The Canadian performance rights society SOCAN (essentially the Canadian version of ASCAP, BMI and SESAC) has announced the purchase of Audiam, a private company that specialized in representing composers trying to maximize their music rights collections – both for performance rights and mechanical royalties – worldwide. Audiam also claims to provide a comprehensive database of rightsholders to both musical compositions and sound recordings – a valuable commodity in and of itself, as there is no uniform public registry for such rights. This follows SOCAN’s purchase of MediaNet, a company that specializes in obtaining clearances for music (including sound or master recordings – the musical compositions that SOCAN has traditionally licensed as recorded by a particular singer or band) so as to provide those rights to digital music stores or services, eliminating the need for these services to separately negotiate terms with sound recording performance rights holders. This consolidation under one roof of public performance and mechanical rights to musical compositions, along with rights to sound recordings, promises at some point in the future, a one-stop shop where music users (including digital music services like Spotify or Deezer, and perhaps even smaller music users like podcasters) can obtain all the rights that they need to use music in their businesses.
This same goal seems to be the motivation behind SESAC’s acquisition in recent years of the Harry Fox Agency (which also handles mechanical licensing – the rights to make reproductions of musical compositions needed for downloads and even on-demand streams) and Rumblefish, a digital service providing clearances for the use of sound recordings in videos, commercials and for other purposes. This same drive to consolidate music licensing services was also, to some degree, behind the push for revisions to the ASCAP and BMI antitrust consent decrees, as ASCAP and BMI wanted the clear right to license mechanical rights as well as the public performance rights they now provide. Even the publisher withdrawals from ASCAP and BMI by major publishing companies that are affiliated with major record labels may have had similar ideas behind them as some have speculated that these major music companies could bundle the licensing of sound recordings and musical compositions (see our article here where we made the same observation).
The idea of a one-stop shop, where a music user can go to obtain all the rights necessary to use a piece of recorded music in a digital music service – whether it be by an individual trying to obtain the rights to use a piece of music in a YouTube video or a podcast, or a company like a Spotify, Apple, Amazon or Pandora trying to use music on a broader scale in some sort of digital on-demand music service – seems facially attractive. Instead of having to deal with multiple rights holders – a PRO for performance rights, Harry Fox or a private company to clear the mechanical rights from the publishers, and the record label (and in some cases the artists themselves) to obtain rights to the sound recording – being able to get all the rights in one place would seem attractive.
But issues arise. One, of course, is pricing. ASCAP and BMI, and to some degree SESAC, are all subject to antitrust consent decrees to limit the degree to which they can package musical compositions together and exploit their broad catalogs of must-have music to charge what are feared to be monopoly prices. Similar regulatory oversight over “tariffs” charged by this type of licensing organization applies in Canada and many other jurisdictions. The ability of any of these one-stop shops, which could potentially have hundreds of thousands of compositions and recordings in their catalogs, to achieve the same anti-competitive pricing is a concern of many music users.
In addition, there is the question of how easily all of the pieces can be put together to provide the kind of seamless music services that any music user would want. The pieces of SOCAN – Canadian public performance rights, mechanical rights to the catalog of music held by Audium, and the large but still limited universe of sound recordings cleared by MediaNet – do not necessarily give services the near universal access to music to which most music services aspire. The same goes for the collection of brands assembled by SESAC. Perhaps these are but first steps to true one-stop shops, and we will see more progress toward universal, one-stop licensing of large catalogs of music develop over time.
But, at the same time, there is also a move toward fragmentation of music rights, seemingly making the potential for a universal one-stop shop for music rights harder to imagine. For instance, publishers holding the rights to major songwriters works have been pulling out of ASCAP and BMI to license their work through other organizations. For instance, GMR, the PRO founded by Irving Azoff, the well-known music executive and artist manager, has already obtained the rights to license compositions by artists including the Eagles, John Lennon, Pete Townshend and Pharrell Williams (as well as many other major songwriters – see the list of artists who have performed works of songwriters who GMR claims to represent, here). GMR has already been approaching businesses in the US asking for performance royalties for the use of their music in stores, bars, restaurants and similar establishments. While, as far as I know, they have not yet approached individual radio and TV stations or digital music services (except for YouTube, with whom their dispute was well-publicized, see for instance the trade press report here), that is certainly coming (see our article here about the upcoming publishing royalty issues for broadcasters). There are other organizations worldwide looking at similar business models. Publisher withdrawals from ASCAP and BMI, and the rise of other rights organizations, promise more complications in reaching a unified one-stop shop for the clearance of music rights.
So what does this all mean? It seems to mean that traditional players in the music industry are looking to expand their services to better provide a broader array of music services to the music industry – particularly the worldwide digital music industry. Will these moves simplify or complicate licensing? Only time will tell, and with the tides seemingly pulling in all directions, it may take some time to sort it all out.