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BMG Singles Out Big Labels and Publishers for Early Stances on Rate Increase for Mechanical Royalties

The company says it regrets not pushing back "against an industry consensus that turned a blind eye to what has been a 15-year pay freeze for songwriters."

While many U.S. music industry trade groups lauded the pending 12 cents-a-song mechanical rate settlement filed with the Copyright Royalty Board, BMG today called out the record companies and music publishers for their initially proposed settlement that would have frozen rates at 9.1 cents for five more years.

“The entire songwriter community owes a huge debt of thanks to those who fought for this increase in the face of the opposition of major record companies and indifference of music publishers,” BMG said in a statement. “Without their belief and commitment, the RIAA (representing record companies) and the NMPA (representing music publishers) would not have been forced back to the negotiating table.”

The statement continued that music companies have a duty to stand up for artists and songwriters and claimed that BMG has put fairness at the heart of its agenda since its rebirth in 2008.

“We regret on this occasion that we did not speak out earlier and more robustly against an industry consensus that turned a blind eye to what has been a 15-year pay freeze for songwriters,” the BMG statement said.

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The CRB judges rejected that settlement after an outcry from songwriting groups led by indie-songwriter George Johnson.

In defending the earlier 9.1 cents proposal that would have meant the same per-song rate for 21 years — 2006-2027 — the NMPA said publishers didn’t want to fight a mechanical rate war on two fronts, considering how expensive CRB rate proceedings can be — often costing more than $10 million per rate determination, according to the trade group. Since streaming is by far the main source of mechanical royalty revenue from master recordings, the NMPA has said that it wanted to put all of its resources into getting a higher mechanical rate from the digital service providers.

However, BMG’s statement expanded beyond the rate issue to conclude with a call for the industry to abandon unfair and anachronistic deductions, such as the one for controlled composition clauses employed against artist who write their own songs on their records. The controlled composition clause, once invoked, allows labels to pay only 75% of the mechanical rate and freeze the rate at that year’s level, regardless of subsequent rises in the rate for those artists who write their own songs. The Songwriters Guild of America, the Music Creators of North America and the Society of Composers and Lyricists also cite that as a key issue, among others, that they want the industry to overturn.

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In recent years, BMG has announced a series of changes that benefit its artists and songwriters in moves that overturn rates and practices that favored the initial publishers and record labels in the contracts that it now owns due to its acquisition binge.

“This episode should be a wake-up call for all those in the industry who fail to match fine words about the value of music with a concern for the people who actually create it,” the BMG statement concluded.

The NMPA and the RIAA didn’t immediately respond to an e-mailed request for comment, while a BMG spokesman couldn’t be immediately reached because he was apparently on a plane.