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SESAC buys Harry Fox Agency

By | Published on Tuesday 7 July 2015

Harry Fox Agency

The US music publishing sector is set to get a combined rights collective licensing organisation for the first time with the news that SESAC is to acquire the Harry Fox Agency, creating an agency that works in both mechanical and public performance licensing.

The music publishing sector routinely splits the different elements of the song copyright, treating the right to make mechanical copies of songs separately and differently to the right to perform and communicate songs to the public. The so called mechanical and performing rights are routinely controlled by different entities and licensed in different ways, which has proven challenging in the digital domain because digital services are usually exploiting both the mechanical and performing rights at the same time.

In Europe, there have been various efforts to provide combined mechanical/performing right licences to customers who need them. This is done in the UK via the alliance between the publishing sector’s mechanical and performing rights societies, MCPS and PRS respectively (which today means MCPS appointing PRS For Music to handle its licensing). But in the US, the main performing rights organisations, BMI and ASCAP, are barred from getting involved in mechanical licensing by the consent decrees that govern their operations.

SESAC, however, as a smaller performing rights agency, is not governed by a consent decree. Which is why it was interesting when, just over a year ago, rumours began to spread that the private equity group that controls SESAC was in talks to buy HFA, the mechanical rights agency currently owned by the National Music Publishers Association.

And now, according to the New York Times, that deal has been done and will be confirmed later today. Terms of the deal are not known, and will have to be approved by NMPA members, though it is thought there were other bidders for Harry Fox, including other performing rights organisations.

Joining up SESAC and HFA will, in theory at least, allow the combined agency to provide joint performing/mechanical licences for any of the songs that both sides of the organisation represent, and to offer songwriters and publishers a more efficient licensing and royalty processing service. It will also give SESAC access to a world of valuable data held by HFA regarding the use of songs on a number of key digital platforms.

Explaining the rationale for the deal form his side of the table, SESAC CEO John Josephson told reporters: “Licensing is fragmented across both multiple types of rights, as well as multiple territories, for the streaming services that represent the future growth opportunity of the music industry. The result is a complex, opaque and currently inefficient licensing regime that fails to deliver the best outcomes for creators and publishers, as well as end users. What excites us about this transaction is the ability it provides to make the licensing process both simpler and more efficient, and in so doing create additional value for music creators and publishers, as well as the digital music platforms”.

The coming together of SESAC and HFA will be another shake up to the collective licensing domain, where Irving Azoff’s Global Music Rights and Kobalt’s acquisition of AMRA are already changing the landscape, and where both ASCAP and BMI are busy trying to get their consent decrees rewritten, partly to allow them to start working with mechanical rights.