Sony threatens to split from licensing collective to secure digital rights

doj and Sony ATV 638w

The simmering legal battle for collective licensing took a new turn last week. Martin Bandier, chairman of Sony/ATV/EMI, said that his company would consider withdrawing from the U.S. collective licensing system unless the Department of Justice overhauls the current regulations for song performance rights.

Bandier wrote a letter to the thousands of songwriters at Sony/ATV to discuss the recent events in the licensing debate. He wrote that the company would consider “the potential complete withdrawal of all rights from ASCAP and BMI” if the legal events do not unfold in favor of music publishers.

Under the existing rules, consent decrees limit the negotiating power of ASCAP and BMI, the two main organizations covering song performance rights in the U.S. While it can help publishers to have a third party manage the administrative side of licensing and royalties, the extra government regulation covering ASCAP and BMI’s group approach often means they aren’t getting the caliber of deals that they might through direct licensing. The federal ruling earlier this year, where ASCAP failed to secure a larger fee from Pandora for playing its recordings, shows that the courts are moving slower than the publishers would like in adjusting to the digital media landscape.

Many publishers want to have digital rights removed from that collective licensing bundle so that they can negotiate directly with today’s plethora of streaming and online radio services. Unless the consent decrees are revised, publishers would have to opt out entirely in order to have control over their digital distribution, which brings us back to Bandier’s letter.

A withdrawal from the collective arrangement would not be a straightforward matter. It would depend on the nature of all the different contracts the songwriters have with their labels and publishers, so the letter may have been an attempt to garner support for a break from the creative side of the industry. Small returns from streaming services are a sore spot for composers, so the possibility of better deals outside of the existing licensing rules could get many songwriters behind a split from ASCAP and BMI.

Losing Sony/ATV would also mean a major hit for ASCAP and BMI. The organizations combined process almost $2 billion in royalties each year, but that figure would be drastically lower without the vast catalog of the Sony family.

Anna Washenko