24 Nov Dangers Facing Indie Music Publishers; SESAC Buys the Harry Fox Agency
The music publishing industry is controlled by monopolies and market share. 90 of the top 100 music publishers operating in the United States are sharing 15% of the market. Lack of competition places the power in the hands of a few threatening the long term viability of independent music publishers.
Performing Rights Organizations (PROs) BMI and ASCAP reign over performance royalty collection and distribution in the United States. Three major publishers Sony, UMG and Warner’s control approximately 80% of the known copyrights in the world, and in 2014 represented 65% of the market. As one of the top 100 ranked music publishers in the U.S. Transition Music Corporation is actually one of the 97 independent publishers who comprised the 35% of the market in 2014. On the surface those numbers don’t sound too bad for the indies, until you factor in the just under 20% market share of the 7 independents who are in reality “mini” majors – 5.4% for BMG Rights Management and 3.9% for Kobalt followed by SONGS Music Publishing, Big Loud Bucks Administration and Information, Inside Passage Music, Beverly Music Group and Peermusic – to face harsh reality that 90 of the top 100 music publishers operating in the United States are sharing 15% of the market.
WAKE UP INDIES! This is a problem for independent music publishers and it will have a direct negative impact on our long term viability. Why is this an issue? Simple – independents have no clout when it comes to how the U.S. 2 billion plus dollar performance revenue pie is calculated or distributed. Again, why is this issue? Here’s why: BMI and ASCAP have the ability to change the formulas they use to calculate royalty distributions. They can do this anytime, without permission (funny since they are federally regulated) and they can change the formula to one of their choosing.
A recent disturbing example of how this can play out and harm independent publishers; Last year BMI notified publishers that as of January 2014 they had changed the formula used to calculate royalties for music performed in local television programs. To most, it just sounded like a “business as usual notification”. It wasn’t. This change resulted in independent’s reporting an unconscionable 30% plus reduction in royalties distributed to them for music performed on non-network television. The impact of this formula change was a major financial event for composers, songwriters and independent publishers alike who receive royalties from the performance of their music on local television. Again, why does this really matter? It matters because this is not a conversation about more or less money in the system; it’s about the distribution of the money, which will align with market share. In effect BMI and ASCAP are working for 10 publishers who will benefit from market share – no matter how the dollars are distributed – while the 90 of us who are the true independents suffer the financial realities.
So when I was asked “What do you think of SESAC purchasing HFA?” my response was thank goodness! Independents need representation and more choices and let’s face it Harry Fox has been stagnating for years unable to adjust to the new world, and as a result not delivering for clients in this digital age. SESAC has proven to be a progressive company, with staying power. At the same time, they have lived in the shadow of the superpowers BMI and ASCAP. This acquisition will increase their participation in the market, and in turn hopefully drive competition and ad another voice to the mix.
In closing what can you do? There are many factors pushing against the rights of copyright owners, and they are all trying seeking to destroy monitization models for music. First it was record sales, next it’s performance rights. If you want to keep getting your “mail box” money get involved join the conversation, and be part of the solution! Check out these organizations: