Google inks remuneration deal with news publishers in France but opposes similar agreement in Australia

 

By Emmanuel Legrand

Last week Google sent mixed messages about the company's intent to remunerate news publishers: In France, Google signed an agreement with the Alliance de la Presse d’Information Generale (General Information Press Alliance), which regroups most of the country's main news outlets. The deal includes payments for the online use of news content by the internet giant. 

  Meanwhile, in Australia, Google has threatened to shut down access to news services through its search engine if it had to pay for indexing content and adhere to a Code.

  France's situation follows the adoption by the French government of the European Union's Copyright Directive in July 2019, which includes a “neighbouring rights” for news publishers. After initially resisting to comply with the law, an appeals court mandated Google to negotiate with publishers. Subsequently, Google entered with individual agreements with some publishers such as Le Monde or l’Obs. 

A major step

  The agreement with the Alliance cover a wider range of news outlets and signals that Google has now accepted the terms of the law, although the amount it will pay has not been disclosed. Sébastien Missoffe, Managing Director of Google France, said the agreement was "a major step for Google" that confirms the platforms' "commitment to press publishers within the framework of the French law on neighbouring rights. It opens up new perspectives for our partners, and we are happy to contribute to their development in the digital age and support journalism."

  "This agreement sets out the principles according to which Google will negotiate individual license agreements with Alliance members whose publications are recognised as Political and General Information, while reflecting the principles set by law," said the Alliance. "These individual licensing agreements will cover neighbouring rights, and will provide access to News Showcase, a new press publishing licensing programme recently launched by Google, which will allow readers to access rich content. The remuneration provided for in the license agreements between each newspaper publisher and Google is based on criteria such as, for example, the contribution to political and general information, the daily volume of publications or the monthly Internet audience."

  The agreement was welcomed by French Minister of Culture Roselyne Bachelot-Narquin. "This agreement marks Google's recognition of the value created by publishers," said the Ministry in a statement. "It is the culmination of a long process and the result of the strong mobilisation of press and public authorities."

Other platforms must comply too

  The Ministry said the agreement "is only a first step that calls for others," since Google "is not the only company that owes this neighbouring right." The Ministry warned that "other platforms concerned must in turn comply with French and European law."

  The Minister of Culture will be careful "to ensure that the remuneration received by publishers and press agencies under their neighbouring rights is the subject of an appropriate and equitable sharing with journalists and other authors of works included."

  In Australia, the situation went the opposite way. Under pressure from the Australian government to negotiate a remuneration deal with publishers, Google and Facebook have resisted entering into agreements with publishers. Google's Managing Director for Australia, Melanie Silva, told Senators that forcing the company to sign such agreement “would give us no real choice but to stop making Google Search available in Australia." She added: "Withdrawing our services from Australia is the last thing that Google want to have happen, especially when there is another way forward." 

Australia does not respond to threats

  The response from Prime Minister Scott Morrison was swift: “Australia makes our rules for things you can do in Australia," he said. "That’s done in our Parliament. It’s done by our government, and that’s how things work here in Australia. People who want to work with that, in Australia, you’re very welcome. But we don’t respond to threats."

  Australia was pushing internet companies and local news publishers to agree to a code that would include a remuneration for the use of news by digital platforms. The proposal was part of a package suggested by the country's competition watchdog, following a full year of review, leading to the introduction of a legislation into the House of Representatives in December.

  The Age reported that Silva said to Senators that paying for news would “break” Google’s business model and that the company was concerned that the proposed Australian code would set an international precedent. 

Platforms need to face their responsibilities

  Facebook also threatened to remove news content from Australia on its platform if the proposal went through. Facebook’s Vice-President for public policy in Asia-Pacific, Simon Milner, said the "great majority of people who are using Facebook would continue to be able to do so, but we would no longer be able to provide news as part of the Facebook product.” 

  The bill to legislate the code was introduce in Parliament by Treasurer Josh Frydenberg at the end of December and is expected to be voted in February. The law would require the likes of Google and Facebook to negotiate with publishers, and if they could not come to an agreement within three months, they would be forced to enter mandatory arbitration.

  Chris Janz, Chief Digital and Publishing Officer of media company Nine Entertainment, said that it was important the continue to apply pressure of tech companies otherwise they will “continue to refuse to pay for the content they’ve used to secure their monopolies or live up to the responsibilities that come with such power."  

Bob Dylan sued by the widow of Jacques Levy over the sale of his catalogue

By Emmanuel Legrand

Bob Dylan has been sued by the widow of songwriter, author and theatre director Jacques Levy, who co-authored with Dylan several songs that appeared in the singer's 1976 album 'Desire'. The suit is related to the news that Dylan, aka Robert Zimmerman, sold his catalogue to Universal Music Publishing (UMPG) for a reported $300 million and that a share of this transaction should have been paid to Plaintiffs.

  Also named in the suit are Dylan's New York-based trading entities Ram's Horn Music, Special Rider Music and Bob Dylan Music Co., as well as UMPG and Universal Music Group.

  The core of the lawsuit, according to a complaint filed by lawyer Richard Golub on behalf of Claudia Levy in New York's Supreme Court, is that Levy, who died in 2004, is entitled to a share of the transaction, based on the agreement that he had originally signed with Dylan. The suit states that circa 1975, Levy started working with Dylan on 10 original compositions: 'Romance In Durango', 'Catfish', 'Joey', 'Money Blues', Hurricane, 'Rita Mae', 'Mozambique', 'Oh Sister', 'Black Diamond Day, A Bedtime Story', and 'Isis', seven of which were featured in 'Desire'.

An atypical work-for-hire contract

  Although the agreement between Levy and Dylan was one of "work-for-hire", the suit describes it as "atypical" in that it was "bestowing on Plaintiffs considerable significant material rights and material benefits that are not customarily granted to to employees-for-hire and that the label work-for-hire is, in this instance, a misnomer."

  As per the agreement, Levy was granted a co-writer credit for the lyrics and was due to receive "35% of any and all income earned by the compositions and actually received from mechanical rights, electrical transcriptions, reproducing rights, motion picture synchronisation and television rights, and other rights therein."

  The suit points out that the payment also includes 35% "of the purchase price paid to the Dylan Defendants, John Does 1-10 or any other entity for the acquisition of rights to a composition acquired by a third party 'for use for the basis for a screenplay, teleplay or dramatic work'." For Plaintiffs, the term "income" is "unrestricted and unambiguous."

Breach of agreement

  It was also incumbent on Dylan Defendants to notify rights societies ASCAP and BMI that Levy received 35% of the writer's share on the songs, and that Levy's music publishing entity Jackelope was entitled to 35% of the publishers' share of the songs for performance income. Since the original agreement was signed, Dylan has moved his catalogue to SESAC for the administration of his performance rights.

  The suit states that the songs Levy contributed to were part of those sold in the transaction with UMPG and that the due diligence process had made aware Universal that "Plaintiffs are a third-party beneficiaries of the catalogue sale with the obligations, inter alia, to account and pay to Plaintiffs all funds due to Plaintiffs pursuant to the agreement as income or otherwise related to plaintiffs' compositions."

  It adds that the Dylan Defendants "refused to remit to Plaintiffs their rightful share of the revenue and/or income earned from the catalogue sale with respect to the compositions" and that Universal "wrongfully, intentionally and without justification induced the Dylan Defendants to breach the agreement with Plaintiffs by advising and/or instructing the Dylan Defendants not to render any revenue, income and/or payments to Plaintiffs in connection with the catalogue sale."

  This situation, the suit adds, is consistent with "Dylan's pattern of refusing to recognise Jacques Levy."

Seeking an award of $7.25 million

  Plaintiffs calculated that the sale price per song would be of approximately half a million dollars, so $5 million would the sale price for all 10 songs co-wrote by Levy. Applying a 35% share of the income and/or revenue derived from the catalogue sale, Plaintiffs estimated that the share of the income generated by the catalogue sale due to Levy was of $1.75 million, which should be paid to plaintiffs by the Dylan Defendants. In addition, Plaintiffs also ask for punitive damages in the amount of $2m "to deter similar conduct from happening in the future."

  In addition, they ask that Universal pay $1.75m as the prorated share of the income generated by the catalogue sale as well. A third cause for action calls for Universal to pay an additional $1.75m for advising and/or instructing the Dylan Defendants not to render any revenue, income or payments in connection with the sale. In total, Plaintiffs want the court to award them $7.25m.

A meritless case

  UMPG has yet to respond to the complaint filed January 20, 2021.

  A lawyer for Dylan, Orin Snyder, said in a statement: "This lawsuit is a sad attempt to unfairly profit off of the recent catalog sale. The plaintiffs have been paid everything they are owed. We are confident that we will prevail. And when we do, we will hold plaintiffs and their counsel responsible for bringing this meritless case."

 

 Follow-up:

At the end of March 2021, Bob Dylan has filed with a New York court a motion to dismiss a lawsuit brought by the estate of Jacques Levy, who co-wrote with Dylan a series of songs that were included on his 1976 album 'Desire'. The lawsuit, brought by Levy's widow, follows the sale of Dylan's catalogue to Universal Music Publishing Group. In a suit filed in February 2021, Levy's estate claimed that a portion of the estimated $300 million sale should have been paid to the Levy Estate. 

In his motion, Dylan counters that Levy worked on a work-for-hire basis and was also entitled contractually to a share of the royalties from the use of the songs. However, the contract between the two sides did not include a clause making Levy a party to the sale of the songs. "Had the parties intended for Levy to share in the proceeds of a sale, they would have so provided in the Agreement," reads the filing. It adds that nothing in the contract "hints that Levy is so entitled." 

The contract confirms that the new owner of the copyrights is "subject to the continuing obligation to pay Levy his share of royalties." Levy's estate was seeking $7.25 million from the sale of the catalogue.

DCMS committee publishes written contributions about the economy of music streaming

The inquiry into the economy of music streaming, initiated by the British House of Commons' Digital, Culture, Media and Sport (DCMS) committee saw the leaders of the three major music companies in the UK – Universal Music UK's David Joseph, Sony Music Entertainment's Jason Iley and Warner Music UK's Tony Harlow  – as well as Andrea Martin, CEO of PRS for Music, and Peter Leathem, CEO of PPL provide testimonies on music streaming.

  A full transcript of the testimonies is available here.

  In addition, more than 150 pieces of written evidence in the economics of music streaming inquiry have been published by the DCMS committee, providing an industry-wide perspective on the impact of streaming and business models operated by platforms. Submissions came from musicians, composers, songwriters, producers, performers, platforms, fans and academics as well as from industry organisations.

  Below is a sample of some of the submissions:

Association of Independent Music
The UK should take the opportunity of Brexit to implement a world-leading contemporary copyright regime that would make the UK the leading global centre of excellence for the investment in and making of music content. AIM would like to see government support in the following areas: 
  1. A world-leading contemporary UK copyright framework that includes platform liability, so that platforms whose profits derive from inclusion of music content are not able to hide behind ‘safe harbour’ provisions to avoid such liability. 
  2. Strengthened copyright protections in trade negotiations – especially with the USA 
  3. Ensuring compliance with international copyright treaties including enforcement measures – especially with the EU, post-transition 
  4. Further strengthening of anti-piracy initiatives – especially in the digital market 
  5. Reinforcement of access to investment capital via a creative industries tax break 
  6. To uphold the current, strong CMA framework to prevent anti-competitive practices

Beggars Group
There is an alternative revenue distribution model for streaming services that has been widely discussed – which apportions all of a user’s subscription fee to what they have listened to (as opposed to taking total revenue and dividing it by total plays across the service).
  Although this might solve some issues we do have concerns about it. It only shifts some of the income around to a fairly minor degree, it does not create more revenue with the same mouths to feed and it does not mean that the revenue is distributed more equitably, but it may create more confidence in consumers that their money is going towards the artists they listen to, which would be positive. 
  We support a fair minimum digital royalty rate for artists without the royalty deductions of the old sales based world.

BMG
There is much work to be done by the streaming services and the music industry working together to drive the value of the streaming market for music makers and music fans alike. But in the current discussion about the remuneration of artists and songwriters, the music industry could make substantial progress itself simply by addressing some of its own outdated assumptions and deal models. 
  A rule of thumb is that streaming services pay around two-thirds of their revenues to the music industry for the music rights they license; The problem for artists is that while the recording attracts the largest share (around 80%) of the music rights pot, a traditional record deal may offer them 20% or less of that share, and 20% of 80% of 66% is 10.5%.
  The problem for songwriters is that while they typically have much higher royalties, around 75%, that percentage is applied to the smaller share (around 20%) of the music rights pot, and 75% of 20% of 66% is 10%.
  The only realistic way for artists to increase their income from streaming is for them to receive a higher share of the revenue generated by their recordings. The only realistic way for songwriters to increase their income from streaming is for them to receive a greater share of the total pot of money paid by streaming services for the music they use. 
  Both proposals are likely to encounter significant push-back from the traditional music industry. This is understandable since achieving them would entail wholesale changes to working practices, improvements in efficiency and a more robust approach to overhead. None of this is comfortable, but we believe it is necessary. 

BPI
Of course, we welcome any proposal that maximises fairness and transparency and promotes the health of the ecosystem. Known as a ‘User Centric Payment System’ (UCPS), this scheme would take into account the streaming behaviour of each individual listener, rather than the current system of apportioning royalties based on a share of total listening. This would not, of course, add value per se but redistribute the same amount of value among artists. This suggests that there may be winners and losers in this type of model, and there would be significant investment and operational costs in setting it up and administering it. Further exploration of UCPS may therefore be worthwhile to better understand its implications.
  There are also matters relating to reporting and audit, and concerns about consumer data and a reduction in transparency to consider. Others have raised the suggestion that streaming should be licensed collectively and subject to equitable remuneration, in a similar way to broadcasting in the UK. However, the on-demand nature of streaming is fundamentally different to that of broadcasting, in that users can at any point individually select the specific track to which they want to listen. This is why international treaties accord exclusive rights to labels and performers, which grant them the ability to negotiate value for their rights in a free, commercial market.

Tom Gray for #BrokenRecord Campaign
The UK could also lead the world in creating a better-balanced music market. The #BrokenRecord Campaign has one key recommendation: Amend UK legislation by extending the right to ‘Equitable Remuneration’ that already exists for ‘Communication to the Public’ (broadcasting) to cover the ‘Making Available’ right, so that artists can earn from On Demand streaming in the same way they have long earned from radio and TV transmissions. This would guarantee an income stream for artists irrespective of contractual terms and guarantee all recording musicians (whose work is listened to) some income from streaming for the first time. It would go some way toward rebalancing the licensing arena, where Major Labels’ market dominance is the main factor in determining the slicing of the streaming pie.

Council of Music Makers on behalf of Featured Artists Coalition (FAC), Ivors Academy, Music Managers' Forum (MMF), Music Producers' Guild (MPG), Musicians' Union (MU)
While each of our organisations will submit their own solutions to this inquiry, as a collective we agree on five fundamental values, that the economics of the streaming market should be:
EQUITABLE 
  ● Value the songwriter and performer contributions to streaming more highly. 
  ● Recognise streaming is not a sale. The song should be paid more. FAIR 
  ● Check the dominance of major music corporations on the streaming market across marketing, licensing and distribution of streaming royalties. 
TRANSPARENT 
  ● Put in place oversight of streaming platforms to ensure algorithms are not biased, and there is equal access to the streaming market for all artists, songwriters and performers. 
  ● There should be greater transparency of artist contracts and the right to audit. 
EFFICIENT 
  ● Royalty distribution systems must be modernised to stop bad and missing metadata, misallocated payments and market-share based policies. 
PRO-CREATOR 
  ● The broad principles of the Copyright Directive should be adopted to enshrine the liability of online platforms in UK law and include provisions around greater transparency, improved contract terms and fairer pay for creators and performers. 
  ● Labels and publishers should be encouraged to adopt progressive policies that write-off old contracts to pay streaming royalties and promote fairer deals between artists and labels. 
  ● Publishers should be encouraged to adopt new progressive policies that remove limits on paying royalties to writers.

Department for Digital, Culture, Media and Sport (DCMS) and the Intellectual Property Office (IPO)
The Government recognises the importance of fair remuneration and transparency in the global streaming environment, while also acknowledging that contractual agreements between rights holders and streaming platforms as well as between record labels and artists are a private matter.
  It is therefore important that we have robust, independent evidence to inform the debate, so the Intellectual Property Office (IPO), an executive agency of the Department for Business, Energy and Industrial Strategy, is working closely with the Ivors Academy, the Musician’s Union, the Featured Artists Coalition, the Association of Independent Music, and PRS for Music on an industry-led research project. The British Phonographic Industry (BPI) and the Music Publishers Association (MPA) have also been invited to join the project board. 
  The research itself is carried out by independent academics who seek to investigate the flows of money from streaming to creators and to ensure independence the IPO will chair the research’s project board meetings. This is a 12-month research project due to report in Summer 2021. 
  The Government also supports efforts to better understand the right balance between transparency, confidentiality and freedom to contract in the online world, which is an ongoing challenge for the industry.

Digital Media Association (DiMA), which represents companies such as  – Amazon, Apple Music, Google/YouTube, Pandora, and Spotify.
While music streaming services play a vital role in enabling content discovery and accessibility, they are one link in the long chain between music fans and music creators. Artists and songwriters are not paid directly by streaming services for the use of music they have written and performed. Rather streaming services enter into agreements with record labels, music publishers and collecting societies to make available music that those entities have the rights to license in exchange for payments.
  Streaming companies generate revenues from the sale of advertising and subscriptions; a substantial portion of those revenues are shared back to these rights holders. Streaming services have no influence over the terms agreed between rights holders and creators, including royalty rates. In fact, once streaming services have paid the rights holders, they have very little ability to see who pays who, and do not know how much ultimately ends up in artists’ or songwriters’ hands.
  The labels, publishers and societies share a portion of their revenues with artists and songwriters, but other entities or individuals may also (and often do) participate in the artist’s or songwriter’s revenue pool – for example, talent managers, lawyers, and business managers.

International Federation of the Phonographic Industry (IFPI)
In order for the UK music industry to thrive it is essential that the UK government ensures that the legal and economic framework underpinning the industry supports the continuous development and investment in UK talent. The flip side of the music industry’s global digital operating environment is that talent and investment can move easily to countries with more supportive frameworks, those that provide incentives for growth, legal certainty, and a fair competitive digital marketplace. Creating artificial barriers or red tape that would make the UK music industry less competitive, would hurt the entire UK music sector.

Hipgnosis 
Hipgnosis believes the focus of this inquiry should be on how the 70% of revenue that is sent to “Rights Owners” and where the money goes once they are paid by the streaming services. The relationship between the 3 major record labels holding the master recording (‘master’) and the control they have over the 3 major publishing companies holding song copyrights (‘copyright’) is, in our opinion, the issue.
  The conflict of interest created by the three major record companies (Universal Music, Warner Music and Sony) owning the three largest publishers (UMPG, Warner Chappell and Sony ATV respectively) is critically important to understand. These three publishers are being prevented from advocating for songwriters’ interests as a result of being controlled by their parent companies who wish to push economic improvement towards recorded music where they make an 80% gross margin and a 40% net margin.
  Hipgnosis’ recommendations for how the relationships between artists, streaming platforms and record companies could be improved are as follows:
  1. Songwriters and artists should have a direct seat at the table in remuneration discussions. 
  2. A music stream should be treated as a license, not a sale: A ‘license’ gives the artist 50% of the royalties for a song whereas a ‘sale’ gives artists between 18% and 30%. 
  3. Move to a broadcast rate of payment to musicians for passive listening.
  4. Data inputs and sources need to be secured: DSPs should tell major labels that they need both an ISWC and ISRC when signing contracts, which are required for preventing losses to artists due to unreliable data.
  5. Regulation needs to be introduced to clarify the grey area around ‘breakage’ in record company and DSPs’ contracts. 
  6. Remove non-disclosure agreements (NDAs) between record labels and streaming platforms.
  7. Equal share of equity for artists.

Independent Music Publishers Forum (IMPF)
The streaming rates issue is the most important and urgent priority for the wider community to address. It is, in fact, a defining issue for where we are at and where we are going to. Rates for publishers have been low from the outset. While record labels are reporting dramatic increases in revenues from streaming services, the publishing sector (and thereby the songwriters and composers they represent) does not benefit from this growth. The publishing sector receive rates of (approx.) 15% for subscription services. This is occurring at a time when the song is becoming more valuable as the business moves to a track-based model. Simply put songwriters, CMOs and publishers need to generate a larger share of digital revenue.

Ivors Academy
Creators face a lack of transparency, lack of trust, royalty distortions and inefficiency. We have an opportunity, one which thousands of music creators are calling for, to investigate this important topic and find solutions that enable both creators’ and corporate interests to thrive.
  RECOMMENDATIONS FOR GOVERNMENT:
  1. Major Music Intermediaries Regulation: introduce regulation of Major Music Intermediaries to ensure parity with the way in which Collective Management Organisations (CMOs) are regulated. A Code of Conduct is required to set out minimum standards.
  2. Copyright Reform: implement a package of copyright reform, based on the principles of liability of online platforms and provisions around greater transparency, improved contract terms and fairer pay for writers and performers.
  3. Data and Administration Reform: set a time-frame for implementation of the reform of Collective Rights Management systems and the implementation of a Minimum Viable Data Standard for music recordings. 
  4. Research: commission research into creators’ earnings, the value of the songwriting contribution and related rights, the revenue, costs and business models of music streaming across the whole chain and whether the algorithmic curation used by streaming platforms is biased, discriminatory or inhibiting cultural diversity.

Music Managers Forum (MMF) and Featured Artists Coalition (FAC)
If record labels are unwilling to address these inequities, the other solution is to introduce so called equitable remuneration on streaming. Whenever sound recordings are broadcast or played in public, artists have a statutory right to payment, even when they do not own the copyright in those recordings and regardless of any deal they may have with the copyright owner. This equitable remuneration right stems from global copyright treaties.
  However, this principle does not currently apply to streaming even though it is accepted that streaming partly exploits the so called ‘performing rights’ of the copyright, just like radio and public performance. If it did, artists – including session musicians who do not usually receive any ongoing royalty payments from labels - could be guaranteed a minimum share of monies generated by the streaming of their music, which would not be subject to recoupment or any discounts or deductions set out in a record contract. This ER income would be collected and distributed by the performer's collecting society – which is PPL in the UK. 

Music Publishers' Association
Government could support the music publishing industry by ensuring a level playing field for legitimate digital services by: 
  - Providing the legal and practical means for rights holders to protect their rights against illegal and unlicensed digital services which do not license or pay for the music on which they build their services and revenues. Unlicensed services undermine the value of music and create market distortions which prejudice services that operate legally and secure licenses. 
  - Addressing the prevalence of illegal and unlicensed services and illegitimate content available online which undermines the legitimate market for both licensed services and rights holders alike.

Will Page, former chief economist for PRS for Music and Spotify
'User-centric’ distribution (commonly referred to as User-Centric Payment System or UCPS) isolates each consumer's subscription fee and allocates it exclusively to the particular tracks streamed by that user. This system may be perceived as fairer by some creators. However, UCPS arguably increases administrative and operational costs for the numerous intermediaries, not least due to the hugely-increased complexity introduced by the variance of the value of each individual stream.
  For example: one stream could be worth as much as £4 (if a subscriber were an exceptionally light user and streamed just one song per month), whereas another stream of the same song could be worth a fraction of the current half-a-penny rate. 
A common misapprehension is that the choice of 'pro rata' or 'user-centric' distribution systems alters the total sum paid by the streaming service to rights holders. This is not the case, as total ‘money out’ remains largely unchanged: it is not about 'more money', but rather about how to allocate and distribute the same amount of money.
  To creators as an aggregate, this is at best a zero-sum outcome. Also, it should be stressed that, contrary to popular perception, this allocation and distribution is done by country – so the UK’s ‘money in’ is not pooled with ‘money from any other country. 
Another common misapprehension is that the user-centric system would make the rich worse off and the poor better through progressive redistribution of wealth. On the contrary: industry analysis suggests that UCPS would have only a minor impact on the allocation of net distributable revenue among different tiers of artists.

PRS for Music
Over the past five years much has been written about the so-called ‘value gap’ and the European authorities’ attempts to address the problem. The UK government has recognised the problem and set out a clear commitment to resolve the harm in the Creative Industries. 
  It is essential the Government fulfill this commitment. It is equally important that they avoid the pitfalls of this debate, including those which plagued the development of the EU Copyright Directive. The Government’s commitment to address the transfer of value can be achieved only by ensuring that all online platforms that provide their users access to music are made responsible for those actions, and thus required to play their role in supporting the sector from which benefit.

YouTube
Balanced copyright law allocates responsibility and liability among all stakeholders. In furtherance of that objective, transparency is key. The music industry has long been plagued by gaps in ownership data, and licenses are often issued to licensees without complete and accurate lists of the rights and works licensed. Licensees like YouTube must be able to obtain data about what they are licensing from rights holders, and should not be liable for any harms arising from a licensor’s inability to provide that information.
  Our offering generates unique benefits for artists, songwriters, creators and rights holders, derived from the size of our audience and the way we leverage that audience to create new opportunities. We are committed to driving meaningful revenues and promotional opportunities back into the music industry so that the ecosystem sustains its growth and continues to thrive. 
  To support the sustainability of the wider music industry, we would therefore call for: 
  1. Policy certainty: Stability in the law has allowed a robust digital music marketplace to develop and drive revenues back into the music industry and we would urge caution before forcing new regulatory interventions in this dynamic space. In particular, any copyright changes should not be introduced until a full economic impact assessment can be made of the impact of Article 17 in the EU. 
  2. Data transparency: We encourage the committee to explore the development of a comprehensive musical works and sound recording ownership database that would have beneficial applications across all areas of music licensing. Similarly, we wholeheartedly endorse transparency principles as applied to artists, songwriters, and other royalty participants, who deserve to understand how their royalties are calculated and distributed throughout the entire ecosystem.

BPI: Record labels' margin on a 9.99 music streaming subscription is 0.51 with artists receiving 1.331

By Emmanuel Legrand

As a preamble to the hearings of the CEOs of the three British major record companies by House of Commons' Digital, Culture, Media and Sport (DCMS) committee, trade body the BPI issued a report suggesting that "music streaming is helping thousands of artists to hit major sales milestones in the UK and its global reach is amplifying artist success."

  According to BPI data, around 1,800 artists achieved more than 10 million streams in the UK alone in the past 12 months. For the BPI, that's "72% more than the total of 1,048 artists who achieved the equivalent 10,000 album sales in the CD, LP and download market of 2007." The study also shows that the top 1,500 artists in the UK "generate on average nine times as many streams outside the UK as they do at home."

  The report also looks into the economy of streaming by breaking down the revenues from streaming services paid to rights holders. According to the BPI, on average, labels receive gross revenues of around 4.33 out of a typical 9.99 subscription, of which artists receive 1.331. Out of the label’s remaining share of 3.00, costs represent 2.49 (including investment into artists such as A&R and global marketing), leaving labels with a margin of 0.51.

Derive more value from platforms

  The remaining 5.67 are split between the exchequer (VAT); the streaming service (DSP); and publishers and songwriters.

  The BPI also noted that "artists are receiving a higher share of revenues nowadays than they did in the CD era" with artist royalty rates are "typically higher" in streaming (around 20-30%), compared to CD era rates of 15%-20% of net PPD (and subject to deductions). 

  The BPI urged the UK Government "to introduce measures to derive more value from platforms – including: addressing issues with certain user-upload services, which return just a fraction of the value of premium services; combatting industrial-scale piracy, which continues to drain some 200 million annually from the UK recorded music economy; supporting British music’s potential to double the value of exports to 1 billion over the next decade; and encouraging inward investment into UK music.

Google Cloud to provide BMG with infrastructure to manage global data flow

By Emmanuel Legrand

Bertelsmann-owned music company BMG has picked Google Cloud to build "a scalable, global infrastructure" and manage the exponential increase in the data flow linked to the digital consumption of music.

  The new service will help BMG process the billions of lines of income data it receives from around the world, across platforms, streaming services, radio, television and many other sources, in order to pay artists, songwriters and other rights holders. BMG will use Google Cloud's BigQuery, a server-less enterprise data warehouse, and Dataproc, an open source data and analytics processing solution. As part of its infrastructure migration, BMG is shifting 1,500 components, servers, and databases to Google Cloud.

  "With its modeling data in Google Cloud, BMG can then more easily explore previous data points such as popularity of certain downloads among device types and ultimately discover new revenue opportunities," explained Google Cloud.

Improved service to artists and songwriters

  "BMG is at its heart a service company for artists and songwriters, and we are constantly optimising our business to improve that service and deliver it more efficiently," said BMG's Vice President, Group Technology Gaurav Mittal. "With the move to Google Cloud, we can now tap into relevant data across the music lifecycle with smarter analytics tools, to benefit our artist and songwriter clients."

  Added Anil Jain, Managing Director, Media & Entertainment, Industry Solutions at Google Cloud: "The rise in digital media means that content companies have to place an increasing importance in data and analytics. We're thrilled to work with BMG and are looking forward to collaborating on the innovative ways our data-driven solutions can help the company drive new revenue streams and scale its business." 

Music Deals -- Week 4 of 2021

British company Blue Raincoat Music Publishing, in conjunction with Reservoir, have signed a global publishing deal with the estate of Nick Drake to represent the artist's entire catalogue of songs, including the albums 'Five Leaves Left', 'Bryter Later' and 'Pink Moon'. "Working with Nick's songs has always demanded and rewarded close attention and focus so it was a relief to find that there are still a clutch of song publishers who have the time and dedication to concentrate on the subtleties and details that these songs deserve. Blue Raincoat is one such, along with their American partners, Reservoir," said Cally Callomon, manager of Bryter Music, The Estate Of Nick Drake.

Universal Music Group's division Interscope Geffen A&M has signed a joint venture with Adam Mersel’s Immersive Records label. The first release under the new deal is the debut single from LILHUDDY (aka Chase Hudson). Through Immersive Management, Mersel is the manager of Ben Platt, and he has worked in the past with Bebe Rexha, Sara Bareillesand Robin Thicke. “[Mersel's] entrepreneurial spirit and his commitment to artist development make him and his Immersive Records label a perfect fit with us at Interscope Geffen A&M,” said IGA Chairman John Janick.

Hipgnosis Songs Fund has acquired the producer's share of a 43 song-strong catalogue from record producer and mixer Bob Rock, which includes such recordings as Metallica’s ‘Metallica’ and Michael Bublé’s ‘Call Me Irresponsible’, ‘Crazy Love’, ‘Christmas’ and ‘To Be Loved’.  

US songwriter Lydia Vaughan has signed a worldwide publishing agreement with Cornman Music and Warner Chappell Nashville. Vaughan has been based since 2015 in Nashville where she has developed her songwriting career. 

British producer FRED has signed an international neighbouring rights agreement with Kobalt in a deal covering global administration and royalty maximisation services. FRED has produced songs for Ed Sheeran, Burna Boy, FKA Twigs, Khalid, Roots Manuva, among others.

Sony/ATV Music Publishing UK has renewed its worldwide administration deal with CamelPhat, and also launched a joint publishing venture with the production duo (Mike Di Scala and Dave Whelan). CamelPhat said they would "find and nurture the new, fresh and emerging talent" for their own publishing imprint.

Singer-songwriter Peytan Porter has signed her first publishing deal with Jody Williams Songs, in partnership with Warner Chappell Music. In addition to Porter, Jody Williams Songs represents Ashley McBryde, Driver Williams, Nathan Chapman, Jeremy Spillman, Greg Bates and Jason Nix. 

Moving chairs -- Week 4 of 2021

 USA

Andrei Iancu has resigned from his position of Director of the US Patent and Trademark Office (USPTO). He was appointed to the job by President Trump in 2018. During his tenure, the USPTO successfully built a coalition to block China's candidate to be elected to the position of Director General of the World Intellectual Property Organisation (WIPO). In addition, USPTO Deputy Director Laura Peter also resigned on the day Joe Biden became President. These two positions have yet to be filled.

Sony Music Entertainment’s Commercial Music Group (CMG) has promoted Jessica Shaw (pictured, below) to SVP, sync licensing. Based in New York, she will serve as head of the Sony Music SyncShop, the centralised sync licensing team housed within CMG, and lead the group's sync-related creative and licensing activities across all entertainment media, including film, television, commercials, video games and emerging new media. Shaw was most recently was CMG's VP, sync licensing, a position she's held since joining the company in 2014. 


The American Association of Independent Music(A2IM) has launched the Black Independent Music Accelerator (BIMA), a fellowship initiative created with the intention of "fighting for social and economic justice within the music industry by amplifying independent, Black-owned music businesses." The inaugural BIMA Advisory Council, which will help to guide the strategy of the programme and advocate on behalf of the initiative includes: Taryn Brown, Founding Principal at Taryn Brown + Company; Troy Carter, Founder & CEO at Q&A; Marcus Hollinger, SVP, Marketing at Reach Records; Fotemah Mba, Head of A&R, General Market at Cinq Music Group; Madeline Nelson, Founder & CEO at Heads Music; and Chissy Nkemere, Senior Director, Streaming Marketing at Concord Music Group.

Dallas Martin (pictured, below) has been appointed as the new president of Warner Music Group's imprintAsylum Records in the US. He was EVP of A&R at Atlantic Records, a position he will retain. He reports to Eliah Seton, President of Independent Music & Creator Services at WMG and Craig Kallman, Chairman & CEO of Atlantic Records. At Asylum, he will work in tandem with co-President Gabrielle Peluso. “It’s always been my dream to head a label as iconic as Asylum," said Martin. 


Warner Chappell Music has promoted Natalie Madaj to Senior Vice President, Digital Licensing, Americas (she was VP Digital Licensing, North America), and Daniel Lang to Vice President, Digital Licensing, EMEIA (he was Head of Digital Licensing, EMEIA). They both will continue to report to Warner Chappell's EVP Global Digital Strategy Eric Mackay.

Sony/ATV Music Publishing has promoted Audrey Ashby (pictured, below) to SVP, Business Affairs, Catalogue. Based in New York, Ashby reports to EVP, Business Affairs and General Counsel, Peter Brodsky. As SVP, she manages the relationships with some of Sony/ATV’s legacy songwriters and catalogues like Valerie Simpson, Holland-Dozier-Holland, Pete Moore, Marvin Gaye, Ron Miller, Sandy Linzer, and many others.


Concord Music Group has promoted Ruth Martinez to Chief People Officer, and Victor Zaraya to Chief Operating Officer. Martinez, who joined Concord in 2019 from Warner Chappell, will be leading the independent music company's global human resources team with a special focus on diversity, inclusion and talent development initiatives. Based in Los Angeles, she continues to report to Concord CEO Scott Pascucci, as does Zaraya.

US management company Milk & Honey has expanded with a sports division and been rebranded as Milk & Honey Music + Sports + Ventures. Agent Jacob Presser will lead the division as a partner and joins with several NFL players, while Dave Frank and Alex Harrow, co-heads of artist management at Milk & Honey, will be overseeing the new sports department at the firm. Agent Rawleigh Williams also joined as a partner. The division will be run out of the company’s New York and Los Angeles offices with the addition of a Dallas presence.

Music video platform Loop Media has appointed Darcy Fulmer as Head of Music. Fulmer will lead a team that produces music video programming for Loop Media’s apps for business, mobile and television as well as its collection of 24/7 music video TV channels. She reports to Loop’s Chief Content and Marketing Officer Greg Drebin. Fulmer worked in the past for radio station KROQ-FM in Los Angeles and Viacom and as a music consultant for Napster and Revolt TV.

Business Manager Josh Klein (pictured, below) has launched TKG Business Management, a Beverly Hills-based firm specialising in business management, tax, and personal CFO services to music industry executives and artists, professional athletes, entrepreneurs, and high net worth individuals. Klein will bring his current client list to TKG, including The Chainsmokers, Big Sean, Logic, Kelly Rowland and Winnie Harlow, among others. In addition to being Managing Partner of TKG, Klein is also a partner in Mantis Venture Capital and JAJA Spirits Company.


Sound specialist Audionamix has hired of music licensing expert and tech advisor Cory Sims to help forge new relationships in the music business for the AI-driven audio isolation company. Sims worked for mechanical licensing agency HFA and led the business development team of its affiliate Rumblefish, before setting up in 2019 his boutique consulting and advisory firm CES ADVISR. “Cory’s expertise in both sync licensing and music technology makes him the perfect liaison between our best-in-class AI stemming solutions and the needs of the music industry,” explained Ellie McNeil, Audionamix General Manager for North America. 

ALIBI Music has elevated Tim Hare (pictured, below) to Vice President, Business Development, working alongside VP, Business Development Kent Carter. Hare is based in Los Angeles and reports to ALIBI Music founder and executive producer Jonathan Parks. A professional composer himself, Hare joined ALIBI as a director in early 2017. 


UK

Gareth Mellor has been named UK Head of TuneCore, the Believe-owned digital music company for the independent sector. He reports to TuneCore's Vice President, International Faryal Khan-Thompson. Mellor was previously Marketing Director, UK & EU at Kobalt Music Group. "The UK is one of the world’s most important music markets so we knew we needed an experienced music executive to lead our efforts. Gareth brings a wealth of industry knowledge and expertise to the table, enabling him to hit the ground running and bring new ideas to the fore," said Khan-Thompson.


RUSSIA

Maxim Vlasov has been appointed Managing Director of Universal Music Russia, replacing Dmitry Konnov, who “leaves the company amicably and by mutual agreement," according to UMG. Vlasov worked as executive director of Universal Music Russia before joining football team FC Spartak Moscow in 2019 as COO. Based in Moscow, he reports to Frank Briegmann, chairman & CEO of Universal Music Central Europe and Deutsche Grammophon.

Jeremy Sirota, CEO of Merlin (Part 2): 'We are going to outpace the market and post significant growth in 2020'

This is part 2 of the interview of Jeremy Sirota, CEO of Merlin, the licensing company for the independent music sector, with Emmanuel Legrand.

What's the biggest misconception that tech companies have about the music industry and vice versa? 
Jeremy Sirota: I think there is not a lot of people who have been on both sides of the equation. I started in music and I moved to tech and now back to the music side at Merlin. But there aren't that many with similar experience. The first 14 years of my life, working at a law firm and at a record company, I worked with technology. At the law firm I did a lot of deals with a lot of content companies at the intersection of copyright law and content. Then nine years at Warner doing every deal you can imagine with technology partners and vendors from all sides of the supply chain, and I don't feel I truly understood tech until I started working for Facebook. The reason why is that it is one thing to work with tech and one thing to work in tech. It helped me better understand the challenges that they have, and how they operate. And how they think about building products and what they think about success. That is typically difficult to understand if you don't work in tech. My recommendation would be that there would be more value driven to the eco-system if there were more people from the record side going to tech and come back, and vice-versa, because the understanding of what drives organisations and how they think is what allows you to better understand them and relate to them. I think Merlin always understood tech well, and I could amplify that further to better relate to where they are and better understand how to interface with them and find more opportunities. On the technology side, I read an article saying that not everything can be quantified, not everything is binary. The thing about music is that it is emotional and it affects at a different level than ones and zeros. The more technology understands how that drives the artistic and creative process the better it is. It is about earning a living but it is also about an artistic product that is created and affects people. The more technology can remember that as part of what they're doing and that it is driven from a slightly different place, that would help better understand actions and what drives people in the music industry.

Have you noticed more willingness from platforms to do the right thing and get licensed? 
Jeremy Sirota: I'll respond tangentially. I do two things: we go out and we strike premium deals on par with the majors. People sometimes forget that you can't time-shift money backwards, so the first time you do a deal with a platform, that is revenue and opportunity that you can't ever recapture. I will never sacrifice speed for value, but it is something we keep in mind when we deal with licensing. And two, you can always disagree with some [platforms] and still be in a conversation. I do not like to raise my voice, this is not my preferred way of doing things, but I can have conversations with people I have deep disagreement about direction and yet and still have productive conversations about where it's heading.  

Any hot issues with with licensing at the moment?
Jeremy Sirota: Driving value is always the hot potato for me. We look at the eco-system in a way that can drive value for our members. I love hearing about my members because we have such diverse background of members from around the globe that they hear about new things, new platforms launching, new services. We are not just interested in who is in the news cycle. We are just as interested in who is not in the news cycle and that we should be in conversation with them. There are a number of platforms that are not in the news and that we are talking to and are not talking to anyone else because we approach them about our opportunities. That's about how I think about the licensing place.

Have you seen an evolution from the business models adopted by platforms? 
Jeremy Sirota: Obviously I can't talk about deal terms. The best I could say is that we are in an evolving landscape with new types of services, and there is an evolution as where music is being found, so there is an opportunity to be at the forefront of that evolution and help drive these models in a direction that is beneficial to the platform and what we want to bring to our members. Here too, even if you are not in a licensing conversation, it is good to be in a conversation with the platforms.  

What do you make of the #fixstreaming and #brokenrecord campaigns? Is user-centric the answer? I asked over a year ago that question to your predecessor Charles Caldas and he said that evidence at the time did not really support a change in model. 
Jeremy Sirota: We've always been in favour of the testing approach. It's a position we continue to have. What Charles said back then still holds true today. We haven't seen any new data since then to say otherwise. For myself, having spent some time in the tech world, one of the things that we need to keep in mind is the massive logistical cost that could be associated with a change in the royalty reporting at a user level and I am probably a bit more sensitive to that because of out membership and the resources required to support that. I don't think anyone has looked at that and that's one thing to keep in mind. What is my remit? It is to drive an absolute maximum revenue and opportunities to our members from our digital partnerships. That was my focus in 2020 and this is where organisations like WIN and IMPALA and other trade organisations can serve the role of advocacy and research, and have the conversation in this space.

In China, Alibaba is shutting down Xiami. Will that leave you with unpaid bills? Are there any risks for your membership?  
Jeremy Sirota: I cannot talk about deal terms or the nature of our relationship, but in every deal that we strike, in every relationship that we have, we are very thoughtful about these issues, about collecting money, collecting reports, currency exchanges, etc. These are the areas where Merlin can go above and beyond just striking a deal. Can we get in early, can we get in first, can we get a premium deal, these are all the places where Merlin can drive value and ensuring that we can get responses and issues resolved.

Overall, it also validates your strategy to make deals in China with each single service rather than making one deal with a service that will then make sub-licensing deals with other platforms. 
Jeremy Sirota: I wasn't there when the deals were made but I think our approach really provides benefits to our members. So we make one deal with a platform, we get one report and we push that through our members. So the answer is yes, it worked for out members.    

Pandora is going to write off one billion dollars in 2020 and one of the reasons mentioned by the service is the cost of content. What do you make of that? Are you driving these companies to their death because you cost too much?
Jeremy Sirota: [Laughs] Pandora is a great partner and we've had a great relationship with them for some time. I appreciate the relationship we have with Pandora and the discussions that we have. What I would say, more broadly is that music has value! And music is something that gives value, not just to people but to platforms. Do I think music is too expensive? No, I think music is one of the most valuable artistic product in the world and that's why I have dedicated my life to being in this space. I will always fight for the value of music because it's had such an impact on my life. It bring joy to people's lives.

What's in the bag for Merlin in 2021?
Jeremy Sirota: This was the first change at Merlin at a CEO level, it was my first time as a CEO. One of the important skills of a leader is not just how they make the best during good times but how they manage things during difficult times. So in 2021 the first ting is to support my team; 2020 really tested us all and was sort of the year that proved resilience, what it means and how you engender that in people, giving them the tools to get there. So I want to make sure my team feel supported, whether through wellness, learning, or growth. We are company with a mission and we have an impact on our members. Two, I'd say stretch yourself. How can we keep stretching ourselves as individuals at Merlin to drive value? We've always been a goal-setting organisation. But we have made it more rigorous at company level, department level, individual level with a goal-setting process that we are about to kick-off. That will bring more value to our members and to our partners. It's about the things that you did not think you'd achieve that year. I love having that thought about something I need to stretch to reach. The new brand is a big part of this year, understanding that the world knows the value of Merlin, and what it means to be a member. Strategically we'll keep making deals. We already have a couple that we haven't announced yet, so we'll continue to be strategic and thoughtful and grow the number of deals we're in. And we'll just continue to deepen our partnerships with all the different music services. We'll also continue to evolve our technology, our tools, and broaden what we do with data and analytics.

How did Merlin perform in 2020? 
Jeremy Sirota: We haven't closed our books for 2020 but we I think we are going to outpace the market and post significant growth in 2020. Some of our members have maturely outgrown the market by something like 20 or 30%. So we are seeing some very interesting growth within all of our members. Another way to look at it is that we have the largest amount of data about independent labels, and one of the things that we are seeing is that we are over-indexing on social media platforms across the board. There is a deep wealth of audience around the world who are very much gravitating towards independent music.

Do you growth in the streaming business can be sustained or 2020 has been such an unusual year for growth that it will be hard to replicate in 2021?
Jeremy Sirota: There is always opportunities for growth. Look, in the US, many colleges moved to remote learning. So you had an influx of young adults, many of whom were headed home and, depending on the age group, you may have had a large segment of the population that had not yet using streaming services, and suddenly their 24/7 was deeply rooted in that world, whether they have a Spotify, an Apple, or a Deezer account, so you have that large segment of the population interacting with streaming services in a way that they did not before. Do I think there will be other pockets of opportunity? Absolutely. Look around the world. Issues like the cost of broadband has dropped, the cost of smart phones is dropping, and that creates new opportunities. I think a lot of social platforms are driving awareness towards streaming and people wanting to switch back and forth from social platforms to streaming services and listen to music they discover there get inspired by. So yes, there's still more opportunities out there. 

US Department of Justice closes the review of ASCAP and BMI's consent decrees without taking any action

 By Emmanuel Legrand

Songwriters, music publishers and the two main US performance rights societies ASCAP and BMI reacted with disappointment to the disclosure that the US Department of Justice (DoJ)'s Antitrust Division has decided to end the review of the consent decrees ruling ASCAP and BMI since 1941 without proposing any changes or terminating them, putting an end to a two-year process.

  "The Antitrust Division has considered carefully stakeholders’ views on all of these issues and recognises that continuing disagreements exist among artists and within the music community regarding the benefits, drawbacks, and continued need for the ASCAP and BMI consent decrees. Continued review of, and stakeholder input concerning, the decrees remains necessary to ensure the decrees continue to satisfy their purpose to protect competition and do not act as an impediment to innovation," said Makan Delrahim, the Assistant Attorney General in charge of the US Justice Department’s Antitrust Division.

  Speaking at a webinar on organised by the Vanderbilt University Law School, added that lack of consensus between stakeholders, and even within the music sector itself on the future of the consent decrees, made it difficult for the DoJ to make a decision. [A consent decree is a judicial decree that sanctions a voluntary agreement between parties in dispute, without having either party admitting guilt. Once approved by a judge it becomes legally binding.]

Encourage competition

  Delrahim said the United States entered 80 years ago into the consent decrees with ASCAP and BMI "to remedy the competitive concerns that arise from the exclusive, collective, and blanket licensing of individual copyrights." According to the decrees, both ASCAP and BMI have to offer the same license terms to similarly situated users in the same industry to license music for public performance.

  He explained: "ASCAP and BMI provide licenses to these users so that they do not have to enter into individual licensing agreements with every songwriter or publisher whose music they wish to play. In this sense, collective licensing provides significant efficiencies to many businesses across the country that benefit from immediate access to music, as well as to songwriters, composers, and publishers who would otherwise have to individually license or enforce against multiple music users."

  He continued: "The crux of the decrees is to encourage competition between ASCAP, BMI, and other PROs for members and music users, and between ASCAP, BMI, and their respective members to license copyrighted works to music users. The decrees prohibit exclusive licensing and protect the ability of ASCAP and BMI members to license works directly if they wish." 

Review the decrees every five years

  Delrahim said the Division will continue to monitor the decrees. “[T]he Division recognises that changes in the music marketplace, as well as in the ways Americans consume music, continue to require the Division to monitor the decrees and, where market realities require, seek to modify them to promote competition," he said. 

  Delrahim went on to outline three points that will inform the views of the Division moving forward:
  > creating an environment where "the ultimate goal should be a market-based solution that ensures songwriters, publishers, and other artists are compensated fully for their creative efforts at market rates."
  > ensuring that songwriters and other intellectual property rights holders "are not shortchanged by the non-market effects of the ASCAP and BMI consent decrees, or by other efforts to regulate the music marketplace."
  > recognising that compulsory licensing "is not the answer" as it "runs counter to the principles that form the very foundation of the free market and rights in intellectual property."

Ensure a free, fair and efficient marketplace

  "It is incumbent upon the Division, the Congress, and the courts to keep these principles in mind as they strive to ensure a free, fair, and competitive music licensing marketplace," said Delrahim.

  He concluded: "The ASCAP and BMI consent decrees should be reviewed every five years, to assess whether the decrees continue to achieve their objective to protect competition and whether modifications to the decrees are appropriate in light of changes in technology and the music industry. Factors that could weigh in favor of modification might include increased competition in the licensing marketplace, including increased direct licensing or technological developments that may affect the market. In all of these efforts, competition must be the watchword. Competition for the benefit of consumers, competition for the benefit of innovation, and most importantly, competition for the benefit of the artists and songwriters without whom the American music industry would not exist."

  During the review process, stakeholders outlined conflicting visions. Groups from the licensees sector, such as the National Association of Broadcasters, organisations representing hotels and bars, as well as the Motion Picture Association, were opposed to changes in the decrees, explaining that they worked for them by ensuring access to repertoire with the stability of not having to face legal challenges. 

Lack of consensus among stakeholders

  Others such as the National Music Publishers Association (NMPA) were in favour of relaxing some of the decrees' provision to allow partial withdrawal of rights from the PROs. And songwriters were also conflicted between the different options. 

  Delrahim also said that there was disagreements within stakeholders on issues such as fractional licensing versus full-song licensing, for which a court ruled against the DoJ that ASCAP and BMI cannot license 100% of the rights to songs for which they only represent a fraction of the rights, as well as on partial withdrawal, for which he said "action on this front would likely require modification of the decrees, or an act of Congress."

  Delrahim said during the discussion at the Vanderbilt University that while there was "a lot of efficiencies" in the blanket licenses that collective rights organisations provide, including to artists, the artists community "was split." He named Jon Bon Jovi, who testified during the two-day hearing organised by the DoJ last year, as one of those who did not think there should be changes "because many artists relied on these types of licensing rights and the consent decree to make their living." He also mentioned LeAnn Rhimes who made a "very impassioned and cogent argument for why they should be terminated." Said Delrahim: "So you have artists and you have the licensee community also were all split.” 

Broadcasters 'pleased' with the decision

  NAB, whose President and CEO Gordon Smith testified during the review process, said in a statement, that NAB was "very pleased that the Department of Justice will not move to make changes to the ASCAP and BMI consent decrees." Smith continued: "We appreciate the willingness of DoJ to have an open mind and to conduct a comprehensive review of all of the possible issues raised by stakeholders concerning modifying or eliminating the decrees. DoJ's decision not to take action will ensure that ASCAP and BMI continue to fairly and efficiently license musical works in a manner that is pro-competitive. Broadcasters look forward to continuing to work with the performance rights organisations for the mutual benefit of songwriters, music licensees and listeners.”

  David Israelite, president and CEO of the NMPA, said he was "disappointed that DoJ chose not to update the regulations to allow for freedoms that would have greatly helped songwriters and music publishers realise the true value of their work." He continued: "We understand that the [performing rights organisations] and the Department could not come to an agreement on broad changes and therefore allowing selective withdrawal of digital rights could not be fully considered, however we see this as a massive missed opportunity for music creators."

  He added, “We agree as Assistant Attorney General Delrahim stated, that ‘the ultimate goal should be a market-based solution that ensures songwriters, publishers, and other artists are compensated fully for their creative efforts at market rates,’ and we are relieved to hear his denunciation of compulsory licensing.” He said that he hoped that the Biden administration would take up the issue.

Disappointment of rights societies

  ASCAP CEO Elizabeth Matthews and BMI President and CEO Mike O’Neill issued a joint letter in which they wrote: "Today, the DoJ has formally closed its review and will take no action to modify or terminate the decrees but left open the possibility of changes in the future. While we were disappointed that no action was taken, we are encouraged to see how the DoJ’s approach to these issues has evolved."

  ASCAP and BMI added that were encouraged by the fact that Delrahim "recognised several important truths that we have long understood: Songwriters are the backbone of the music marketplace and must be paid fairly; blanket licensing is incredibly efficient; ASCAP and BMI are innovating to serve the needs of the industry; greater competition and not compulsory licensing is the answer; and the value of music is best decided in a free market."

  There also admitted that while BMI and ASCAP have long advocated for updating and modernising their respective consent decrees, "it has become clear over the course of two different reviews by two different DoJ administrations in the past eight years that modifying or terminating our decrees would be extremely challenging."

Revisit the decrees

  The respond to the DoJ's request for a new approach, the two societies offered a joint solution "that would help facilitate a thoughtful transition to a free market while avoiding potential chaos in the marketplace." However, it "soon became clear that key industry participants could not agree on how best to move forward."

  They elaborated: "We were concerned that the lack of consensus in the market could lead to a legislative push resulting in unwarranted government regulation of our industry in the form of compulsory licensing. In addition, our victory in confirming the industry-wide practice of fractional licensing would have been revisited. These factors would absolutely not be in the best interest of our songwriters, composers and publishers, and indeed, would represent a major step backward. Although it would have been wonderful to see our decrees modernised, we would rather they remain as they are, than see an outcome that could adversely affect music creators for generations to come."

  In their conclusion, the two PROs said they would continue to innovated and offer new solutions to licensees, such as the recent joint database of songs Songwview. They write: "While we are both looking forward to the day when ASCAP and BMI are no longer under consent decrees, we were buoyed by the DoJ’s comments that it will pay to revisit these decrees as a result of new market developments. When the appropriate time comes, BMI or ASCAP may wish to seek a future review. For now, we’ll turn our attention to the opportunities that lie ahead in 2021 and, of course, all of the incredible new music the year will bring."

  Meanwhile, Delrahim will be leaving the government on January 19. During his tenure, the Division embarked in a lengthy review of the 1,200 consent decrees that the department was overseeing, resulting in the termination of 850 of them. The film sector saw the end of the Paramountconsent decrees, which forbid studios to own movie theaters. The DoJ also started launching probes into internet companies such as Google.

  “During my tenure as Assistant Attorney General, the Division successfully enforced the competition laws and implemented transformative policy and organisational initiatives that will bear fruit for both American consumers and entrepreneurs for years to come,” said Delrahim in his resignation letter to President Trump.

  President-elect Joe Biden has picked Merrick Garland as the next Attorney General but has not yet appointed a new person in charge of the Antitrust Division. According to Reuters, two former Barak Obama administration officials are under consideration for the job: Renata Hesse, currently a partner at law firm Sullivan & Cromwell, where she advised companies such as Amazonand Google parent Alphabet; and Juan Arteaga, who has also worked for the Justice Department under President Obama between 2013 to 2017 and served as the Deputy Assistant Attorney General for Civil Enforcement.

  Reuters noted that Hesse's involvement with Alphabet could pose conflict of interest issues as the DoJ sued Google on Oct. 20, and suggested that Ortega was the front runner.

[Commentary: A wasted opportunity
So this is the end of the current episode of the consent decrees' saga, until the next one! When the DoJ announced the review of the decrees two years ago, there was optimism within the songwriting, publishing and PRO community in the US and abroad that something would come out of the process, based on the pro-active desire by Makan Delrahim, the Assistant Attorney General in charge of the US Justice Department’s Antitrust Division,to take a deep look at rules that have been in place for almost 80 years.
  But it became very clear after a while that there were so many conflicting views around the table that finding a consensus among stakeholders would be almost impossible. The DoJ could have taken the bull by the horns and decide on new terms for the decrees but the architecture of licensing in the US is so convoluted that moving one piece would have had an impact on so many others pieces on the chess board that the DoJ took the "brave" decision to do nothing (probably also for fear of legal challenges from all sides).
  So now we have that wonderful paradox of an administration that was intent to let market forces determine the best course of action, and regulate as little as possible, having to accept that deregulating the music licensing market for performance rights was too complicated to be let into the hands of the market. 
  It's a great win for the NAB because they got what they wanted, a status quo which fully serves their interests. If you add that to the fact the NAB is totally opposed to performance rights for recordings, the music sector has one hell of a battle ahead to get US broadcasters acquiesce to norms that are pretty much in place around the world.
  On the positive, the review has pushed ASCAP and BMI to increase their cooperation on the data front, and also come up with a joint proposal, while remaining competitors and keep each other in check.

  For the NMPA, it's a bitter loss, because David Israelite put a lot of time and efforts to get the ball moving on this front, using his connections with Delrahim, but to no avail.

  One of the unintended risks of the lack of decision on the decrees could well be the decision from key players on the publishing side to go their own way and establish their own PROs, like Irving Azoff did a few years ago with Global Music Rights. These PROs would not be constrained by the decrees and could use their leverage with licensees. In the end, licensees would face an even more fragmented licensing market, and total confusion on rates. Certainly not the best outcome. 

Emmanuel Legrand]