Finally, VEVO will start paying indie publishers their fair share.
But this is just the first victory in a potentially dragged-out process. We just got off the phone with David Israelite, head of the National Music Publishers’ Association (NMPA), who agreed to share details on the early arrangement. We’ll have more information as it materializes, but the top-level breakthrough is this:
Universal Music Group, part owner of VEVO, has now agreed to pay independent publishers for the use of their compositions streamed on VEVO. Previously, that money was paid by VEVO, and kept by UMG, while indie publishers were basically getting bilked.
Sadly, the majors have a sullied reputation for failing to distribute money after it is collected from a partner, whether that results in an artist, downstream publisher, or other partner getting shorted. Against that backdrop, VEVO has been spinning the classic, Spotify-like argument that ‘we pay the labels,’ and according to our information, VEVO was actually indemnified against liability for downstream payment failures. But ultimately, VEVO was spinning a circular argument here, given that the video joint venture is mostly owned by the major labels themselves.
Which basically means that UMG was taking payments from VEVO, and then bilking indie publishers even if those publishers contributed to works they had licensed. Which also means that once again, Israelite has broken a ridiculous logjam and forced payment for smaller publishers. The agreement also calls for the retroactive payment of independent publishing streams dating back to 2008 (and is focused on the relevant North American region).
So far, UMG is the only label that has agreed to do this, but Israelite pointed Digital Music News to a ‘model deal’ that could be extended to the other majors. Currently, UMG is one of the top two majors in terms of market share (the other being Sony Music), and would easily become the biggest label if its merger with EMI is completed. Sony is a joint venture partner in VEVO, EMI is a non-owning participant, and Warner Music Group is not involved.
Whatever happened behind closed doors, Israelite seems to be playing the politics well. Most importantly, Universal Music Group has admitted no wrongdoing here, and Israelite didn’t even entertain the blame game during our discussion. Which means that the focus will be on publishers getting paid, instead of lawyers.
A key aspect of this negotiation is that a VEVO stream represents a synchronization, which means there are no statutory licensing parameters involved here. “It’s a totally free market,” Israelite described. “But indie publishers had not been given the opportunity to enjoy the same licensing relationship as the major publishers.”
More deal specifics ahead…