Sony Threatens To Pull Out Of ASCAP And BMI

In what may be a glance at the music publishing world to come, Sony/ATV Music Publishing has threatened to end its relationship with music licensing agencies ASCAP and BMI if the changes it wants aren't implemented. And it looks like Universal Music Publishing could be lining up to do the same thing.

The issue primarily stems from the payments received from streaming royalties, which most publishers think is too little, especially when compared to downloads. Then there's the fact that the performing rights organizations (PROs) have always been nebulous how their payouts are determined. Writers and publishers alike have been frustrated for years over the disparity between royalties payments between ASCAP and BMI on the same song, where one will be higher than the other on one statement, than switch on the next.

Given the fact that we live in an age where song use tracking and royalty accounting is so much easier than in the past, it would seem that the PROs usefulness might now be diminished. Where for most of the 20th Century they were a total necessity for the publishing business, today that's becoming less true, since every play can be digitally tracked.

Sony/ATV has a catalog of over 2 million songs, including huge earners from The Beatles, Taylor Swift and Lady Gaga. Pulling out of ASCAP and BMI would be a significant blow to those organizations, and probably just the beginning of the snowball rolling downhill. It wouldn't be long before the other large music publishers followed suit.

It's probably inevitable that this will happen eventually. What's for sure is that we're about to witness both big changes in the industry and some history in the making right before our eyes.

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Apple's Music Streaming Pulled At The Last Minute, Twice

There has been a lot of speculation about Apple's new streaming service over the last year, but it appears to be much closer than you think. Apparently Apple was all set to make the announcement in September during the iPhone 5 introduction, but it was pulled due to a last-minute snag.

The word is that publisher Sony/ATV caused Apple to pull the plug at the last minute because it could not agree on the per-song rights fee. Considering that Sony/ATV administers 2 million copyrights, including those by everyone from Taylor Swift and One Direction to the Beach Boys and Beatles, the company supposedly push for a higher rate, and Apple had to wait until things could get ironed out as a result.

That was bad enough, but it happened again in October when Apple introduced its iPad Mini, when once again, Sony/ATV refused to sign off on a deal.

It's been said that the iPad Mini is an especially good fit into Apple's long-term strategy of being a media controller, so the streaming music announcement would've fit nicely with that, but once again it was not to be. Look for this to be resolved soon, but Sony/ATV looks like it's driving a hard bargain, which hopefully will be good for its songwriters.

In the meantime, Pandora's stock is taking a beating and it's execs are selling off their shares. Everyone sees the writing on the wall as the 800 pound gorilla prepares to enter the market.

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What Sony/ATV's Direct Negotiation With iTunes Means

In a move that may signal a change in the way business is done in the music industry, music publisher Sony/ATV Music will soon negotiate directly with iTunes, Amazon and every other online music distributor directly. In effect, they're cutting out the traditional performing rights organization middlemen of ASCAP, BMI and SESAC.

Sony/ATV with begin this new policy with The Beatles catalog, which obviously carries considerable leverage; so much so that The Beatles now have their distribution deal directly with iTunes that bypasses their record label EMI (let's see how long that lasts now that EMI is owned by Universal Music).

It should be noted that the direct negotiation is only for online distribution and doesn't apply to broadcast performance or physical product mechanical royalties.

By bypassing the PROs, Sony/ATV sets a precedent that the PROs should be very wary of. One of the things about online music distribution online is that the detail of information is high. You know exactly where every sale is coming from and can easily have that info at your fingertips. The PROs have a stranglehold on the analog world in that they do blanket deals directly with the broadcasters then pay out to publishers and songwriters by their own complex formulas, since the royalty data is a lot more nebulous.

While it seems a bit far-fetched that any publisher would even dream of cutting a PRO out of the picture, you have to believe that at some point the airplay info will become granular enough that they may begin to wonder why they need a PRO in the middle of everything.

Then again, The Beatles are such a unique case that they still warrant special handling. Regardless, keep an eye on this since it may be a harbinger of things to come down the road.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

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McCartney Takes His Talents To Kobalt

Talk about timing; EMI Music Publishing is just being taken over by Sony/ATV and one of their biggest clients bolts. It seems that Sir Paul McCartney didn't like the looks of what was going down with EMI/Sony and decided to take his talents elsewhere.

But he didn't go to another so-called "major" publisher. No, Paul took his MPL Communications to the upstart Kobalt Music Group, who is quickly becoming one of the major players in the publishing world. Why? Because Kobalt has built it's business on technology, which they claim gets the songwriter paid as much as 25% more and up to two years faster than the more traditional publishing companies. In fact, Kobalt has enticed the likes of Pear Jam, Trent Reznor and Dr. Luke into it's fold, and its share of Top 100 hits has already grown to 15%, which is just under what long time market leader EMI has.

While MPL's move might be symbolically ominous, it doesn't hit the bottom line of EMI as much as you might think, with estimates at less than 10%. The deal with Kobalt does not include North America, Britain and Ireland, which MPL administers itself. But MPL is a heavier hitter than just the McCartney catalog as it includes songs by Roy Orbison, Carl Perkins and Broadway shows like The Music Man.

This just goes to show that even old traditional businesses can be improved with technology, and when that happens, it doesn't take long for artists to take notice and jump on board.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

The EMI Publishing Deal Is Now Complete

As EMI winds down from being a major record label, thereby taking the number of majors from 4 to 3, the first part of the deal is now complete. An investor group led by Sony/ATV Publishing now brings the famous and powerful EMI Music Publishing under its wing.

The group, which includes the sovereign wealth fund of Abu Dhabi, Jynwel Capital of Hong Kong, Blackstone's GSO Capital Partners, the estate of Michael Jackson and mogul David Geffen, paid $2.2 billion to purchase EMI Publishing, which appears to be a pretty good deal. EMI Publishing has long been considered the jewel of the industry, with a catalog of 1.3 million songs including classics like "Somewhere Over The Rainbow" and "New York, New York," as well as songs by The Beatles, The Police, The Beach Boys, Kenye West, Alica Keys, Justin Beiber and many other superstars.

Terms dictated by the Jackson Estate stipulate that EMI Music Publishing still remains as a separate company, which is all well and good, but it's still under the same conglomerate umbrella.

Isn't this country supposed to have anti-trust laws to prevent major consolidation like this? It's not only a bad idea for one company to have such a large market share (well over 30%), but it's bad for the writers too. With that many songs to administer, it's too easy to fall between the cracks.

This is just another indication of how badly the music business needs a major reset, even more so than we're seeing today.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.