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Sony/ATV chief clarifies Pandora deal practicalities in songwriter memo

By | Published on Wednesday 11 November 2015


Hey, Sony/ATV songwriters, you’ll be receiving “100% of the benefits” that result from the mega-publisher’s direct deal with Pandora. So that’s a relief.

As previously reported, Sony/ATV announced that it had reached a direct licensing deal with the American personalised radio service last week. Under the deal, the publisher will get a better royalty rate than it currently receives from the collective licensing system via which Pandora has previously licensed song rights.

Pandora has agreed to these terms – despite Sony/ATV currently being obliged to allow the digital firm to get its licenses from collecting societies ASCAP and BMI if it so wishes – in order to get more long-term security. Collective licensing rules are up for review in the US and things might change, plus highly public attempts to reduce royalty commitments through America’s rate courts have resulted in plenty of bad press for the publicly listed (and therefore PR sensitive) personalised radio business.

In a memo to writers, Sony/ATV chief Marty Bandier says that it was Pandora which reached out to the publisher in recent months about doing a direct deal. That new agreement, he says, “will result in a significant increase in the royalties that you will receive”. He adds that “I am not in a position to publicly go into the specifics of the deal” but says “rest assured that you will receive 100% of its benefits”. That’s 100% of the benefits pro-rata, I’m guessing.

Despite being light on deal specifics, Bandier does answer two key questions in his memo. First, when the collecting societies – or performing rights organisations – license a service, 50% of the income is automatically paid to songwriters, with those payments not being subject to any recoupment obligations under a writer’s publishing deal. And, says the Sony/ATV chief, that won’t change as a result of the new arrangement.

He writes “you will receive your songwriter royalties relating to Pandora directly from the PROs and to be clear, none of those amounts will be used to recoup any advances that you may have received”. This will work in a similar way to the streaming services the big publishers have directly licensed in Europe, where performing rights income still always flows through societies like PRS, which pays half the money to writers direct.

The other thing Bandier confirms is that the Sony/ATV deal only covers the publisher’s own share in co-owned songs. Under US copyright law, in theory Sony/ATV could license part-owned works in their entirety, passing on a pro-rata share of income to the other stakeholder publishers, writers and/or PROs. Though such a practice is generally frowned upon, and is not part of this deal.

Says Bandier: “Further, I should point out this is a direct deal between Sony/ATV and Pandora whereby we have only licensed the fractional share of the songs in our catalogue that we control. In other words, we did not grant Pandora a 100% license. That is consistent with our past practice and what we believe has been the long-standing practice in our industry”.

Questions do remain regarding how much of Sony/ATV’s catalogue is covered by the deal, in that beyond the US the societies rather than the publisher control the performing rights that Pandora seeks to exploit, meaning the likes of PRS have to be involved in any deal making. European societies currently have reciprocal deals with BMI and ASCAP that cover services like Pandora, so where does Sony/ATV’s direct arrangement fit in there?

But still, let’s not allow such big questions get in the way of all the excitement. “We are very excited about this deal”, Bandier continues. “[We] believe what we have achieved is a major step in the right direction to ensure you are fairly compensated for the use of your music on streaming services”. Good times.