"PROFITS BEGIN WITH A LICENSE: NAVIGATING EURO LICENSING"

Susan Butler interviewed 50+ executives and lawyers who work every week on music publishing licensing deals in Europe for major & indie music publishers, major & indie record companies, digital & mobile music services and collecting societies plus lawyers for the European government.

Promised anonymity to encourage frank discussions, their experiences, plus Susan's legal and investigative reporting expertise, provide one-of-a-kind legal insight and insiders' views in EASY TO UNDERSTAND language for you to use in business.

Read the introduction, table of contents, unsolicited responses from executives who purchased the white paper, and pricing information below.

© 2010 Butler Business & Media LLC. All Rights Reserved.

INTRODUCTION

The business of music that was built on generating enough revenues from hit songs and back catalogs to support thousands of small- and medium-sized commercial enterprises, generations of authors and composers, and strong national economies is at risk.

Responses to the repeated involvement of the European Union (EU) government, in such an uncoordinated and piecemeal fashion, in the process of licensing music publishing rights for online uses has severely disrupted the marketplace. As a result, it is likely that today there are not even one dozen people working in licensing departments around the world who can accurately advise either a digital or mobile service provider, a record company (label) or a music publisher on how music publishing rights can be properly licensed throughout the EU for digital and mobile uses of recorded music.

This means that:

• Companies trying to deliver or use properly-licensed songs in Europe over the Internet or via wireless transmissions are likely infringing some copyrights;
• These companies’ payments for licenses are not accurately flowing through the network of collecting societies to right holders;
• The process of clearing publishing rights for special Webcast events or for European record companies’ own promotional Web sites is cost-prohibitive for nearly every company;
• Some societies are hindering the potential success of digital services by holding up, or over-complicating, the licensing process;
• Publishers are not able to accurately verify licenses or track royalties for all of their music; and
• Some subpublishers and societies fear they will be run out of business under the changes, perhaps threatening cultural diversity, the ability to offer different genres of music and the capability to adequately protect copyrights in their territories.

And as the European Commission’s (EC) various units that initiate proposed legislation and enforce copyright, commercial and competition regulations are meeting with some select ‘stakeholders’ trying to sort out the marketplace, some Members of the European Parliament are jumping into the mix. They are initiating countless ‘studies’ that tax the manual resources of businesses and are threatening to create an entirely new copyright law for the whole of Europe (and perhaps create a mandatory licensing scheme) that would likely hold up the market for many more years amid legal challenges.

Still, music companies, digital service providers and collecting societies have businesses to operate. They face enormous digital piracy as they restructure or build their companies, try to get music licensed and try to ensure they are accurately counting the revenues due to the ultimate right holders.

In order to help sort through the commercial and policy mess and speed the business process along, this report:

• Provides some background on the contracts and government activities that created the current licensing state of music publishing rights in Europe;
• Sets aside the hyperbole made by all stakeholders over the past five years;
• Helps illuminate what is really going on today during the licensing process in Europe;
• Walks the stakeholders through the current licensing process so they can be forearmed with information on what hurdles they must be prepared to overcome and what right holders and societies must resolve;
• Points out specific issues to publishers so they can more effectively track their music use and royalties as well as negotiate or refine subpublishing or administration agreements;
• Explains some proposed solutions that may streamline the process in the years ahead; and
• Provides some direct contact information to license publishing rights from many of the collecting societies.

This report is the culmination of my one year of investigative journalism specifically for this report, five years of journalistic coverage of the relevant government and business activities, legal and business analysis of the results and a ‘how to’ compilation of this information.

My legal and business analysis for this report is based on my 21 years practicing law representing creators (Grammy-winning recording artists, an Oscar-winning film composer, songwriters, recording engineers and producers, book authors, photographers) and companies (independent record companies and music publishers, Web technology developers, Web site designers and marketers, live event producers, recording studios, documentary filmmakers) for copyright-based creation, license and distribution agreements throughout the world (North America, South America, Europe, Asia).

My journalistic investigation over the past year for this report used this knowledge and experience in order to gain the trust of my sources for in-depth conversations and to get to the heart of the issues during our discussions.

“There are absolutely no winners for the current set-up,” says one source. “These guys [with the European Commission] are dealing in theory, not practice. It is all so academic. Unless you’ve been involved and trying to do this in practice, you do not get a full appreciation of what goes on. You need to know what’s involved not just from the licensing perspective, but from the reporting [of music use and royalties] perspective, to have the full picture.”

Indeed. So I interviewed more than 50 senior executives and senior lawyers who, every week, work on licensing deals throughout Europe involving rights in recorded compositions for online and mobile phone uses. These sources were with major or independent music publishers; major or independent record labels; digital or mobile music services; or collecting societies. I also spoke with senior lawyers for the EU government.

I promised them all anonymity to encourage frank discussions, so there are no identities or source references to their statements in this report. When quotation marks appear, the statement is from one of these sources.

But do not assume that a statement which sounds like it would come from a particular stakeholder actually came from that stakeholder. On some seemingly cut-and-dried issues, often a source surprisingly sounded like another stakeholder—sources with digital or mobile services at times sounded like a publisher or collecting society source, publishers sounded like a service or a society or a label source, label sources sounded like publishers or services or societies, and so on.

As a result, please read the quoted statements as if they could have come from any stakeholder.

UNSOLICITED RESPONSE FROM SOME OF THE FIRST PURCHASERS:

"I must say, you've outdone yourself. Congratulations on such a well written and well researched paper. It will set a new standard in the industry." Peter Primont, CEO, Cherry Lane Music Publishing (now part of BMG Rights Management)

"'Remarkable' doesn't do it justice." Chief Executive of a collecting society.

TABLE OF CONTENTS (partial)

• THE FUNDAMENTALS: RIGHTS & WHY WE’RE HERE
  
                  Copyrights in a Composition
  
                  Songwriter & Publisher Contract Rights
  
                                  The Subpublishing Network
  
                                  Anglo-American Rights
  
                                  Continental European Rights
  
                  Collecting Society Network
  
                  Licensing in the Digital Past & Physical Present
  
                  The 2005 EC Recommendation
  
                  The 2008 EC CISAC Decision
  
                  The Conflict
  
  TODAY’S ROADBLOCKS & DETOURS
  
  LICENSING RIGHTS
  
                  Gathering Songs for Services
  
                  Which Songs, Which Rights, Get Where?
  
                                  Will All Rights Be Cleared?
  
                                  Clearance Strategy
  
                                  Which Songs Covered?
  
                                  Fragmenting Rights
  
                                  Where to Go for Licenses
  
                  Pricing Concepts
  
                  Negotiations & Contract Terms
  
  PUBLISHERS TAKING MORE CONTROL
  
  SOCIETY TRANSFORMATION
  
                  The New Network
  
                  Preserving Culture
  
                  Competing Sisters
  
  BETTER WAYS AHEAD?
  
                  Copyright Holder Choice
  
                  Compulsory License
  
                  Collective Licensing
  
                  Portal, Trading Platform & Global Database
  
  CONCLUSION
  
  APPENDIX (Selection of Past MUSIC CONFIDENTIAL Reports)
  
                  REPORTING DIGITAL CENTS (DDEX)
  
                  TRACKING TECH DEVELOPMENTS: FASTTRACK
  
                  AN INSIDE LOOK AT ARMONIA
  
                  DEVELOPING TECH SOLUTIONS: ICE
  
                  CISAC: CREATING STANDARDS
  
                  PAYING THE RIGHT PEOPLE THE RIGHT AMOUNT: METADATA
  
                  COLLECTING SOCIETIES: INVESTING WHOSE MONEY?

INQUIRE ON PRICES* at MusicConf@gmail.com *limited availability

*NOTE ON PRICING: The White Paper has variable pricing based on the type and size of company ordering it, just as a music right holder prices a synch license for a particular song based on the type of use in a motion picture (featured or background) and on the budget for the project. The White Paper is 57 pages plus an appendix of 34 pages, and it is based on nearly 400 hours of expert-level work. Companies that are primarily involved with licensing and collections benefit the most from this information so are more akin to a featured music use, while companies or firms that incidentally license or advise on licensing issues are more akin to a background music use. Prices are mostly in the $500 to $1500 per company range.