UMP leak heats up the digital pie debate

July 2015

Music publishing, internet


As the U.S. press said that Spotify’s total payments to rights holders rose by another $300 million in the first quarter of 2015, news also broke of a leaked UMPG internal email and in MIDEM German music publishers set out their thoughts on how the digital pie should be shared. Billboard revealed that Spotify has now paid out $3 billion to music rights owners since launching in 2008, $2 billion of which has come in since the beginning of 2014, but the big news was the boss of Universal Music Publishing boss, Jody Gerson, who was the centre of attention after a confidential internal memo was leaked in which Gerson expresses her annoyance over “self-interested parties” that are stoking worries amongst songwriters, particularly when it comes to to unallocated ‘breakage income’ from big advances.
In her email Gerson said this:
Over the past several months I’ve read or heard comments by self-interested parties that aim to mislead our songwriting community and ultimately devalue songs.

These misrepresentations work against the mutual best interests of both songwriters and publishers. To paraphrase that old saying, sunlight is the best disinfectant.

So let’s shed some light on the facts and make sure that all of our employees and songwriters – and the greater songwriting community – know where we stand on direct performance licensing.

One thing we can all agree on: songwriters are at the heart of what we do, and at UMPG we put them first.

Every day, we work to protect their rights and do all we can to deliver the greatest value for them. I’ve stood behind this my entire career and will continue to make it a fundamental cornerstone of the values of UMPG.

Our tireless efforts on consent decree reform are consistent with and an extension of the following principles that are – and will remain – central to the way we at UMPG conduct ourselves, including:

  1. We will adhere to a standard of transparency with our performance rights licenses by sharing with our songwriters terms and all monies under such licenses, whether royalties, unearned advances, or flat payments;
  2. We will not apply the writer’s share of performance income against unrecouped songwriter advance balances; in fact, at a songwriter’s election, we will direct licensees to pay the writer’s share of performance income directly to the songwriter’s performance rights organization of choice;
  3. To the extent a songwriter is a member of an ex-US performance rights society, we will not license such songwriter’s performance rights unless authorized to do so by the songwriter or society concerned.

As we move into a world of direct performance rights licensing, we need to continue to listen to our songwriters and respect any concerns or questions raised by their representatives and songwriter trade organizations. We need to ensure that they are secure in the knowledge that when we act, we act to serve their best interests.

Put simply: in everything we do, we put the interests of songwriters first. Period. So let’s work together and make a concerted effort to not only implement our principles and our commitment to songwriters, but to effectively communicate them, as well.

I am so proud that we are leading the way for the industry in maintaining the value of copyrights and upholding the highest standards of fairness for songwriters and publishers.

I sincerely thank you for all you do to make UMPG great.



But beyond who gets paid what FROM song writing income, the bigger story is what that income actually is.
Music Business World have uncovered court filings that revealed the deals secured by UMPG and Sony/ATV when they were permitted to directly license Pandora. At one point, UMP secured 8.5% of gross annual revenue for its industry-wide catalogue – or an adjusted rate of 3.83% for repertoire normally associated with BMI. UMPG, Sony/ATV have since been forced by US consent decrees to stop direct negotiations with Pandora and instead use collective bargaining through BMI and/or ASCAP. When music rights owners license through their collecting societies the likes of the US rate courts or the UK’s Copyright Tribunal are there to prevent abuse by rights owners. Whilst BMI last month managed to force its payment from Pandora up from 1.75% of gross annual revenue to 2.5%, the new revelations go a long way to explain why music publishers and songwriters are frustrated with the royalty rates they are now receiving from key digital services via collective licensing
The Department of Justice in the U.S. has been busying reviewing the collective licensing rules, and the publishers are hopeful that the consent decrees will be rewritten later this year to allow them to withdraw just digital rights from collective licensing. Regulations in Europe, which are a little more flexible, already allow publishers to license digital direct while still dealing with other licensee types through the society system.
Finally, German music publishers called for better digital royalties at MIDEM conference in France. Germany’s music publishing trade group Deutscher Musikverleger-Verband (DMV) led calls from the publishing and songwriting community for an increase in the royalties being paid to song right owners by digital services. The songwriting community has become increasingly vocal about the royalties they are receiving from the booming streaming sector, which they say too low and songwriters and publishers alike have criticised the fact that both the digital platforms and the record labels are earning considerably more from the streaming market than the song rights owners. The DMV President said: “We want to form an international movement so that authors are paid what they deserve and are no longer exploited, and that the multinational companies of music streaming stop making a fortune while paying the creative authors next to nothing”. Its now generally accepted that the currently loss making music platforms are taking something like 30% of revenues from streaming, record companies take the majority of the income generated by streaming (55-60%), making it impossible for the DSPs to increase the revenue share it provides to the songwriters and publishers, which are currently approximately 10-15%.  The DVM President, Dr Rolf Budde, reinforced the position of U.S. publishers saying “The reason for this is that labels can choose whether to license music to music services” and “Authors and music publishers are dependent on the collecting societies. In Germany, for example, GEMA has to license at certain rates because of its monopoly status in the market”.

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