Are music publishers using the issue of low royalty payments from digital users [Spotify, Pandora, et al.] as a pretext for an unprecedented land grab of rights, money, and power? And who is most likely to benefit from a shift to direct — as opposed to collective — licensing?
Sony/ATV recently announced that it is contemplating complete withdrawal from the Performing Rights Organizations (PROs) ASCAP and BMI, if the consent decrees that each operate under are not amended to allow publishers to withdraw rights for certain uses. Such a withdrawal would enable publishers to negotiate their own performance licenses and, for the first time, collect not only the publisher’s share of royalties, but the writer’s as well. Sony/ATV portrays this contemplated move to direct licensing as an urgent act that would be taken on behalf of its songwriters, who it states are being insufficiently paid for performances on digital music services.
But is that the whole story?
As music creators ourselves, we wholeheartedly agree that songwriters and composers are significantly under-compensated for performances on digital music services. But what Sony/ATV and other publishers are seeking is the ability to withdraw rights not just for digital music users, but for any group of music users, potentially including radio, broadcast television and cable networks. (Sony/ATV’s letter to songwriters speaks of withdrawing “performance” rights, not just “digital” rights.)
The notion that music creators will be better off if publishers collect the writers’ share of performance royalties is questionable at best. What is certain is that a withdrawal from the PROs by major publishers will have a chaotic impact on the music marketplace and a devastating and irreversible effect on almost all music creators and independent publishers.
If major publishers withdraw from the PROs, music users will suddenly be forced to negotiate with individual publishers, each demanding higher rates for the music they claim to control. The resulting confusion and lack of rate certainty will create a logistical nightmare that can benefit no one. And whether or not these publishers actually have the right to direct-license all works in their catalog is subject to dispute; for instance, no work written or co-written by a member of an overseas PRO such as PRS, GEMA or SACEM can be included in such a direct performance license. That includes the songs of the Beatles, the Rolling Stones, Adele, etc.
What’s more, most songwriter agreements guarantee that the writer’s share of performance royalties will be collected and paid directly to the writer by the PRO of their choice. But publishers are now claiming that general clauses covering exploitation of a writer’s work permits them to withdraw from the PROs all rights in that work. This is not only an extraordinary attempt to shift these rights from PROs to publishers, it’s not necessarily true. (And the assertion that general exploitation clauses permit direct licensing is bound to inspire legal challenges, creating even greater turmoil.)
What about collaborators who have separate publishing relationships, let alone those in collaborations in which one writer’s share is direct-licensed and the other’s share is licensed by a PRO? How will a PRO-affiliated writer be paid in instances when the licensee pays all royalties from a song to the publisher issuing a direct license? What rights does a PRO-affiliated writer have to audit a publisher with whom they have no legal agreement? The potential complications are overwhelming.
Meanwhile, the cost of running the PROs will be borne by fewer members, and users like Pandora will demand to negotiate lower fees for smaller repertoires. As a result, those writers and independent publishers who remain with the PROs are likely to earn less. And legislative advocacy, career development workshops, honors and awards, and other valuable but non-essential services currently provided by PROs likely would be eliminated.
But perhaps most troubling for writers is that publishers who direct-license will enjoy “enhanced revenue opportunities.” Administrative fees, technology fees, signing bonuses, equity stakes and huge cash advances could fill the pockets of corporate owners, stockholders and music executives, but not those of music creators, whose work makes all this revenue possible. Worst of all, these direct licensing deals are private and confidential; there is no way for a writer or their auditor to ever know if they are being paid fairly, or not.
Our PROs may not be perfect, but they do offer transparency. Every writer and publisher knows and understands that when a dollar comes into a PRO, it is split into two equal parts: a writer’s share, divided among writers, and a publisher’s share, divided among publishers. This simple but essential mathematical truth provides music creators (and administered publishers) with a degree of certainty unavailable from any other source. It also provides an important check and balance: Writers can compare what they receive from their PRO with reports they receive from their publishers.
We hope that the Justice Department’s pending review of the outmoded consent decrees that govern the affairs of our PROs will result in changes that will help songwriters, composers and publishers achieve fair value for our work and preserve voluntary collective licensing for future generations. While we await the outcome of that process, we must continue to press the point that the long-term interests of music creators and publishers are best served by a proven structure of collective licensing administered by organizations they know they can trust.
The pursuit of higher licensing fees from digital users should not be used to camouflage a seismic shift of rights away from a system that has worked well for a century. Moreover, it should be a part of a solution that strengthens the PROs, not one that will certainly weaken and could well destroy them.
Songwriter Phil Galdston, composer Maria Schneider and composer/songwriter David Wolfert are members of the Council of Music Creators, a non-profit organization dedicated to informing, organizing and protecting the rights of all songwriters and composers. Billboard welcomes insightful commentary — you can submit op-ed and gust post ideas to email@example.com.