Songwriters, Music Publishers Fear ‘Nightmare’ Scenarios After New Licensing Rulings
A recent decision by the United States Department of Justice threatens to have a profound impact on songwriters' royalties — and their ability to collaborate.
Billboard offers some insight into the DOJ ruling, which revolves around the consent decree — the agreement that lays out the rules between rights holders and potential licensors. For the last two years, an assortment of major publishers and performing rights organizations (PROs) have worked to secure an amendment making it easier to withdraw from blanket digital licenses, but their hopes were dashed by the DOJ's June 29 ruling.
Additionally, Billboard reports that "fractionalized licensing" is being done away with — which means, in slightly plainer English, that any publisher with a stake in a song has the right to enter into a licensing agreement on behalf of all rights holders, as long as they're all accounted for and paid accordingly.
It all might sound like a lot of babble to anyone who isn't versed in the inner workings of the music business or licensing intellectual property, but it has potentially major implications. In theory, it makes it easier for digital music services to obtain licensing agreements for works that are tied up between multiple rights holders, but in practice, the PROs fear it'll allow those services to "rate-shop," using the decree as a wedge to seek out the lowest possible royalties and drive down payments across the board.
Aside from hurting songwriters' royalty income, Billboard's report notes that the DOJ's decision could increase the fees they face by leaving them vulnerable to double-dipping administrative costs — and more onerous still, it could ultimately discourage songwriting collaborations between artists represented by different PROs.
"It will be a nightmare for every publisher and songwriter in the world," one publishing executive told the trade. "It will up-end a successful business that has been running for 100 years. The DOJ has no idea and it's clear that they don’t care, but the fallout will be immense."
In the short term, consumers could benefit through increased access to music that's been held out of the digital arena for one reason or another, but over the long run, the picture painted by the report is decidedly less rosy. "Either way," concludes the report, "this deeply complicated situation is likely to become even more so."
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