Oxenford: Individual rights deals may eventually set precedent for blanket licenses

Industry attorney and rights/royalties authority David Oxenford is suggesting the system of simple, one-stop music licensing that has enabled services to easily pay for the use of copyright music, and rights-holders to earn on their creations, may be breaking down.

Last week news broke (here) that webcaster Pandora's bill to perform compositions held by Sony/ATV will go up 25%. Pandora's agreement with ASCAP and BMI no longer covers Sony/ATV work, and they must settle separately -- without the oversight of a rate court. Some fear this is just the first domino falling, soon to be followed by other publishing groups breaking away from the Performance Rights Organizations (PROs) ASCAP and BMI, which aggregate rights and rightsholders (making the licensing of music simpler for both copyright owners and users). See our followup to the Sony/ATV and Pandora news here.

Oxenford joins those warning that if more large publishing groups withdraw from the PROs, the process gets harder for music users -- with no rate court oversight (to regulate rates).

Keep in mind some owners of sound recording copyrights have peeled away from the collective -- in this case, SoundExchange. In those cases, labels or label groups like Big Machine have made separate deals with broadcasters that decrease webcasting royalties.

But, if this fragmenting of rightsholders continues and accelerates, life could become more complex and expensive for smaller players -- both smaller services and smaller rightsholders. As Oxenford points out, smaller services don't have the manpower to negotiate all they agreements necessary for a comprehensive service; smaller publishers may be left relying on the PROs, and with fewer members, admin costs as a percentage of earnings will rise.

"Note, in some cases, any advantages of the larger players may fade away, as marketplace agreements can often be the best evidence of what the royalties set by a rate court or the CRB should be, in which case these directly licensed rates will end up being extended to all players in the industry," Oxenford writes.

Given the direct deals for sound recording and publishing rates so far, "we might see higher rates for music publishing, but lower rates for sound recordings over time."

Read his entire blog post at Broadcast Law Blog here.