Sony/ATV (ATV owned by the Estate of Michael Jackson) threatens withdrawal from ASCAP, BMI

Story by the Tennessean
Written by Nate Rau
Sony/ATV history: http://kirktanter.blogspot.com/search?q=sony%2FATV

Sony/ATV Music Publishing (ATV owned by the Estate of Michael Jackson - http://kirktanter.blogspot.com/search?q=sony%2FATV) will explore withdrawing all of its licensing rights from ASCAP and BMI if federal regulators don't allow for the partial withdrawal of its digital rights from the nation's largest performance rights organizations.

In a letter to its songwriters last week, the publishing giant outlined steps it is taking to withdraw just its digital rights from ASCAP and BMI so that it can strike more favorable licensing deals with companies like Pandora, which offer streaming access to music.

Last year, Sony/ATV tried to withdraw some of its digital performance rights from ASCAP and BMI, but federal judges ruled that Sony/ATV and all publishers must continue all-or-nothing licensing relationships with the performance rights organizations.

Sony/ATV plans to appeal those federal court rulings in order to allow for partial withdrawal of rights. The company also is working with the Department of Justice to revise the consent decrees that govern how BMI and ASCAP operate.

If both of those options fail, then Sony/ATV will consider withdrawing all of its rights, according to last week's letter.

"It is our hope that the DOJ and appeals process will recognize the benefits and fairness produced by partial withdrawl of performance rights," Sony/ATV Chairman and CEO Martin Bandier wrote in his July 9 letter. "This would enable us to remove only those rights that we believe we can more efficiently license ourselves (e.g. digital), and keep other rights with ASCP, BMI or others where collective licensing (e.g. for bars, restaurants and venues) makes sense for the writers, publishers and licensees.

"That being said, because the DOJ and legal process is not fully within our control, we may have no alternative but to take all of our rights out of ASCAP and BMI."

For decades, ASCAP and BMI have managed public performance rights for publishing companies by collecting royalty payments and paying songwriters after a song is played on the radio or in a bar. But as technology revolutionized how consumers listen to music, publishing companies have argued that new media companies such as Pandora don't pay fair rates to songwriters and publishers.

Since the federal court rulings, the U.S. Department of Justice has announced that it is reviewing both consent decrees for the first time in decades, giving publishers and songwriters hope that an update to the document would lead to more favorable digital rates.

"Given the resulting requirement that they must consider whether they remain 'all in' or 'all out,' it is understandable that publishers would be reviewing all possible options for their songwriters," BMI Senior Vice President and General Counsel Stuart Rosen said. "It is a shame, however, that major publishers like Sony/ATV would have to leave BMI in order to explore the possibility of free-market negotiations, all because of an antiquated regulatory framework."

Text of Bandier's letter:

Dear Songwriters and Publishers,

I'm reaching out to share some important news with you about our rapidly changing industry and what we're doing about it. As you may recall, last year I wrote to you to announce that Sony/ATV had taken the lead in protecting your rights in the digital space by withdrawing certain digital performance rights from ASCAP and BMI.

There were numerous reasons for this withdrawal. One was that ASCAP and BMI operate under antiquated antitrust consent decrees which dictate how they negotiate and grant licenses. As a result, the performance rights licensing process is often lengthy, expensive and results in artificially deflated rates.

By withdrawing certain rights and entering into direct deals, the process becomes more efficient, less costly and, ultimately, more transparent and beneficial for everyone.Unfortunately, in two legal decisions at the end of last year, the Federal Courts ruled that music publishers could not selectively withdraw public performance rights from ASCAP and BMI. In other words, a publisher had to keep all of these rights (including digital) with the two performing rights societies, or leave altogether.

As a result, all of our performance rights currently remain with ASCAP and BMI.

Like you, we passionately want digital music services to be successful as they provide fantastic new ways for music lovers to listen to music and have the potential to generate significant new revenues for all of us. However, because the current system results in what we believe to be inequitable royalty rates, the amount being paid to songwriters is unacceptably low and in no way reflects the vital contribution you make to the success of these services.

To overcome the challenges of the present legislative and regulatory system, we are aggressively pursuing the following activities:

Working on your behalf with the U.S Department of Justice to revise the consent decrees and allow partial withdrawal of performance rights.
Appealing the rate court decisions so that partial withdrawals are permitted.

Exploring other options, including the potential complete withdrawal of all rights from ASCAP and BMI.

It is our hope that the DOJ and appeals process will recognize the benefits and fairness produced by partial withdrawals of performance rights. This would enable us to remove only those rights that we believe we can more efficiently license ourselves (e.g. digital), and keep other rights with ASCAP, BMI or others where collective licensing (e.g. for bars, restaurants and venues) makes sense for the writers, publishers and licensees.

That being said, because the DOJ and legal process is not fully within our control, we may have no alternative but to take all of our rights out of ASCAP and BMI. We recognize that full withdrawal is a significant step and we are carefully looking at all of the issues associated with this, including speaking with potential partners to assist us.All of us at Sony/ATV take our responsibility as your music publisher very seriously. We know we face some difficult decisions ahead that will impact our business for years to come.

We are optimistic that we will overcome these issues and set the stage for a better future for you, our songwriters. As the streaming market continues to grow rapidly, we are excited about all of the opportunities that lie ahead. We will be sure to keep you updated as important and significant events develop.

Sincerely,

Martin Bandier

Chairman & CEO

Sony/ATV Music Publishing