When ASCAP and BMI announced July 26 that they had been working together for almost two years on a joint database for the more than 20 million songs they represent combined, they thought that all sectors of the music industry would welcome the news.
So they were surprised when record labels, publishers and some licensees criticized them as coming to market with what some have called a half-baked solution that could invite more government intervention in music licensing, sources tell Billboard.
They were even more surprised to learn that the two biggest music trade groups, the labels’ RIAA and the publishers’ NMPA, had begun their own discussions to build a comprehensive song database and had purposely excluded ASCAP and BMI from that initiative, at least in the early stages, the sources said.
“[ASCAP and BMI] seemed resistant to the issue previously and we don’t know how they would react now, but we didn’t want to take the chance of them frustrating the process,” which is still in the early planning stages, says one source familiar with the RIAA/NMPA discussion. “We wanted to make sure we could get out of our own way first before we invite in other parties.”
Both trade organizations declined to confirm or comment on those plans, but an executive within the professional rights organizations’ camp told Billboard that they saw the criticism of the PROs’ initiative to merge and clean up their own databases before inviting others to join as “hypocritical, considering it’s the very same thing that the NMPA and RIAA appear to be doing.”
As streaming replaces sales as the industry’s most promising revenue source, the stakes are higher than ever to create a comprehensive database that includes data on both publishers’ and PROs’ shares of songs, married with recordings, to make it easier for digital services to license music and pay out royalties to the correct copyright holders. Spotify has been slammed with a litany of lawsuits, some of which it has settled, as unmatched, unpaid royalties mount.
Some publishers told Billboard that they blame the performance rights organizations for impeding years-long industry efforts to build such a system. But another publishing-industry executive argues that the publishers are just as guilty as anybody for the sorry state of songwriter data. “Up until they started doing direct digital licensing, they had no incentive to manage their databases effectively, since they were paid through the blanket licenses and by the labels,” the person says.
The tension has been building since one of the last of these efforts, the so-called Global Repertoire Database initiative, collapsed in September 2014 because the PROs started to withdraw from the plan, sapping the necessary funding, according to industry sources. While some in the PRO sector say the withdrawals were due to the exorbitant costs of the initiative and disputes over its management structure, others said that the PROs were looking to protect their own business model, which they feared would be threatened by a comprehensive database.
“The GRD was good in concept and extremely horrific in execution,” says one executive in the PRO camp. “If it continued further, it was going to become a Harvard study on wasting money.”
Right after that initiative died, both ASCAP, Sony/ATV Music Publishing and the Universal Music Publishing Group were admonished for their lack of transparency by the federal judge overseeing the PROs’ dispute with Pandora over licensing rates. At the time, some publishers — including Sony/ATV and UMPG — had withdrawn their digital rights from the blanket license, but neither provided Pandora with a usable list of songs so it could program around the withdrawn publishers.
“The publishers were the ones withholding their catalogs from Pandora,” says the PRO executive. Pandora also asked the professional rights organizations for the publishers’ song data, but it wasn’t their data to give, a PRO executive said.
After both the ASCAP and BMI rate courts established that the publishers either had to be all in or all out, all four entities made moves to be more transparent, with the two PROs disclosing their shares of control for each song in the database; UMPG publicly posting information about each of its songs; both UMPG and Sony/ATV privately posting song information for licensees; and both making lists of all their songs available to licensees.
Publishers then began asking the DOJ to amend the consent decrees governing ASCAP and BMI so that they could withdraw partial rights, but the DOJ instead soon began thinking about imposing a 100 percent (or full-works) licensing scheme, which requires licensees such as Pandora to only get a license from one of the co-writers of a song in order to be allowed to play it.
Full-works licensing could reduce rates, publishers feared, but was also seen as something that would give BMI and ASCAP an advantage over SESAC and Global Music Rights, the two privately held, for-profit performance rights organizations that don’t operate under consent decrees. Licensees could get millions more songs and possibly lower rates by aligning with one or both of the two bigger PROs.
In addition, full-works licensing would serve as a disincentive for publishers to completely withdraw their rights — a move that could have reduced revenue for the PROs.
The industry put up a united front to stave off 100 percent licensing, but some music publishers told Billboard they questioned whether the PROs were fully on their side. As one executive in the PRO camp put it at the time, “If you read our license, it says when you get a blanket license, you can play any song in our repertoire.” That implied the PRO was already issuing a 100 percent license, even if it only has a fractional share in that song.
But other PRO sources say the publishers’ suspicions were completely unfounded, pointing out that BMI helped initiate a songwriter letter-writing campaign to the DOJ condemning full-works licensing, sending more than 12,000 letters in November 2015.
As the specter of full-works licensing loomed, a power struggle between publishers and PROs began to mount over whose relationship with the songwriter is paramount, with both sides jockeying for an advantage should full-works licensing become a reality.
Some in the PRO camp claimed that since songwriters often joined PROs before they get a publishing deal, that they had prime standing in issuing performance licenses.
When one publisher explicitly claimed the right to performance licensing in its songwriting contracts, for example, ASCAP began experimenting by changing the wording to its contracts when re-signing writers, stating that the writers could not offer an exclusive performance right to anyone else and could only sign non-exclusive contracts, multiple sources at the time told Billboard.
Now, though, another source tells Billboard that ASCAP was simply trying to clarify that when songwriters give it a non-exclusive performance right, that they had not given an exclusive right to anyone else, says the source.
In 2016, the PROs quit sniping with publishers behind the scenes and rallied to become the industry’s staunchest opponents of full-works licensing, advocating fractional licensing instead. ASCAP stepped up its lobbying in Washington, while BMI sued the DOJ and won when its rate court ruled that “the consent decree neither bars fractional licensing nor requires full-work licensing.”
Still, some publishers nevertheless see PROs as an obstacle to a comprehensive database, especially with the societies busy diversifying and expanding to compete with each other. SESAC bought Harry Fox Agency, adding mechanical licensing to its portfolio while seeking international opportunities. SOCAN, the Canadian PRO, acquired Audiam and Musicnet, both of which match recordings with compositions, and the latter of which enables mechanical licensing. SoundExchange acquired the Canadian mechanical licensing agency CMRRA. Meanwhile, Music Reports Inc., which works with digital services, has been aggressive in expanding its efforts to build its own database.
The ASCAP/BMI database announcement was seen by some as their own competitive strategy rather than a salve for the entire industry, because it is initially limited to performance rights and excludes the other two PROs, GMR and SESAC.
As for the RIAA/NMPA secret effort, the two had begun discussions on how to build a comprehensive not-for-profit database that purposely left out the PROs initially because they feared the PROs were likely to protect their own turf, though they had planned to invite them to join once the project gained momentum, says a source familiar with the plans. That database, initially drawn from the major publishers themselves, would provide data on who owns what shares of songs and for what period of time for mechanical, performance and synch licensing in the U.S., while matching those songs to recordings. It would also include the beginning of a global database with data on publishers’ rights overseas.
ASCAP and BMI “are a piece of the puzzle and yet they just announced to the world that they are the entire puzzle,” complains one executive in the NMPA/RIAA camp.
“The PROs have had immense pressure put on them in the past to be a part of building a global database, which up until now they have resisted,” says another senior publishing executive. But now that that momentum is building toward the creation of a comprehensive rights management database, “their announcement to me is simply another attempt to control their fiefdom as the world around them changes.”
“BMI works on behalf of songwriters, composers and publishers collectively, not any one faction,” says BMI president and CEO Mike O’Neill. “We are always open to working with other PROs and other businesses to get the right solution. The idea for a data exchange is to get [the song database] right.”
The NMPA issued a statement when the ASCAP/BMI collaboration was announced but wouldn’t comment further. “I am a firm believer that we need more transparency and better data in music licensing,” NMPA president David Israelite said in a statement last week. “It should be done in the private market, not by the government, and it should be done industry-wide, not in a fragmented way. We will be on the losing side of history if we count on the preservation of a music licensing system where ownership information is treated as a confidential valuable commodity. We should be working to increase the value of songs, and transparent data can only help in that fight.”
While a new bill proposes that the Copyright Office would oversee the process of building and maintaining a rights-holder database, most music publishers think that there is already too much government involvement in licensing and would rather the industry control a global database.
However, others in the industry question if the NMPA/RIAA’s project will ever get off the ground. “How they think they will be able to build a database with the major publishers and without ASCAP and BMI is beyond me,” says one music-publishing executive who had only recently learned about this other up-until-now secret initiative between the NMPA and RIAA.
Sources say that matching the data between the BMI and the ASCAP databases is proving to be extremely difficult because the two get their source data from the publishers themselves. “Do you think that Sony/ATV, Universal, Warner, Kobalt and BMG’s data on the songs they own with the others match each other?” asks one PRO executive. “Good luck to NMPA/RIAA in trying to get that right and then add in data from the other 60,000 music publishers without the PROs.”
Somehow, all of the publishers, labels and PROs will have to join forces to create a comprehensive database. That, at least, is one point on which most executives, even those involved in the current infighting, seem to agree.