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Sony/ATV Threatens the Nuclear Option Against Pandora…

sonynuclear

What happens when the largest publisher in the world isn’t allowed by law to deal directly with digital services like Pandora?  Well, one option is a complete and total withdrawal from collection societies ASCAP and BMI, and the end of typical songwriter licensing as we know it.

The following letter was sent by Sony/ATV chairman and CEO Martin Bandier to songwriter and sub-publisher members this week.

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quotation-marksDear Songwriters and Publishers,

I’m reaching out to share some important news with you about our rapidly changing industry and what we’re doing about it.  As you may recall, last year I wrote to you to announce that Sony/ATV had taken the lead in protecting your rights in the digital space by withdrawing certain digital performance rights from ASCAP and BMI.

There were numerous reasons for this withdrawal.  One was that ASCAP and BMI operate under antiquated antitrust consent decrees which dictate how they negotiate and grant licenses.  As a result, the performance rights licensing process is often lengthy, expensive and results in artificially deflated rates.

By withdrawing certain rights and entering into direct deals, the process becomes more efficient, less costly and, ultimately, more transparent and beneficial for everyone.

Unfortunately, in two legal decisions at the end of last year, the Federal Courts ruled that music publishers could not selectively withdraw public performance rights from ASCAP and BMI.  In other words, a publisher had to keep all of these rights (including digital) with the two performing rights societies, or leave altogether.

As a result, all of our performance rights currently remain with ASCAP and BMI.

Like you, we passionately want digital music services to be successful as they provide fantastic new ways for music lovers to listen to music and have the potential to generate significant new revenues for all of us.  However, because the current system results in what we believe to be inequitable royalty rates, the amount being paid to songwriters is unacceptably low and in no way reflects the vital contribution you make to the success of these services.

To overcome the challenges of the present legislative and regulatory system, we are aggressively pursuing the following activities:

  • Working on your behalf with the U.S Department of Justice to revise the consent decrees and allow partial withdrawal of performance rights.
  • Appealing the rate court decisions so that partial withdrawals are permitted.
  • Exploring other options, including the potential complete withdrawal of all rights from ASCAP and BMI.

It is our hope that the DOJ and appeals process will recognize the benefits and fairness produced by partial withdrawals of performance rights.  This would enable us to remove only those rights that we believe we can more efficiently license ourselves (e.g. digital), and keep other rights with ASCAP, BMI or others where collective licensing (e.g. for bars, restaurants and venues) makes sense for the writers, publishers and licensees.

That being said, because the DOJ and legal process is not fully within our control, we may have no alternative but to take all of our rights out of ASCAP and BMI. We recognize that full withdrawal is a significant step and we are carefully looking at all of the issues associated with this, including speaking with potential partners to assist us.

All of us at Sony/ATV take our responsibility as your music publisher very seriously. We know we face some difficult decisions ahead that will impact our business for years to come.

We are optimistic that we will overcome these issues and set the stage for a better future for you, our songwriters. As the streaming market continues to grow rapidly, we are excited about all of the opportunities that lie ahead. We will be sure to keep you updated as important and significant events develop.

 

Sincerely,

Martin Bandier

Chairman & CEO

Sony/ATV Music Publishing

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Comments (44)
  1. Willis

    I believe the correct term is “nuculer.”


    Reply
    1. pete simms

      It’s spelt correctly. I hope you’re not a lyricist.


      Reply
      1. D Sully

        Pretty sure he’s referencing George Bush’s well-publicized butchering of the word some years ago.


        Reply
      2. Willis

        It is a shame you couldn’t catch the obvious sarcasm.


        Reply
  2. smg77

    More shocking greed from labels.


    Reply
    1. Paul Resnikoff

      Except, this isn’t labels. It’s publishers and songwriters.


      Reply
    2. TuneHunter

      Far from greed.
      Time to monetize music.
      Pandora can continue to deliver custom generated Radio stations to homes cars and offices but DOES NOT have to rape music and musicians.
      We can convert Pandora to $5B music store.


      Reply
  3. Mike Repel

    The whole industry has gone bat shit.

    Glad to know that since Pandora couldn’t get the US Congress Judiciary committee to bend over for them, that one of the biggest publishing companies out there is willing to grab its own ankles.


    Reply
  4. Anonymous

    This seems like it would be terribly inefficient. While they could potentially make more from Pandora, they would have to license with each of the ~650,000 businesses BMI/ASCAP are already licensed with. The overhead seems like it would be astronomical for a single publisher even if they are the largest.


    Reply
    1. Anonymous

      As an artist, producer and writer signed to Sony/ATV I fully support this.


      Reply
      1. Scared Songwriter

        Let’s try this synario on … The PROs are out of the mix … Sony/ATV is now negotiating the rates songwriters (and they) will receive for performances. In negotiations with Pandora they set the rate at say 3% for 2 years (above what the PROs get) … but they have calculated, internally, what they would receive if the rate were set at 5%. They ask for a non returnable advance based on the the 5% rate … When they renegotiate with Pandora at the end of the second year, they demand that the outstanding balance of the existing advance be forgiven. They pay the writers based on the 3% rate and whatever is left over they pocket because they have no responsibility to pay writers more than their share of the negotiated 3% rate.

        Remember, too, that the publishers are now collecting 100% of performance income – writer’s and publishers share … You, as a writer, are no longer associated with a PRO! It will be up to publishers to determine what is due writers before they forward the money to whomever they elect to handle the distribution (assuming it will be impossible for them to handle it themselves.)

        Can you feel the cracks widening? There is every chance that you will make as much or less than you would at a PRO … but, you will have no choice!

        Additionally, the majors are getting equity interests in the services … they don’t have to share dividends with writers … and, they don’t have to share the payouts they will receive it the services are sold. … Could be billions!

        One final thing … you don’t know who will own your copyright tomorrow … Catalogs are being bought and flipped like they were on the griddle at a Pancake House. Who’s the next owner of you song? What sort of new trick will they think up to reduce their royalty obligation to you.

        Remember on thing… your songs, and your songs alone will allow all of the above to happen.

        The only hope for songwriters is that the PROs consent decrees are modified – or done away with – and the major publishers decide to stay in.

        Whatever personal gripes you may have with you PRO, they seriously strive to deal fairly and responsibly with their members or affiliates. There are no back end, hidden games. They are audited by outside auditors every year to insure that their systems and practices comply with accounting and industry best practices … It is unlikely that publishers will ever apply such high standards to themselves!


        Reply
        1. Anonymous

          “There are no back end, hidden games.”

          If you actually believe this you should read the Judge’s opinion in the BMI v. DMX case. No back end, hidden games … bwahahahaha.


          Reply
          1. Scared Songwriter

            The back end hidden games in the DMX case was Sony/ATV taking a huge advance no one knew about until it was revealed in court. That revelation is exactly what led me to the fears I expressed above.

            It had nothing to do with BMI who was unaware of the advance until the DMX documents were produced during the trial.


            Reply
            1. Anonymous

              Take a closer look into what BMI paid UMPG to not do a similar direct license deal. Why wasn’t this sort of sweetheart deal offered to all BMI affiliates whose music was being performed by DMX. Where did this bribe money come from? Seems like a simple case of robbing from Peter to pay Paul to me.


              Reply
              1. Stephen craig aristei

                Hey Anonymous,
                I am always skeptical when people make comments and don’t have the testicular fortitude or gumption to attach their names to it….And that goes for “Scared Songwriter” too !

                “Scared…” has many valid reasons for his/her fears. Major music companies have been in extremely difficult positions for a long time….when one buys another, do you really think that they paid for it out of their “savings account”? Music Publishing has become a “big boys game” and all the “Big Boys” (Wall Street) are playing with it until real estate recovers and they no longer have an interest in it…..Then just watch and see what will happen then with your songs???? In the meantime, the “debt service” (the cost of the money borrowed to make/buy the acquisition) on these acquisitions has to be unbelievably intrusive to the major publisher’s “bottom line”…..In their need to squeeze every last dime out of each and every avenue of revenue source, they were bound to come to this one…Performance….! For a major publisher, ripe with debt, getting a big piece of this pie will go a long way to curing the sever cold of “financial over extension”! It would definitely secure a lot of high salaries and bonuses, not to mention a few contract renewals ! ! !

                Can you remember how many writers survived because they were still in debt to the music publisher for their salary/advance, but were still able to receive their performance royalties directly? Mr. “Anonymous”, do you have that “short” of a memory ???

                It is illogical to think that any major music publisher has the excess capital to invest in restructuring or creating a new “collection” vehicle to promote, monazite, manage and administrate all these new revenue streams currently collected by the PROs…So where is the “catch”? And there has to be a “catch” because money does not grow on trees and this cost somebody something, and you can bet that the “somebody” won’t be the major publisher……Or have I not been in the business for over 50 years????


                Reply
                1. Leon L

                  @ Stephen craig aristei
                  Good point & debate


                  Reply
                2. Anonymous

                  Stephen, I too am skeptical of “anonymous” posters who make comments that are unsupported and/or unverifiable. I, on the other hand, made a specific remark and then supported it by pointing to something in the public record. You can hang on to your skepticism if you want (that would be easiest), or you can do the research and learn for yourself. I even made the task simple by telling you where to look.

                  Also, I made no comment on the ethics or finances of music publishers, so your jabs on these issues would be better aimed at someone else. Points to you though for totally making that straw man your b*tch!


                  Reply
        2. Leon L

          @ Scared Songwriter I couldn’t agree with you more


          Reply
    2. Anonymous

      Sony/ATV can’t administer the payments. They need ASCAP and BMI to field the data and reporting.


      Reply
      1. Anonymous

        Film & TV licensing!! Sony/ATV pays me directly and I own my own masters. ASCAP pays out small in contrast anyway and are usually not so great. Still waiting on back royalties from ASCAP due to lack of reporting over 30 syncs on major network TV & film. Just adding my 2 cents from first hand experience.


        Reply
      2. Paul Resnikoff

        I keep hearing this, but it seems that there are a number of companies eager to handle direct licensing for a company like Sony/ATV. I’ve always had the impression that the technology exists to handle this. MRI is one that comes to mind, just off the top of my head.

        Sure, there will be hiccups and problems, but the current system isn’t perfect, nowhere near.


        Reply
  5. hippydog

    wow, it will be interesting too see how this pans out..
    They money they are getting from the PROS has become a significant percentage of oncome,
    this is equal to a large portion of the writers going on strike..


    Reply
    1. Anonymous

      I think it depends on what we are writing for specifically. Personally, I have written top 20 singles, have cuts on a US platinum record and many others. I have never made as much since I stopped writing for other artists though. I think the name of the game as a “writer” these days is to break it in the synch world. It’s difficult but speaking from experience you can get lucky. There are many things wrong with how performance royalties are calculated at the moment, but I honestly think that this is a great move. I would love to hear how others are making a living in our field. I hope you all are. If not yet, stick at it!!!!


      Reply
      1. hippydog

        ya, my post was written more with the top 40 writers in mind.. Looking at the stats I was a little surprised to see that the income derived from the PROS has reached 3rd place. (not because they are getting more money, but most likely because mechanical has gone down so much)

        of course, the PROS still pay out primarily based on Radio play (I have yet to see anything that proves otherwise), so payouts are still only meaningful only if the song is in rotation.. (I assume)

        I’ve been reading that the sync side is also getting hit pretty hard.. :-(


        Reply
  6. Anon

    My gut tells me that if Sony/ATV parts ways the PROs it would be a net positive for them. Sure they’ll lose revenue in the short run, but this will hurt the little guys much more than the big guys whose compositions aren’t just limited to digital radio. In the long run, if Sony/ATV is able to get better rates directly through the distributor, it may even attract additional clientele into the future (assuming the UMPGs and Warner Chappells of the world don’t follow suit).


    Reply
  7. Skeptic noob

    I have little to no experience with publishing, but am I missing something here? Not sure why songwriters wouldn’t be up in arms about this move. Not that ASCAP and BMI couldn’t improve significantly, but having Sony/ATV directly license with digital broadcasters seems like a bad idea for songwriters. I think it’s likely that they will use the whole of their catalog to negotiate large advances, and equity stakes in broadcasters’ companies, at the expense of potentially lower streaming rates. Seems like their trying to set themselves up on the publishing side to do what they already do on the label side of things: extract large sum payouts for themselves that they do not contractually have to distribute to the folks they represent. I don’t buy that Sony/ATV will be “ultimately, more transparent” for a second. ASCAP and BMI need more transparency too, but I don’t think any major could ever be described as having been transparent about their deals.


    Reply
    1. Anonymous

      So what you are saying is songwriters have to pick between a turd sandwich or a giant douche to represent them?


      Reply
  8. David

    So far as administration is concerned, I don’t see why the publisher (Sony or whoever) can’t subcontract this to whoever they like, including ASCAP/BMI if both sides can agree terms for the service.


    Reply
  9. Grooveshark fail

    Have a look here:

    reddit.com/r/Music/comments/ucumx/hey_reddit_were_grooveshark_music_streaming_site/

    Grooveshark is trying to do some PR on Reddit, but fails miserably…


    Reply
    1. Youareyou

      From two years ago?


      Reply
  10. Doctor VonCueBall

    The theft of lump sum rights payments by any and all of publishers, labels, PROs, aggregators and whoever else literally cheats the songwriters, masters creators, that is the people who create the works. Until that gets fixed and shared with all of them it will never be a level playing field for creators.


    Reply
    1. hippydog

      As far as I know, the PROS have not received any lump sump payments..
      Just the labels..


      Reply
    2. danwriter

      That’s along the lines of what I was thinking. ASCAP and BMI are inefficient, but they do act as a buffer for songwriters’ revenues, paying their members, such as myself (BMI), directly. If all the licensing revenues were to pass through a single entity, it increases the potential for abuse. And since in this case the entity is a publisher with ties to a major record label, I’d expect the same kind of “accounting” the labels have historically been known for.


      Reply
  11. Realist

    Terrible idea. Whilst ASCAP and BMI are not the most efficient organizations the fracturing of rights per publishing company would create utter confusion. Not to mention what will happen to the millions of co-published songs meaning that businesses would have to pay different rates per percentage of song owned – nightmare!
    The music industry has to be smarter in choosing its battles. Whether we like it or not all music rights organizations are in this together. Quasi monopolies like Google know this and exploit our differences. United we stand divided we fall.


    Reply
    1. Leon L

      @Realist you took the words right off my mouth excellent point!! United we Stand and Divided we fall
      the other issue/scenario which is a nightmare as well is who and how would the sub publishers collect and distribute royalties and to whom?
      this could potentially create an international antitrust mess
      how would international treaties be affected and or enforced?


      Reply
  12. Allen Johnston

    A few years ago I started posting that it was time to leave the PRO’s completely and start direct licensing with international and national companies that want usage of your music. What most see as a BAD thing for songwriters I see as a GIFT. As with most businesses the people that are business savvy will make more money than the people that depend on the PRO’s to “pitch, oversee and collect” funds from music usage.

    I have made a decent living collecting royalties from International PRO’s who have used the music of the songwriters I represent. In doing so I have also been able to start directly working with individual companies that are paying us direct and are reporting directly to us. There are a few legitimate services that can do the deals and get the money AND if the PRO’s in this country start losing songwriters and publishers there will be a massive influx of new companies eager to fill the gap.

    Sony / ATV is just making a sound business move that should really have been done years ago. If we can now sell direct to user we should be able to license direct to user.


    Reply
    1. Grammarian

      PROs . . . not PRO’s. what is possessive about your usage of the term PRO?


      Reply
    2. Scared Songwriter

      How are your deals going with the 2500 TV stations, 5000 radio stations and the hundreds of thousands of bars, grills and restaurants in the US …? Must keep you busy negotiating, collecting, keeping track and paying royalties on those licenses.

      By the way PROs don’t ‘pitch’ songs … they are NOT publishers …


      Reply
  13. Grammarian

    PROs . . . not PRO’s. If you can’t get your grammar right how can people take you seriously?


    Reply
  14. Tony Gottlieb

    This is legal legerdemain BS.

    If Marty thinks some Federal judge is going to grant the difference between ASCAP/BMI collecting under the consent decree auspices and an administrative contract basis, on behalf of the major music publishers, he might want to start now hiring up some more Belmont interns as his field licensing reps.

    These guys scarcely know what’s in their own catalogs and now, they are going license every venue and media outlet directly in the world? Ah… I don’t think so.


    Reply
  15. Two Cents

    Saber rattling.

    Let’s just see how a publisher with countless licensees will contribute to greater transparency.

    Not to mention the greater efficiency of dealing with licensees individually (!).


    Reply
  16. Stephen craig+aristei

    Tony Gottlieb, that is very funny……! What many of those involved don’t seem to realize, it that, by all of the “major music publishers” being is in such dire need for revenues, they are pushing prices to exorbitant levels, which in turn will cause people to not use your song and simply go somewhere else. Music Libraries have grown over night because of the short sightedness of many majors. To cure this they simply purchased libraries of their own…..And Tony, you are soo right…most of these children out there “hocking licenses” have no idea what they are doing. They have no idea how what they do or don’t do can help or hinder the creation of a valuable copyright…..It is all very sad.

    I would further question weather a major music publisher has the “right” to tell me who can collect my performance royalties from……It would be an interesting president to see how that one plays out !

    The “sync and performance” area is a tiny little one inch hole that the entire industry is trying to squeeze through…..And yes the money is “there” when you finally “hit a lick”, but it has become over saturated and crowded beyond belief. When I was a kid, the people who were involved with music in TV and Films were not the hippest or coolest guys in the room…..And they all had one thing in common, they wanted to be in the “music business”, not the film & tv business……It appears that many have forgotten the foundation……A Hit Song that becomes A Hit Record…..and becomes a hit act and that has built businesses, careers and the industry over the years….!


    Reply
    1. Leon L

      @Stephen craig+aristei
      The “sync and performance” area is a tiny little one inch hole that the entire industry is trying to squeeze through…..And yes the money is “there” when you finally “hit a lick”, but it has become over saturated and crowded beyond belief. When I was a kid, the people who were involved with music in TV and Films were not the hippest or coolest guys in the room…..And they all had one thing in common, they wanted to be in the “music business”, not the film & tv business……It appears that many have forgotten the foundation……A Hit Song that becomes A Hit Record…..and becomes a hit act and that has built businesses, careers and the industry over the years….!

      OMG!!!!! EXACTLY if I had a nickle for every clueless dip shit hipster that does NOT understand licensing and the valuation and /or devaluation of copyrights,career creation and development for songwriters and composers I would be as rich as Warren Buffet and George Soros

      You illustrated and articulated that beautifully !!


      Reply

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