BMI publishers are exploring their options following last December’s rate court ruling stating publishers that withdrew their catalog solely for digital licensing on Jan. 1, 2013 are no longer part of any licensing deals that expire as of Jan. 1 2014. They are faced with two options: stay with BMI and hope the DOJ is willing to amend its consent decree or negotiate voluntary licenses at a market rate with music services. While the first option isn’t a solution to below-market royalty rates, the second option will drastically change the face of music licensing, which has traditionally been done via copyright collectives.
If publishers opt to leave BMI completely, there will be several far-reaching consequences, namely a severe reduction to BMI’s already legally restricted bargaining position and no existing general licensing framework for publishers to collect from smaller music users like bars, stores and venues. Publishers are considering a few contingencies to handle general licensing should they choose to withdraw completely from BMI. One would be to attempt to have BMI or ASCAP handle administration, which it doesn’t appear BMI is willing to do, or turning to another licensing entity that isn’t confined to a consent decree, like SESAC, HFA or Music Reports.
Pandora experienced a setback in its efforts to lower the royalty rate it pays to songwriters and publishers. The FCC blocked the Internet radio giant from transferring the ownership of a broadcasting license from KKMZ, the South Dakota radio station it acquired last June, because it failed to adequately comply with alien ownership limits (it couldn’t prove Pandora is at least 75% owned by US citizens). If Pandora is successful, this move would lower ASCAP and BMI’s combined rates from 3.6% to 3.4% of revenue, significantly lower than the pro-rated 10% paid by iTunes Radio.
Long-anticipated subscription music service Beats Music will launch on January 21st. The service recruited Nine Inch Nails frontman Trent Reznor as its Chief Creative Officer as part of its initiative to be the artist-friendly streaming service. Beats Music’s purely subscription based service ($9.99/mo subscription service, $14.99/mo family plan for AT&T customers) is expected to result in higher royalty rates than its competitors due to higher revenue per user. Beats hasn’t yet released details about its royalty payouts, but this will surely be public knowledge after its first distribution.