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Sony vs Apple

Steve GordonGuest Blogger: Steve Gordon is the author of The Future of the Music Business. Below is an excerpt from his blog The Future of the Music Business.

I recently published an article that the the blog, Digital Music News, titled “Songwriters May Never See a Dime from Apple’s New Music Service. . .”  To incorporate my thoughts after reading the comments on  the article, I revised the article  to demonstrate that, while songwriters may continue to receive royalties from ASCAP and BMI for Apple’s new service, it is likely that they will see much less money than they have in the past.

If Apple wants to launch their much anticipated, Pandora-like music service, they must negotiate directly with Sony/ATV for public performance rights.  That’s the word on the street, and if true, could prove to be a dangerous turn of events.  The reason is that, until recently, performing rights organizations—ASCAP, BMI, and SESAC (the “PROs”)— offered blanket licenses on behalf of almost all the publishers, including all the majors.  Sony/ATV’s plan to license its music directly to Apple dramatically changes that practice, with severely negative repercussions to follow for songwriters.

So why is Sony/ATV—now the largest publisher after taking over the administration of EMI Music Publishing—doing this?  After chatting with chairman Marty Bandier, the New York Times reported that the decision is “simply an effort to obtain a higher royalty rate for [Sony/ATV] writers.”  Bandier was quoted as saying, “This wasn’t us not wanting the service.  We want the service.  It’s like oxygen.  We just want to be paid fairly, no different than the NFL refs.”

The truth, though, is that 1. songwriters signed to Sony/ATV and EMI Music Publishing will probably may never see a dime from the monies that Sony/ATV receives from Apple, and 2. The monies that they receive from the PROs will be dramatically reduced. Here’s why:

I. Publishers Generally Don’t Share Negotiated Advances

Individual music publishing contracts vary depending on the bargaining power of individual writers or the negotiating skills of their lawyers (among other reasons), but almost all agreements have a provision similar to this one:

“In no event shall composer be entitled to share in any advance payments, guarantee payments or minimum royalty payments which Publisher may receive in connection with any sub publishing agreement, collection agreement, licensing agreement or other agreements covering   the Composition.”

Keep reading Steve Gordon’s article at his blog, The Future of the Music Business

The Future of the Music Business, Third Edition

The Future of the Music Business provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video.

The Comprehensive Guide to Reclaiming Your Old Masters…

Steve Gordon

Guest Blogger: Steve Gordon, author of The Future of the Music Business (Hal Leonard Books)

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By now, you’ve probably heard that “termination rights” in older contracts may allow artists to regain control over their valuable masters. This would apply to works created over 35 years ago, though lots of fine print, legal battles, and application details apply. With that in mind, here’s a complete overview of the legal issue in question, its current status, and specific steps that rights holders should take if they want to transfer ownership of these masters to themselves.  It was written for Digital Music News by music industry attorney Steve Gordon, with assistance from Nari Roye, Esq.

Just remember: your label doesn’t want you reading this!

‘Legacy’ recordings, or reissues from the vast catalogs of Sony, EMI, Warner and Universal and their associated labels such as Epic, Columbia, Capitol, and Atlantic, are still a huge business for major labels.  As of the first half of 2011, sales of catalog music accounted for 47% of all album sales and 60% of track salesaccording to Billboard!  Spotify’s top 50 albums contain many compilations with older titles including The Essential Michael Jackson,  Fleetwood Mac’s Rumours100 Hits of the ’80s, and The Essential Journey.  But most of the income from these sales accrues to the benefit of the record companies, rather than the artists or their estates, because the labels only have to pay royalties after fully recouping production and marketing costs, and recoupment occurs at the artist’s royalty rate.

This means that the labels are making money even if the artist has not earned enough to repay the labels’ expenses. Sales of legacy records is a huge factor in keeping the majors afloat as they continue to suffer from competition from free music made possible by illicit websites. The demographic for legacy recordings tends to consist of older fans who are not as adept at using the internet to collect free music downloads or are more apprehensive of the legal consequences than their children.

Keep reading on Digital Music News.

STEVE GORDON AND THE FUTURE OF THE MUSIC BUSINESS, THIRD EDITION

New technologies are revolutionizing the music business. While these changes may be smashing traditional business models and creating havoc among the major record companies, they are also providing new opportunities for unsigned artists, independent labels, and music business entrepreneurs.

The Future of the Music Business provides a legal and business road map for success in today’s music business by setting forth a comprehensive summary of the rules pertaining to the traditional music business, including music licensing, as well as the laws governing online distribution of music and video. Available for purchase here.

STEVE GORDON operates a music clearance service and is an educator on entertainment and copyright law. The recipient of two Fulbright Scholarships, Gordon has taught at Tel Aviv University in Israel and Bocconi University in Milan, Italy, and has also served as adjunct professor at the New School in New York City. He has lectured at many schools and universities, including Juilliard, Wharton, and Columbia University.

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