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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.