The Digital Rights Bundle: Real Progress for Songwriters and Publishers?

Posted in News on December 13, 2004
by Del Bryant
President and CEO, BMI

The commentary below by BMI President and CEO Del Bryant appeared in the December 11 issue of Billboard. It outlines BMI's posture on the important issues surrounding royalties on ringtones and ringbacks.

In April of 2005 BMI will mark the tenth anniversary of the music industry's first license for the digital performance of music over the internet. During those 10 years, BMI has collected over ten million dollars in license fees for digital media, including a multiplicity of uses on the internet. We have distributed over two million dollars in royalties for ringtones alone over the past two years and the growth in this arena is exponential. A new plan to bundle digital rights may have the unintended effect of putting that royalty stream at risk.

BMI and its fellow performing right organizations, and their digital licensing customers have created an orderly marketplace. In fact, a performing right license is the easiest for music users to obtain. A customer has only to ask BMI or ASCAP for a license and one will be automatically granted, pursuant to their consent decrees. A wide spectrum of lawmakers and policy experts, from the Cato Institute to the Electronic Frontier Foundation, to members of Congress and the U.S. Copyright Office have endorsed the collective administration of rights and the blanket license as used by the Performing Rights Organizations as the preferred business model for licensing in the digital age.

Last year, BMI's digital licensing revenues grew by more than 70%. We have signed marketplace-driven long-term agreements for more than 3,700 outlets for digital music including more than 200 ringtone and mobile entertainment providers. Each quarter BMI processes hundreds of millions of digital performances and reports internet and ringtone royalties with transparency to our writers and publishers. In this fast-growing marketplace, BMI, a non-profit making entity, has become a paradigm of the trusted broker creating a marketplace with a state-of the art management system at a very low administrative cost, and a high level of customer service. Our sister collecting societies in Europe and Asia, where the ringtone market is more developed, have paid out hundreds of millions of dollars to songwriters and copyright owners over the past several years.

We understand the challenges of building the market for digital copyrights. While our efforts have focused on establishing an independent value for the performing right, we have also supported our colleagues in music publishing and recorded music as they meet the unique challenge of licensing the mechanical, synchronization and master recording rights. We applaud efforts to simplify and accelerate the licensing of recordings for master ringtones and ringbacks, provided the rights and income of writers and publishers are not compromised.

A recent Billboard commentary announcing a new initiative in this regard was silent on the role of the performing right in their licensing plan. The initiative, however, raises fundamental questions: if performing rights are included, how are they valued in the bundles, and how will the performing right royalties be accounted for and paid to songwriters and music publishers? Are we looking at a business model that circumvents performing rights organizations such as BMI and ASCAP? If so, this may not be real progress for songwriters, composers and publishers.

If the performing right is devalued or negated, then songwriters and composers who rely on their performing right royalties may find their income reduced, or eliminated, in some of the most important future markets for the use of their works. The result: the multiple and distinct income streams that have benefited songwriters, composers, music publishers, recording artists and labels alike are put in jeopardy and a viable marketplace for administration and licensing of music copyrights may be permanently disrupted.

The agreement proposed in the Billboard commentary, and others recently announced, may not include the bundling of the performing right. But, if it is the intention to license the performing right along with other rights, which is an available option, we would certainly hope that the level of royalties flowing to songwriters and music publishers for the performing right would at least match what BMI and other performing right organizations have successfully established over the past several years.

Today, the performing right is alive and well and working to the benefit of songwriters, composers and music publishers in the digital arena. In many cases, it is their economic lifeblood. Let's not tinker with something that's working so well, for so many.


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