Non-exclusivity, direct licensing and the granting of digital composition rights

Guest TMV writer Rick Riccobono is 30 year music business verteran with a background in music publishing and Author’s rights, he has been on the front line of international digital rights licensing for a series of on-line and mobile ventures including Napster, SK Wireless, eMusic, Vivendi Universal, Sun Microsystems, New Media Law and Swedish Composition Rights Collection Society-STIM. He is responsible for the first of its kind all-in digital rights licenses for ad supported on-line and mobile digital music service providers, mobile karaoke and the “ring back ” or “caller” tone.

The granting of digital composition rights via non-exclusive agreements could carry with it benefits that pave the way for a more dynamic and market driven negotiating platform in Europe. Blanket and compulsory licensing could take a back seat to case by case content licensing giving the rights owner options and a negotiating flexibility rarely available to them in the past.

The availability of licensing options may be timely. With the UK Government Hargreaves’ report coming and seemingly slanted toward the user (Google and other major content users might be applying pressure on the government to step in and make rights licensing easier and of course more economical – this may not be exclusively about ease of licensing but rather about the devaluation of copyright – I’ve seen the tactic many times before when I was an Officer at BMI), the time may have come for rights owners and administrators to start controlling their own negotiating and rights licensing financial destiny-at least in the on-line and mobile world.

The Government (and Google) will focus on the collectives and the difficulty working with them and be pushing for some compromise. Unfortunately compromise by its nature in these cases usually means a reduction in published rates and the establishment of a compulsory license. The exclusive relationship between the rights owner and the collectives gives the powerful licensing hopefuls of the world a target to attack and scrutinize in a self serving manner. The collectives have an inherent problem when negotiating rights licenses. Rights administrators and owners represent the Author’s works; the licensee in most cases has the direct relationship with the consumer who in turn votes. This could be a mismatch. Less compulsory licensing mechanisms and more flexibility for the rights owner to negotiate in a market driven environment is one of the only ways to prevent unfavorable legislation and judgments. A published rate may be fine as a floor in some circumstances but not all. A powerful user will often take the published rate as a ceiling and work at eroding it.

When the major music publishers pulled digital composition mechanical rights from composition rights societies in Europe it opened the door for the entire music publishing community to do the same. Unlike the US whereby the relationship between the music publisher and the Performing Rights Societies was recently verified as non-exclusive (ASCAP vs. DMX), the international group of collectives maintains an exclusive licensing relationship with their members. With some rights owners reserving the right to direct license the exclusive relationship may be breaking down. This might be a good thing for composition rights owners and administrators.

US Indies have the option to grant rights in Europe:

1. Through direct membership in a local composition rights Society.
2. Through the network of European sub-publishers who are members of the local composition rights Society.
3. To one or more of the major music publishers’ pan-European licensing hubs who will license content on their behalf

And soon:

4. To a pan-European licensing hub of aggregated independent music publishers with the intention of creating a non-exclusive membership collective capable of negotiating and licensing rights on an equal footing with the majors. The STIM sponsored WOI/Portal is a non-exclusive, transparent, non-bureaucratic option for the US group of Independent music publisher and gives the US indie the option to license catalog on a case by case basis.

And at some point:

5. Direct license all or part of a catalog on a case by case basis to the user

Or,

6. All of the above via non-exclusive licensing agreements.

Essentially, non-exclusive agreements have the potential to maximize hands-on aspects of international composition rights negotiations and licensing.

The non-exclusive granting of rights allows for a greater degree of copyright control and opens new vistas for catalog exploitation.

Non-exclusive digital rights licensing could empower the rights owner in a way never before possible. A music publisher, big medium or small can conceivably have the option to license under a number of different scenarios licensing all or part of the catalog on a case by case basis.
It’s about getting paid and the value of copyright. Authors (and their publishers) only want to be paid fairly and what the market will bear.
Market driven licensing terms and the non-exclusive granting of composition rights on a case by case basis may be one way for the rights owner to exercise their rights without government intervention and maintain the value and vitality of copyright.

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Related posts:

1. Digital Music Trends Podcast
2. Why And How Digital Music Products Have Indeed Failed
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4. Event Report: Digital Content Monetization (Part II)
5. Event Report: Digital Content Monetisation 2011 – Day 2

Posted by Rick Riccobono on Feb 14 2011. Filed under Business Models, featured, Labels. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.