An Interview with David Israelite

David Israelite

“While there is a lot of talk right now about a broad copyright modernization, I’m not optimistic it can get done any time in the near future, just because there are so many diverse interests and very dug-in positions about copyright.”

David Israelite is the President/CEO of the National Music Publishers Association (NMPA), which is the principal trade association for the American music publishing industry. With over 3000 members, representing more than 85% of music compositions, NMPA engages in advocacy, on behalf of the music publishing community, involving the Legislative and Executive branches of government, as well as the court system, in order to help protect the intellectual property of publishers and the songwriters they represent.

Prior to joining NMPA in 2005, Israelite served as Deputy Chief of Staff and Counselor to the Attorney General of the United States, as well as Chairing the Department of Justice’s Intellectual Property Task Force.

Music Intelligentsia sat down with Israelite on September 23, 2013, to discuss the current state of the music industry, getting his take on a broad range of relevant issues.

Hear David Israelite on withdrawals and consent decrees…

In reading the interview, if you prefer to skip to Israelite’s take on a particular subject, please click the desired link, below. Or, just enjoy the read.

 

Intellectual Property, Piracy, and the U.S. Government

How did your work heading the Justice Department Intellectual Property Task Force prepare you for your current job leading NMPA? Or did it?

I don’t think anything could have prepared me for this job! The Department was really much broader on all intellectual property, but one of the things that became clear to me very early was that music had unique challenges compared to other forms of intellectual property. And I think it’s a combination of a lot of factors:  The ease with which music files can be transferred, the attitudes about music which often times can be different than about other forms of content,and really about music being kind of the canary in the coal mine of the IP industries, where piracy really hit the music industry hardest first.  So I think it did prepare me for some of the challenges about how the industry is changing, but that was at a very high level and more about government response, whereas now in my current job, we’re looking at all the different tools that we have to address these challenges and I think we have largely moved beyond the initial shock of people stealing music and now we’re trying to figure out how to make new business models work, which is a very different environment than we were in, say, ten years ago.

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Do you think that piracy is still a major issue, however?

It will always be a major issue, but I don’t think we’re ever going back to the days of where people primarily purchased music. I think we’ve moved on.   And so a lot of people that used to steal music have now moved to other legal type services.  There are many more available now.  And I also think the business models are just different.  I think people that are young, that are music fans, tend to not buy music.  They tend to access music, whether it be through YouTube or Spotify or another form of streaming service.  That’s becoming more the model of preference, and I think that’s something that the industry is just going to have to adapt to.

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I guess buying probably perceptually is traditionally about tangible goods, so it naturally followed. 

I think that’s right.  When I was growing up you had a collection.  And that collection would change as formats changed, so you would collect albums,and then maybe you collected cassettes, and then you collected CDs.  And it would be actually a big part of your identity.  You would go into maybe someone’s room, and you would look at their album collection or their CD collection… and now that experience just isn’t present at all for people that are growing up.  Now it’s really, there’s not a need to have a physical thing.  To own it is a concept that is foreign to many people.  And I don’t know that ever again you’ll have a situation where you have to re-buy the same music because the format changed.  Whereas, you know, I’ve experienced going through maybe buying your favorite album, then cassette, and then the CD.  That’s something that I don’t think we’ll ever see repeated again.

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Yes, that was a dilemma.  It’s like do I buy the CD now?  I have the tape, but I want the CD.

And I think that has a lot to do with the attitudes…is that people, I think to some extent, felt a little bit angered at having to buy a full album when they wanted maybe one or two tracks, or having to buy the CD when they’d already purchased the album or the cassette.  And so that may have fed into some of the attitudes involving digital music.

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Some people from the “analog time” were very into the liner notes and developing a relationship with artists that way. Is that gone as well?

It’s interesting.  My perspective is that that actually is now more a part of the experience for a fan than ever before; and so while you may not buy an album that comes with art work, liner notes with the lyrics, and things like that, you now have opportunities to have so many more interactions as a fan.  So you’ll go to the artist’s web page and, instead of just seeing a couple of photographs on an album jacket, you may see video and pictures that’s well beyond anything someone experienced.  One of my big disappointments is that you don’t get the lyrics when you buy a digital download.  And that’s something that’s not the fault of the music publishers or the songwriters, but actually it’s because the record labels and the digital services are unwilling to pay for it.  Now I’ve heard the argument, well we use to give those lyrics away, so why now would a songwriter or a music publisher want to get paid for it.  And I think that if you look at record labels, there is a very similar story with music videos.  They use to give music videos away as a means of promotion, and today music videos are an important source of revenue.  They wouldn’t dream of giving those away.  So when record labels say to me, “Well why can’t you just give those lyrics away like you used to,” I like to point out that it’s very similar to what you’ve done, record labels, with regard to music videos.  You used to give those away; you don’t any more.  The market has changed.  Lyrics now have value.  But I do think that someone that buys a download ought to get the lyrics with that download, and that’s something that could be solved very easily, if the download stores and the record labels were willing to just compensate the songwriters.

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Which they seem very unwilling to do, in so many ways.

They do.  They do.

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You spearheaded theIntellectual Task Force 2004 Report.Have there been others since that have revised that?

The task force did survive beyond me, into the next administration, although I think it really did peter out, and today there is no longer a task force like that at the Department of Justice, which is unfortunate.  I do think that it would be an appropriate thing for the Justice Department to do, and not just the Justice Department.  There are lots of other agencies in the government that deal with intellectual property.  For example, under Homeland Security, I.C.E, Immigration and Customs Enforcement, has been a very active player in helping to protect intellectual property.  The most recent, Under Secretary John Morton, was someone who worked very hard on this issue. So some of it is personality driven about the people in the jobs and what they care about.  But I would love to see more institutional concern about intellectual property surviving.  You do now have a position in the White House, known as the Intellectual Property Enforcement Coordinator, and that’s still a developing job where it doesn’t have enough resources or attention yet, but is was a step forward in terms of the government making some kind of institutional structure to deal with these types of issues.

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Regarding the coming changes, according to Maria Pallante and the Great Copyright Reform Act, do you think some of that will be incorporated?

I think it could.  You have an interesting kind of coalition of things happening.  You have a new Register of Copyright who is very smart and thinks it’s time to take a look at the broader question of a new Copyright Act.  You have a new Chairman of the House Judiciary Committee also very smart and similar instinct about maybe it’s time to look at the broader Copyright Act.  So, you do have kind of some momentum to doing something.  You also have the fact that it’s been two generations since there really has been a copyright revision, and almost everybody thinks the current Copyright Act is broken in some way.  The hard part is that there are so many interests now involved in copyright that to change the law would really be a difficult thing to do by consensus.  And so while there is a lot of talk right now about a broad copyright modernization, I’m not optimistic it can get done any time in the near future, just because there are so many diverse interests and very dug-in positions about copyright.

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“Whether it’s an academic approach that’s hostile to copyright or whether it’s really a business interest hostile to copyright, you often see people trying to hide under a different disguise about why they take the different positions that they do. When you boil it down, it often comes down to a pure economic interest that weakening copyright is good for them.”

The Google/YouTube Connection

Now are you talking about tech industries?

I am.  In the past when you would kind of revise the Copyright Act, it usually meant strengthening protections for intellectual property.  I fear that if we went through a complete copyright modernization today, we would be at risk of rolling back some of those protections.   Because there are interests, like some of the internet companies, that are less concerned about the property rights of creators and more concerned about their economic well-being, which might involve in some ways rolling back or weakening copyright protection.  So it would be a very dangerous thing to open it up, but at the same time there are opportunities to make things better.  I don’t think anyone thinks the DMCA (Digital Millennium Copyright Act) works well.  It’s an impossible burden that’s put on creatives, especially small organizations, to protect their intellectual property online; and I don’t think the law fairly balances the role of internet service providers with the role of creators.  We’ve had a lot of court cases since the law was passed, and so Congress could take a look at that and figure out a way to maybe come up with a better balance that wouldn’t put an unfair burden on internet service providers but at least make them part of the solution, which right now, they seem to take a very hands-off approach.

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Do you see any kind of solution that does away with the Notice and Takedown and has some sort of other, better resolution?  Have you thought that through at all?

I think a lot of people have been thinking about it.  I don’t know that there is any solution out there that would make everybody happy.  You have people that actually would like to make it harder to do notice and takedowns, if you can believe that, which we know is already very ineffective because of the ability to repopulate a site with the exact same material that had been taken down and the difficulty of actually litigating to go after the bad actors.  I think that our best hope is probably not congressional action.  Our best hope is probably figuring out, through a business arrangement, how to get those people that are the gatekeepers to have some interest in working with us to make the system better.  There are some encouraging steps that are being taken.  For example, Google now operates content sites.So YouTube is launching a subscription service in the very near future.  Google Play has become a music store that competes with Apple ITunes Store.  And so these types of things maybe change the attitude of a Google about helping to protect intellectual property because they’re in the business of selling it or selling access to it.  We haven’t seen that yet, really; but that might be the way forward, is ultimately to have an economic interest that aligns rather than fighting each other in Congress to change the law.

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Yes, that’s difficult in any field.  Now, with YouTube you’ve had various dealings, and you’ve made some kind of deal with them.  Can you tell me about that?

Sure, the story of YouTube is still an ongoing story, but basically when YouTube first launched, it didn’t seem very concerned with licensing music or paying creators.  At some point, the major music publishers were able to strike deals with YouTube where their content was being licensed and they were being paid for user generated content.  Independent music publishers were having a harder time doing that.  After years of litigating, we actually reached a settlement with YouTube where we agreed to provide a model platform so that any music publisher or songwriter could license their content for user generated content under terms that were fair and similar to the deals that were struck by the major music publishers.  That deal now has been in existence for two years.  We have about four thousand music publishers that have opted in to the deal.  I would say that there are still a lot of problems with making this work, but it’s very early in the kind of life cycle of this new business arrangement.  So, I’m optimistic that it’s just going to get better.  So today you can license YouTube for user generated content.  What we need to focus on is making it easier to identify your content, making sure that the payments are happening properly, and really expanding the deal to include not just user generated content but all of the content on YouTube, which includes a lot of content from partners and record labels that provide music videos, to make sure that any music that is being used on YouTube, the creator of that music, the songwriter, is being licensed and paid properly.

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Would your deal help the small, individual publisher?

It should.  And that’s really the challenge.  The business is changing, and there is nothing that anybody can do about that change.  We are, as an industry, very used to licensing our songs to record labels to sell copies of recordings.  That system is in place.  We are very used to licensing our songs to performance rights organizations that then will collectively license, take in money, and pay out based on a sampling process.  What we are not good at is licensing things like YouTube.  Now if you wanted to use one of your songs in a specific movie or TV show or commercial, we know how to do that.They would approach you, there would be a negotiation, there would be a specific deal.  But how do you license a site like YouTube that doesn’t know what music is going to be posted, wants licenses for all of the music out there, and it’s a business opportunity that’s not a mechanical reproduction covered by a compulsory license or a performance covered by a blanket license under a consent decree; but it’s a mass synchronization opportunity.  And it’s very hard to make that work.We’re two years into this first deal with YouTube. I suspect there are going to be a lot of other players enter the space, whether it’s Twitter with its VINE Service, or Facebook with Instagram Video, or any other number of services that want to use video, which is of course becoming very common in the experience of music.  And figuring out how to license that on a broad scale is something as an industry we’ve got to tackle.  And I’m hoping that the YouTube deal, while not perfect and improving, is a model for how to take a step forward to make this kind of thing work.

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On the other hand, you just sued Fullscreen.  Now that’s not YouTube but a major player in YouTube.

Right.

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How does that fit in with all that?

Sure, so for people that don’t quite understand the details of this, the deal we have with YouTube covers user generated content, which means that any one of the users of YouTube could post the material.  They don’t have a business relationship with YouTube; they are just posting something for people to see.  That content is now licensed and covered.  There’s a separate problem with what are known as partners.  These are companies that go to YouTube, tell YouTube that they are going to provide original content, that all the rights have been cleared, they’ve warrantied that they’ve gotten all the licenses they need, they give YouTube an indemnification, and they collect all of the money.  The problem is many of these partners are not licensed, and they are not paying the songwriters.  A multi-channel network (MCN) is an example of this.  What they do is they go around and get many different types of channels to come under the umbrella of their multi-channel network, and they are a partner of YouTube.  Fullscreen is an example of a very large one.  You might find lots of examples of young artists doing cover songs of famous songs as a way to get discovered or to just make music using someone else’s songs.  It’s not licensed properly and they’re not paying properly, and so we have filed a lawsuit against Fullscreen.  There is another MCN, known as Maker Studios, that had a similar problem, and we’ve reached a settlement with them, which we will be announcing very soon and which includes damages looking backward and a licensing arrangement going forward.  And I suspect that our Fullscreen litigation will also settle, because, quite honestly, these MCNs have no defense.  They simply got caught, and we need to establish a system within YouTube for the partners, of legality, of order and of respect for creators.  And right now it’s a little bit of the Wild West where you’ve got a lot of people trying to make money and not doing it the right way.  And so we don’t like having to file lawsuits like we did with Fullscreen, but we will be protecting the rights of all the songwriters in this country.  And so for anyone doing business on YouTube that hasn’t taken a proper license and isn’t paying properly, you can expect to hear from the NMPA.

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And does YouTube get involved with that at all, or is this totally separate with the partners? 

YouTube is in an unusual situation here because they’ve been indemnified.  They have no way of knowing whether their partners have actually cleared the licenses and so they are not part of the litigation.  They are not part of the negotiation in terms of the settlement, but they are involved.  One of the things we’re talking with YouTube about right now is whether we should expand the scope of the user generated content deal to include content from partners.  So that instead of having to license every individual partner that puts content on YouTube, we could have one umbrella deal that all falls under the same terms.  And that’s something that might be the solution going forward.

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What about Google as a whole?  What is your relationship with Google?

It’s a mixed relationship.  It would be easy to just say negative things about Google, and there’s plenty of negative things to say.  I think that as a company they are largely disrespectful of copyright, disrespectful to songwriters, and that they can be bullies at times.  I also think it’s important to have a mature relationship, though, where you can compartmentalize the different things going on.  So, for example, Google Play is now a music store that we negotiate with and do business with.  We want them in the business of selling music.  We want competition in the space of digital downloads,locker services.

YouTube is owned by Google, again the number one source of music acquisition in the country, and we need to have a business relationship with them.  So I try to approach Google, which is a very large question, with a balanced approach of there are some things that I think are going well,there are some things I think are not going well.  It’s not easy to just put it into one space and characterize the entire company with one, you know, approach.  But clearly Google is a source of a great deal of the frustration and the concern among creators about what’s happening in our world.  And I think it can get a lot better than it is now.

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Do you think that they have undue influence on government decision making?

I think they are an enormous player when it comes to government decision making.  They spend a lot of money on lobbying.  They fund a lot of organizations that lobby.  They filter money through other foundations and things like that, that have influence.  They are just an enormous player.

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I know there seems to be a relationship, like with Public Knowledge and EFF (Electronic Frontier Foundation), in that they are funded by Google.  Is there any direct evidence of that?

There is; you know I try to be very careful and specific about things.  There are a lot of groups that are hostile to copyright and to creators.  EFF is one.  Public Knowledge is another.  The Consumer Electronics Association is a third.  Google has some role in these organizations, and with each one, you try to measure and find out the source of where it’s coming from.  The Future of Music Coalition is another.  Don’t let their name fool you; they are very hostile to the rights of creators.

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Why is that?

Well, it’s who they are.  Just because you call yourself The Future of Music doesn’t mean that in any way you represent people who make music.  And so what bothers me the most is when people try to pretend to be something that’s different than who they are.  I almost can respect more someone coming at us frontally and saying for example, “We’re the Consumer Electronics Association.  Our members make electronic devices which we sell when people access music whether they steal the music or not.  And so we don’t care if people steal music, because it sells more devices.”  That would be an example of a direct approach.  Very different than an approach of say, Public Knowledge.  They call themselves Public Knowledge, yet they won’t disclose to the public who funds them.  They pretend to be an advocacy group for consumers, yet I don’t know that they have any claim whatsoever to speak on behalf of consumers, as opposed to the people that fund them that may have a direct economic interest in weakening copyright.  These are the types of battles that we are going to have to fight.  And Google does play a large role in a lot of these things.  And I do think it’s appropriate for them to be called out about how they fund and what their interests are.  And whether it’s an academic approach that’s hostile to copyright or whether it’s really a business interest hostile to copyright, you often see people trying to hide under a different disguise about why they take the different positions that they do.  When you boil it down, it often comes down to a pure economic interest that weakening copyright is good for them.

The funding of those groups come from sources that would benefit from a weakening of copyright.  And you often have a hypocrisy of where these same interests want to protect their own intellectual property, but it’s the copyright of others that they want to use for their own benefit.  And so if you get into a discussion about patents, for example, or trademarks, very different approach to intellectual property than perhaps the copyright interest of others that they benefit from.  And it just depends on where they are coming from.  It’s hard to group them all together.  You could take them one at a time, but if you had to say there is a common thread, I would say the common thread is they are very hostile to copyright and often times their funding sources have an economic interest in seeing that happen.

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Do any of them ever address the discrepancy there between patent and trademark as opposed to copyright?

Of course not.

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Have they been asked?

We do our best to highlight that; whenever there is an opportunity we try to raise that issue.  So it’s an ongoing war.  I think the one thing that’s clear is that the creative groups are going to have to step up their game to compete with these massive economic interests on the other side of the copyright debate.

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“If someone is stealing a digital copy, you are denying that songwriter fair compensation for the use of their intellectual property. And so to somehow argue that is not a theft, because it doesn’t deprive someone of physical property, is just so intellectually and morally bankrupt, because it just totally ignores what it means to be a creator like a songwriter.”

The Creative Connection

Do you have ideas on how to do that?

Sure I do.  I think that if you look at the core copyright groups, which include motion picture, recording, software, video games, books,songwriting, we really need to come together as core copyright groups and try to speak with one voice on some of the larger issues of the day.  I think we need to do a better job of explaining to lawmakers how we’re not just interests of little pockets, maybe in Hollywood or New York, but that in reality we represent a very important economic natural security interest for the United States, and that the fundamental underpinnings of copyright are things that are as American as you get when it comes to free enterprise and property rights.

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And one of our largest exports, really.

It’s true.It’s an important export; it’s a positive balance of trade.  I mean the creative content we make in this country is coveted all over the world, and that’s not likely to change any time in the near future.  You compare that to other industries where other countries are competing quite well against the United States but they don’t seem to compete as well when it comes to things like music or our motion picture industry or our video game industry, for example.  We ought to be taking advantage of that.  And if you weaken copyright, we really are directly hurting that advantage that America has.

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In talking about groups like Public knowledge and EFF saying they speak for consumers…It seems to me that the creative community could do a lot more to take back the consumers and make them more understand that intellectual property, that all that creative entertainment and culture, is good for consumers.

I think that’s right.  It’s just a harder sell.It’s a lot easier to convince a college kid that they should be able to have their music for free than it is to make the economic argument about how important intellectual property is for the country down the road.  It’s just… it’s a harder sell.  And we can do a better job of it, but I also think the government can step up and also do a better job protecting property.  I mean if there were the type of theft in other areas of things that are important to our economy the same way there is in intellectual property, you would see a massive government reaction.  There is a soft bias against intellectual property somehow not being as worthy of protection as other forms of real property, and I think that is unfortunate.

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I think part of it is probably the perception that people in creative fields enjoy it too much.  They shouldn’t be protected, you know; they could do it anyway.  It is; it’s a harder sell.

One of my favorite arguments that you’ll hear some intellectually bankrupt people make is that somehow stealing digital music isn’t stealing, because you’re not depriving the original person of ownership of a tangible thing.  So, if you steal a car, the person who used to own the car doesn’t have the car any more, but if you just make a copy of a digital file, you’re not taking it away from anyone.  So, it’s not really theft.  Of course what that argument ignores is the fact that if you are a creator, if you are a songwriter, your entire method of making a living is dependent upon profiting when someone uses the music.  And if someone is stealing a digital copy, you are denying that songwriter fair compensation for the use of their intellectual property.  And so to somehow argue that is not a theft, because it doesn’t deprive someone of physical property, is just so intellectually and morally bankrupt,gunsongwriter.

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Do you have any thoughts on 3-D printing and how that might play into that in the future?

I hadn’t given that a lot of thought, but that certainly is an interesting topic.

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Because then you are creating physical things that actually can take away from people’s sales of them.

With a very similar argument, I suppose, is that if you’re able to copy somehow with a 3-D Printer and thus not need to buy the physical product, same impact on the people that manufacture and sell physical products.  Maybe that will help get people focused on this argument and why it’s not a fair argument.  It’s an interesting point; I hadn’t thought of that.

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Music Intelligentsia is interested in bringing the creative components together, talking to photographers and film makers and video gamers to see where we the commonality is.

And we’ve made some progress.  You know, I guess about seven years ago, NMPA was one of a handful of groups that started the Copyright Alliance, and that has now grown to be a very large group that represents all kinds of creators.  And so that’s an organization that does attempt to have that type of coordination function among the different forms of intellectual property and copyright.  You also see other groups, like the Chamber of Commerce, starting to pay more attention to this.  Or a new group, not a new group, but a group that’s doing a lot recently is the International Intellectual Property Group Association (IIPA) which is a combination of different groups that work together using our trade agreements and things like that.  But if you just look at our most recent experience with the SOPA (Stop Online Piracy Act) debacle, our efforts aren’t nearly enough.  It’s clear that when the other side decides to ramp up a message machine, that we are out-gunned, and so that’s something that we’re going to have to deal with in the future.

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“The NMPA is going through a modernization plan right now. We have a new set of bylaws that were approved by our membership that really kick in a new process starting January 1 of next year. What it mostly means is that we are going to ramp up for the exact purposes we’ve been talking about, in terms of the challenges ahead of us.”

The Future of MNPA

Hear David Israelite on NMPA’s plans for the future…

At the annual meeting this past June, you said there would be a major announcement in a few weeks regarding the reinvention and rebirth of NMPA and that you also wanted to involve songwriters more than ever.  Tell me.

Sure.So the NMPA is going through a modernization plan right now.  We have a new set of bylaws that were approved by our membership that really kick in a new process starting January 1of next year.  What it mostly means is that we are going to ramp up for the exact purposes we’ve been talking about, in terms of the challenges ahead of us.  In the past NMPA had the luxury of not asking its members to fund us directly.  Our dues were only $100 a year per member.  Starting next year our members are going to be paying direct dues to the trade association, just like most other trade associations fund themselves, which will give us the ability to really strengthen what we do to prepare for the copyright modernization and some of the bigger fights that we have coming up ahead.  Also, part of that, we are going to try and do a much better job of engaging songwriters directly.  Music publishers obviously are partners with songwriters, but the best spokespeople we have, I think not only in music but all of intellectual property, are songwriters.  They probably are the ones that can make the best argument about why intellectual property is important, about the creative process.  They tend to be at the bottom of the economic food chain, often impacted the most by some of these changes, and yet they are treasured.  I mean America just treasures its songwriters and yet they are being treated terribly by the state of the industry when you look at some of the things that are going on.  So, we’d like to try to do a better job of getting songwriters to be part of the advocacy of what we do.  They can do it on a lot of different levels.  There is a grassroots component where you need a lot of songwriters to speak up.  There is a targeted approach where a limited number, but ones that are prepared to discuss in-depth issues, can be very effective here in Washington.  We’re going to be working a lot more to do that.  And so, that’s something that I’m really excited about as part of this modernization plan.

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I’m curious.On your Board, do you have any songwriters?

We do.Now our Board is made up of eighteen music publishers that are elected every two years, but some of those music publishers are songwriters.  For example, Dean Kay is one of our Board members who has written some fabulous songs including That’s Life for Frank Sinatra and is also very well known for his Dean’s List, which is circulated on a daily basis with news about the music industry.  And so, we do have songwriters on our Board, but, more important than that, our Board is just a representative group of the entire industry.  We’ve got to figure out how to tie in to all of the songwriters in the country and try to get them to work collectively toward our common interest, which is hard to do.

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I was wondering as well, because there are songwriters who are not represented by publishers, who do their own publishing, and who are not members of NMPA.

Well it’s interesting because if you are a songwriter that does your own publishing, you are a music publisher.  Now, you are thought of as a songwriter first, of course; but, I think it’s important, we view them as members.  If you are an individual songwriter that keeps your own publishing, you are a music publisher.  And among our 3,000 members, we have several that are just of that model of individual songwriters that have kept their publishing.  It’s really more about a question about size.  The smaller the enterprise, the harder it is for them to get engaged in an industry-wide effort, because like many small businesses, you are focused on operating your small business.  If you are a songwriter that administers your own copyrights, you’ve got two full-time jobs – writing and taking care of your copyrights.  So there’s not a lot of time and focus left for industry-wide policy arguments.  But, they all care.  And they all ought to care about their future with these issues, so I’m hopeful that we can do a better job of communicating to that group and getting them engaged, finding ways to make it easy for them to get engaged.

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But do you think it would be inappropriate for just a songwriter who’s, well I guess they’re all publishers, but to have someone who is more predominately a songwriter on your Board to help engage songwriters?

Oh, well, our Board is elected by the full membership,and so we don’t hand pick who’s on our Board itself.  There are writers that can be on the Board if they happen to own their own publishing, and I’d welcome that. What I’m really looking for is, the voices that we need, it’s not really about attending board meetings, you know, four times a year.  It’s about justhaving an opportunity to weigh in about your interest.  And that’s something that any songwriter should be able to do.  There are a lot of organizations that represent songwriters, from NMPA to ASCAP to BMI to SESAC to NSAIto SGA.  We’re all, you know, operating as partners working toward common goals.  It’s the songwriters themselves, though, that we’ve got to provide opportunities to speak up.  And that’s something that I think we all can do a better job of doing, because they are such a powerful voice.

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What are the issues that publishers do not have in common with songwriters?  Meaning, there are certain issues, say, termination.  What do you do with issues where you have a situation where they are at odds?

Sure, it’s so interesting to me.  You know I started this job with no background in the music industry or the music publishing industry in particular.  So, when I started, I came at it as a blank slate, and what I quickly learned is that there’s a long history in this industry, and a lot of the attitudes that exist today are based on decades-old issues that have developed over time.  It doesn’t make it a right or wrong thing; it’s just an acknowledgement that we have a lot of history that we’re dealing with.  So when people ask me about the differences between songwriters and music publishers, I honestly believe that ninety-nine-point-something percent of the time, there is no difference in the interest between a writer and a publisher.  Now if you want to seek out that point-less-than-one-percent part of the time when there is some tension, I’m happy to talk about it.  But I really don’t think it is a dominant issue on the landscape of issues.  So for instance, you mentioned termination.  We’re very early in the terms of when there may be terminations.  I’m not sure that that’s something that splits songwriters and publishers, because the way that I look at it is that it’s more like free agency in sports.  If a songwriter decides to terminate and recapture rights from one publisher, they are almost certainly then going to then affiliate and work with a different publisher unless they want to do it themselves, in which case, they are a publisher.  And so I don’t see the termination issue in any way as a division between writers and publishers.  Now, there may be some individual tension between an individual writer and his or her publisher, but the net outcome of that may be that for any publisher that loses, there may be another publisher that wins.  And so, I don’t see that as a split between the interests of songwriters and publishers.  I really don’t.  And it’s early.  But again, I don’t see that as being something that should divide the communities of songwriters and publishers.  And from what I can tell, most of these issues are going to be approached by writers as what’s best for them, which is how it should be.  And so if they are able to affiliate with a different publisher, that’s great.  If their current publisher and they work out an arrangement to continue, that’s great.  If they want to control their own copyrights and administer them, that’s fine, too.  The one thing that’s probably not going to happen is a songwriter to recapture their rights and just sit on them and do nothing.  That wouldn’t make any sense for anybody.  And so that’s why I say someone’s going to be publishing those songs and, therefore, I don’t see it as a net kind of plus-minus tension between writers and publishers.  Other issues that could divide them, you know, honestly, I just don’t see it.

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“Now the reason why you are seeing pull-outs from ASCAP and BMI, I suspect, has nothing to do with the licensing; it’s about economics. Because ASCAP and BMI operate under consent decrees, we found ourselves in a situation where ASCAP and BMI are given an unfair task. They are asked to negotiate with a gun to their head.”

Direct Licensing

Maybe this is a good time to bring up a huge issue right now, which is direct licensing.  Talk to me.

Sure, direct licensing.  So take a step back and understand how music publishers and songwriters make their money.  If you look at last year’s data, which NMPA has analyzed, and there’s no public data on this and so it’s hard to come by, but NMPA has access to a lot of private data.  You have a situation where in very rough terms, let’s just say, about a third of the income stream comes from mechanical reproductions, about a third of it comes from performances, and about a third of it comes from synchronizations.  There’s another five or six percent that comes from other rights like lyric or print music and things like that, but let’s put that aside for the moment.  The issue of direct licensing is very different depending on which of those three income sources that you are talking about.  When it comes to mechanicals, it’s really all directly licensed.  It’s publisher to usually a record label, sometimes a digital service, for mechanical reproduction rights.  The publisher collects the money.  The publisher pays the songwriter.  And, if there is a contractual term between the writer and the publisher with regard to an advance or something like that, that’s dealt with in that income stream.  In the performance world, however, the songwriter usually is the one to choose where to affiliate the rights with a performance rights organization – ASCAP, BMI, or SESAC.  And the publisher kind of comes along, if you will, for the ride, where a typical PRO arrangement is the PRO will be the licensor, collect the money, and then directly send the money to the songwriter, and directly send the money to the publisher.  In the synchronization space, it’s of course all directly licensed by the publisher.  So if you’re a songwriter, and you’re looking at your income streams, your mechanicals through the publisher, your syncs through the publisher, your lyrics and other things through the publisher, but in this one area of performance, we have historically developed in a way that you, the songwriter, affiliate with a PRO and get paid directly by that PRO.  And so the issue of direct licensing is most concerning when it comes to if a publisher pulls out of a PRO, licenses directly, and then collects the money, which, otherwise, they never would have touched the songwriter part of the money.  Now the reason why you are seeing pull-outs from ASCAP and BMI, I suspect, has nothing to do with the licensing; it’s about economics.  Because ASCAP and BMI operate under consent decrees, we found ourselves in a situation where ASCAP and BMI are given an unfair task.  They are asked to negotiate with a gun to their head.  And recently we’ve seen some results where songwriters and music publishers are getting very bad rates because of these consent decrees.  The best example maybe isPandora, where in the last quarter Pandora paid out fifty-seven percent, of its revenue to record labels and artists and four percent, of its music revenue to music publishers and songwriters.  And so you’re starting to see some publishers want to pull out for the purpose of avoiding, I guess, a consent decree and having a fair market negotiation.  However, if you’re the songwriter, you may have concern because your money is no longer going through the PRO; it might be going through the publisher.  So a couple of things.  Number one, as I understand it, those publishers who have pulled out have all committed to still letting the PRO administer the songwriter part of the license.  If that’s true, then there should be no concern about the direct license because the songwriter’s money isn’t going through the publisher.

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Well, it’s going through the publisher, but they’re passing it to ASCAP or BMI.  Where’s the transparency?

Well the concern about a publisher having touched the money, as I understand it from a writers perspective, is about recoupment and about transparency; two different interests.

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And then advances, too.  Right?

And advances, too.  So, on the recoupment issue, not an issue if the money is sent, if the publishers aren’t recouping from the performance stream.  As far as I know, no publisher who has tried to directly license a performance is trying to recoup advances from direct performance licensing.  On the transparency issue, then, I suspect it’s just like the other two-thirds of the songwriter’s income where there is a contractual arrangement between the writer and the publisher.  And I think it’s important that writers have a sense of how that money is being accounted, and making sure that they are being paid fairly.  And then on the advance issue, to the extent there are advances, that would be something that’s new because the PROs generally don’t get advances which they then share with writers, but rather it goes into the revenue pool.

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Apparently Sony got a huge advance…

On which example are we talking?

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On withdrawal of digital.

An advance from whom?

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DMX.

Well, there may be some confusion.  The DMX case was before Sony withdrew; there was no withdrawal in the DMX case.  As I understand it, the DMX case was a case of where Sony licensed directly to DMX performances that DMX could have gotten through the PROs because there hadn’t been a withdrawal.  It’s just that there was a direct license and that the concern about DMX was that the rate court judge then didn’t take into account the full deal when using that as precedential, and, as a result, there is an argument that maybe it hurt the rate structure going forward.  I think the DMX case is not any longer what we are talking about.  I think what we are talking about today is more what just happened with Apple and ITunes Radio.  Where, as I understand it, ITunes Radio had to negotiate for rights because of withdrawals, and that the end result was that a rate structure that was two-hundred and fifty percent better than the Pandora rate because of the withdrawal.  So I think we’re very early in this experiment of withdrawals.  There was even a court case last week where it’s been put into question about the effectiveness of the withdrawals and all of that.

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I was going to ask you about that because, that seems like it could be a real game changer.

It could be.  I think that this issue of withdrawals is… we’re at the very early stages of considering what this means, and I think it’s a really important question, and the reason I say that is because of this: Our performance right is inherently not regulated by law.  So when we talk about our income streams, our mechanical rights have a compulsory license since 1909.  We have a bad rate standard.  We have to go to trial every five years to be told what we get.  Our performance right is not regulated by law, but since World War II, a majority of our rights are under consent decrees.  And so the withdrawal issues are really raising a more fundamental question about should our property rights be dealt with in a free market with a fair payment or should they be dealt with in a way that guarantees something less than a fair market rate, which is often what the consent decrees do.  And so it’s not ASCAP or BMI’s fault; they do a fabulous job.  But they’re asked to play an unfair game.  And these consent decrees, I think it’s time to take a fresh look at the impact of them on the marketplace and on songwriters.

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The reason they came into being is really no longer of the same relevance.

It’s a completely different world.  Again, it was World War II when the consent decrees were put into place.  And when you look at the market today, if you will, there is no reason in the world why a new digital service shouldn’t have to negotiate in a free market for the rights, just like a synchronization service would, for example.  So when YouTube wants to do a deal, they negotiate in a marketplace, but if Pandora wants to do a deal they get to take advantage of these consent decrees and pay a lot less.  And so I’m very sensitive to the issue that you raise about when there is direct licensing of performances, it raises issues for songwriters that didn’t exist when their money came through a PRO.  And I think those questions have to be dealt with head on, and they’re important.

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How are they to be dealt with head on?

And I’m happy to offer my perspective but I want to point out that the larger issue is about the economic value of the right itself.  And so transparency, recoupment issues: very important, but those are subsets to the bigger question of what are our rights worth.  Now let’s talk about how you deal with that.  It’s a very interesting thing to me, again not coming from the industry, if you are a songwriter, you will make a decision to sign a contractual arrangement with a music publisher, and you, in effect, are turning over the economics of your business to that publisher, other than perhaps what you get paid directly from a PRO.  And so if the typical songwriter looks like the average of the industry, two-thirds of your revenue is going through your publisher that you voluntarily signed a contract with.  One-third of your revenue is coming through your PRO.  The question is if that one-third starts being treated like the other two-thirds, if that’s a bad situation for a songwriter, that probably means they signed a bad deal in the first place, because two-thirds of their income is already being treated that way.  So I think it probably should make it just that much more important that songwriters and music publishers, when they strike a contractual bargain, have a clear understanding, they trust each other, they deal with each other fairly.Because if you can’t trust your music publisher, as a songwriter, with your performance revenue, why did you agree to trust them with the other two-thirds of your revenue?  It really doesn’t make a lot of sense to me.

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Where do you think the vertical integration of the industry comes into play here in terms of influence on the publishers?

I think that’s an issue.  You have a situation of where some songwriters may sign a publishing deal and then the publishing company gets bought or merges or otherwise is sold and now, all of a sudden, you’re dealing with a different set of folks.  That’s usually why there is a term on the agreements and you have an option to change.  Just like you have on your PRO, for example.  When you’re a songwriter and you decide to sign with a PRO, you’re locked in for a period of time.  If you don’t feel like you’re getting a good service or you think that the commission rate’s too high, you can move to a different PRO at a certain period of time, just like with your publisher.

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Although now with direct licensing you have less control over how the money is dealt with or where it goes first, right?

You do.  Here’s the opportunity for songwriters.  If the withdrawal rights from a PRO results in two things — number one, a higher rate because the withdrawn publisher is able to negotiate in a free market and get a better rate and even, possibly, number two, a lower commission deduction because perhaps the cost of that license is less than the overall cost of what it costs to administer performance licenses –a songwriter might make more money in two different ways.  Now that’s balanced against the issues that you raised about transparency and about recoupment.

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Yeah, they could be great deals, but who knows?

I think it’s very important that, for this to work, publishers need to make sure that they are partners with their songwriters, which means everybody’s got to win.  If everybody doesn’t win, then I don’t think the withdrawals are going to work in the long term.  But if it’s a situation of where, like with the Apple ITunes Radio deal, it seems like the withdrawals led to a two-and-a-half times increase, from four percent to a ten percent deal of the revenue stream, that that’s going to help both the songwriter and the music publisher.  And, by the way, if everybody gets the same rate, it’s going to help the PROs too.

Hear David Israelite on the Apple ITunes Radio deals…

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Well that’s the question now; how does that come about?

As I understand it, both ASCAP and BMI are going to benefit from the same market rate that Apple is offering those publishers that withdrew, which means in the first example of a negotiation with a new digital service in this new world, the theory worked.  The theory helped everybody.  The rising tide lifted all boats.  It’s very early; we have to see how it plays out.  But I’m optimistic that long term, it’s very important that we not let things like a 1941 consent decree devalue the property of a creator.  Now every individual deal is on its own; there’s no discussion about doing this collectively.  I just am a believer in free market economics, and I just can’t believe that songwriters and music publishers aren’t better off negotiating at arm’s length than there are in the system of consent decrees where you can’t say no, the licensee is licensed from the moment they ask, even when no rate has been set, and you have federal judges setting the rate in an environment that’s not necessarily friendly to the creators.

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In the case that just happened with Judge Cote and ASCAP and Pandora, do you think that possibly will lead to a complete withdrawal of rights, since she is saying that you can’t just do digital?  Which way do you think that might go?

I don’t know yet.  The decision is only a week old.  My thoughts are this:  Number one, I think there is a good chance the decision gets overturned on appeal.  You know, I’ve talked to the attorneys in the case; I’ve talked to my own attorneys.  I really do think that there is a very good argument that this is not what the consent decree provides for and that it could be overturned on appeal.  Secondly, this was the ASCAP rate court judge.  BMI is going through a separate rate court with a different consent decree and a different federal judge.  There is a chance that the BMI judge comes to a different conclusion.  Thirdly, I do think it’s time for the Justice Department to take a fresh look at these consent decrees and what it means.  I don’t think that ASCAP and BMI should be handcuffed the way that they’ve been handcuffed.

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Which basically means that the songwriters are handcuffed as well.

Exactly.  Everybody gets handcuffed.  So before you can get to the question about publishers withdrawal a hundred percent as a result of this one decision, we have an appeal, we have a different case with BMI, and we have a Justice Department that might be willing to look at changes to the consent decree, which would make that question moot.

When you get beyond those three questions then to the question of will people withdraw, I just don’t know.  Every individual rights holder will make their own decision.  What I do know is that today the digital performance space is a very small slice of the overall pie, but it will grow.  And the more that it grows and the more that the rate structure is such that songwriters and music publishers are just getting screwed; the more pressure there will be to do something about it.  And so I’m optimistic that working with the PROs together as partners and, really, songwriters, music publishers, and PROs, we’re all partners in this.  There shouldn’t be any different interests in this, but we all should be partners at trying to get to a place of where our performance right is dealt with on a fair market basis.

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Labels/Artists v. Songwriters/Publishers?

What about the discrepancy now between labels and artists as opposed to songwriters and publishers?

It’s of tremendous concern to me.  I’m a believer.  We came up with a term a long time ago.  I was seeing some of these fights between labels and publishers and, again being naïve and not having come from the history of these fights, I came up with the theory that I called the One Music philosophy.

And the philosophy was pretty simple.  The future of music, it seemed to me, was going to be about a third party that needed to license both copyrights, one from the label and one from the publisher.  And that if the two copyright interests spent their energy tearing each other down under the misguided theory that there was a limited pool of money and if we could decrease what the other person gets, there is more for us, that would be a destructive future.  However, if we took a One Music philosophy, which is when a third party is paying for two copyrights, neither copyright should do anything to devalue the other copyright,that’s the way to go forward.  Now we have a history of where record labels were the ones that paid the music publishers, so there was a direct economic confrontation.  The labels wanted to pay less; publishers wanted to get paid more.  But now that we’re dealing with a future that is almost all third party, if we don’t adopt a One Music philosophy, then we’re really in for some trouble.  Now if you look at what’s happening with internet radio, this is maybe the perfect example of the perverse nature of the different copyrights being regulated in different ways.  In every other country in the world where both labels and publishers get paid for radio, the radio pays the publisher a significantly higher rate than the label.  The label right is known as a neighboring right.  It’s a smaller right.  In the UK I think it’s about a three to one split, publisher to label, and in the rest of Europe I think it’s a bigger split.  But in this country you have a couple of anomalies.  Number one, broadcast radio doesn’t pay the record labels.  That’s unfair; I think it should be changed.  I support the record labels and artists getting paid from broadcast radio.

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That’s the Performance Right in Sound Recording.

Correct.  But because of the absence of a performance right in terrestrial broadcast radio, there’s a sense that the label should get paid more in digital as a way to make up for it.  The other thing you have in this country is the weird situation of where the labels have a compulsory right for their performance right with a good rate standard, other than three grandfathered companies, and the music publishers have these consent decrees.  You’ve ended up with this crazy fourteen-to-one split like happened in Pandora, of the labels getting $14 for every $1 for the publisher and the writer vs. what happens in other countries.  So when that happens, it’s not that I think the labels should get less, because under my philosophy they should be getting as much as they can and we should be getting as much as we can.  But I think it’s important to point out that our system has created an imbalance that’s really unfair, and I also reject the argument that just because the record labels and artists are getting treated unfairly by broadcast radio,that’s not a reason to create a future for us where we’re being treated unfairly.  And that’s exactly where we are today unless something happens.

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Well if there is a finite amount of money, though, how would the record companies still be making the kind of money they are in digital?

Great question.  First of all, I don’t accept that the amount of money that we’re both being paid is the finite amount of money.  I think that there’s always a question about whether content is being paid enough.  ITunes, for example, pays out seventy percent of its revenue for content.  I don’t know that Pandora paying out sixty percent means that that’s all that Pandora could pay.  But secondly, you may be right.  It may be that the labels can’t get paid as much as they are for us to get paid a fair rate.  That should be balanced in a marketplace.  Unfortunately, right now, no one is deciding the right way to split that money up.  Instead, what’s happening is that you’ve got one group setting the rate for record labels, a different federal judge process setting the rate for publishers, and there never being any consideration of the comparison.  So if you want to put both copyrights in a fair market situation and then letting it balance out what they get, that’s the right way to go.  That’s what happens in synchronizations, for example.  When a movie or a TV show or a commercial wants to use a song, they have to negotiate with both the record label and the music publisher in a free market.  Guess what happens?  The money’s split fifty-fifty.  So it’s not that I’m attacking what the record labels currently make and saying that they should get less: I’m arguing for a system of at least a fair market consideration.  If the result of that is that they get less, then so be it.  But that’s not what we’re directly going after.

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Vertical Integration

Hear David Israelite on the recent ASCAP/Pandora ruling…

And again, where does the vertical integration fit in where the labels own the big publishers?

Well, I’m glad you asked that.  That’s another one of those perceptions that I’ve struggled with — the reality that I’ve seen vs. what some people think from the outside world.  First of all, I think it’s a complete misnomer to suggest the label owns the publisher.  In a corporate entity, you have both a label division and a publishing division.  Now every company is unique.  It’s hard to just group them all together and talk about the majors.  So for example, in the case of BMG, which has some recorded music interests, they’re dominated by music publishing interests.  In the case of Sony, you have a situation of where the label is operated completely separately than the publisher.  And there’s no person sitting over both entities that’s somehow tipping the scale against the publisher in favor of the label in a company like a Sony.  In the case of Universal and Warner, where you do have corporate interests in both publishing and labels that seem to be more integrated in the corporate structure, you have a very interesting thing going on.  They’re looking at reality.  Their publishers are more profitable.  Their publishers are growing in importance to their bottom line, and so what use to be kind of the attitude maybe of the publisher being kind of the silent, sit-on-the-sideline, get us your small return while the label is the one that has the bigger chance of return, you’re seeing a totally different attitude among these companies because of the importance of the publishing right.  And so I will tell you this honestly: I have never seen one example of where a major music publisher has taken a position that was to weaken the publishing idea in favor of their corporate sister label.  It just doesn’t happen.  And you also have a situation, for example, in my board of directors that is made up of eighteen people, fourteen of which are by definition independent music publishers.  One person, one vote.  I can promise you that if a major publisher walked in our Board room and tried to take a position to weaken the publishing interest on behalf of their label corporate partner, they would be tarred and feathered out of that room faster than you can believe.  It just doesn’t happen.  And it’s actually counter intuitive but sometimes the strongest voices in favor of the publishing interest against the label interest come from those major publishers.  It’s really true.  So I can see from an outside perspective how you might look and say, “Oh, those companies must favor their label over their publisher.” But it just doesn’t work that way in practice.

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So you think that when there’s that fourteen to one ratio, say like in Pandora, that’s just about the market.

Well think about that fourteen to one ratio.  Let’s say that you’re, let’s not even take a specific company.  Let’s just say that you’re company X and you’re the world’s largest record label and you’re the world’s largest music publisher and you’re under one house.  What your publisher gets paid from Pandora has had nothing to do with you.  The consent decrees over the PROs are what have dictated that percentage from Pandora.  So if you see a major publisher pull out of ASCAP or BMI, that major publisher is taking an action that is exactly opposite of what the question would to suggest, which is, by pulling out, they’re trying to demand more of the pie, which would mean less for their record label.  So the fact that the major publishers have pulled out proves my point.  If they wanted to just lay down and let the majority of the money go to the record labels, they wouldn’t pull out at all.  They would let ASCAP and BMI continue to operate under consent decrees and have their labels continue to get the fifty-seven percent and leave the imbalance the way that it is.

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“But, for example, take the largest record label in the world, and what percent of the market does it control? And why does it get to operate without a consent decree, and is it really that much larger than a PRO is in terms of a market share? I mean these are questions that I think need to be asked.”

Direct Deals, PROs, Consent Decrees, and Transparency

Why won’t they talk about the details of their deal to their songwriters?

Well, I’m not aware that they don’t.

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I’ve never heard any details of those deals.

I’m not aware that they don’t.  I mean, again, we’re very early in those withdrawals.  This court case just last week throws into question the status of those deals, but I’m not aware that a withdrawn publisher doesn’t talk about their deal any more than ASCAP or BMI does about their deal.  So for example, if you’re a songwriter that’s affiliated with ASCAP, the question is how much detail about the business deal do you get from ASCAP.  And if your rights are then withdrawn and they go with a major publisher who makes a deal, are you getting more or less or the same information about the deal than you were from your PRO.  I don’t know the answer to that question, but to me that would be the question to ask.

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Well then the question is about transparency all around.

Transparency is always a good thing all around.

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But it’s very hard to come by.

I understand.  I think that you have some publishers in the marketplace today who attempt to attract songwriters with that very pitch, more transparency if you sign with me.  Uh, you’ve seen…

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Kobalt.

Well, you know all my members are my members, and so I don’t get in the middle of any of their competition among each other.  But I’m just pointing out that if transparency is what’s driving songwriters as to where to sign, then you will see publishers respond with pitches about transparency, and the market will move that way.  What’s very frustrating to me and I suppose it’s frustrating on both sides of the equation — I don’t mean to minimize the concern –but if transparency is a concern for writers, they shouldn’t sign with a publisher where they don’t feel like they’re getting enough transparency.  They should maybe be their own publisher and they’ll have total transparency, or they should do an administration deal with a company that’s just going to provide a service and they’ll keep all their copyrights.  Often times, as you know, the reason why writers sign a publishing deal is because they get a very large cash advance.  Now they may be trading something for that money in the door on day one.  It’s a business decision; no one is forcing them to do it.  If that money is recouped later, for example, I think that’s just part of a contractual arrangement.  Now, I hear your point about transparency.  But I don’t know that any of the direct deals provide less transparency than a PRO deal, for example.  I suspect they provide the same if not more level of transparency.

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I guess there’s just a certain assumption, or was, going in, that your PRO was your PRO and that that would always be the way it was.  And I don’t think any of the songwriters had any say in that whatsoever.

As I understand it, and again every situation is different based on the terms of an individual contract, but if a songwriter wants to make a decision about a PRO and doesn’t want that decision to be able to be changed with their affiliation with the publisher, that certainly could be part of their contract, if they chose it to be.  So I’m kind of a big believer in letting adults make agreements among themselves and not having a whole lot of government interference in that transaction.  I think the consent decrees provide a level of government interference in that transaction.  And again, I think the withdrawal issue has nothing to do with how well the PROs administer, or the transparency… I don’t think it’s about any of that.  I think it’s simply about the frustration of this fifty-seven to four and other things like it, where we don’t think we’re being treated fairly.And every individual publisher may make up their own mind about what to do about that.

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I want to go back to what you were saying about how any publisher could make their own direct deal, like with the digital companies.  Again, what about the smaller publishers?   I don’t think that there is the leverage there for a lot of these more independent, smaller publishers to be able to do that.

Right, I agree.  So the question is a couple of things.  Number one, if the larger publishers withdraw and make direct deals, does that benefit you as a small publisher that may not be able to withdraw your rights.  I think that’s an open question, but I think that the first test of the question was a test in your favor. Which was, if in fact Apple Radio is paying ten percent across the board to ASCAP and BMI, that suggests that everybody wins. Secondly, it may be that the future involves smaller owners of copyrights coming together and doing something in a collective way to the extent permissible under law.

Now that’s exactly what ASCAP and BMI were.  They were a lot of different interests of copyright coming together and operating collectively, and at some point during World War II, they came across a Justice Department that felt like it had gone too far and that they needed to be regulated.  There might be some future that involves aggregation, but without government regulation and oversight.  For example, I don’t know, fundamentally under law, why there is a difference between, say, a large publisher that has a bunch of individual songwriters whose rights are bundled together under that corporation, being different than a bunch of small publisher writers coming together under some umbrella.  Under antitrust law, and I’m not an expert in antitrust law, but, as I understand it, there’s no fundamental difference in that.  SESAC, for example, operates without a consent decree.   I don’t know exactly what percent of the market they represent, but clearly a large enough segment that people have to deal with them.  So is a SESAC type situation something that becomes more attractive in the future?  I just don’t know.  I mean I think the best case scenario is that ASCAP and BMI be allowed to continue to operate on behalf of their members, but without this kind of over-regulation, in which case it may be a moot point.  So I think there are a lot of open questions.  It’s one of the areas of songwriting and music publishing that I think right now is one of the biggest challenges facing our industry.  I’d say the two biggest challenges are the consent decrees over our performances and the mass synchronization business models that are developing and how we license those and get paid properly from those.  To me, those are the big questions for the future.

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And the consent decree…how would that be addressed?

Well, for example, one question is why you need a consent decree any more.

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How is a change brought about?

Well, right now the consent decree is an agreement between parties.  The Justice Department and ASCAP or in the case of BMI, the Justice Department and BMI.  So part of this starts with how do ASCAP and BMI feel about it.  And I can tell you from, you know, I talk with their leadership all the time.  They are very concerned, and they are doing their best to represent the interests of their members.  So they have the right goal in mind, which is they want to do everything they can to have their songwriters and music publishers get paid as much as they possibly can.  So I think they have a common interest with any individual publisher that’s looking to how you enter into the future.  But, for example, take the largest record label in the world, and what percent of the market does it control?  And why does it get to operate without a consent decree, and is it really that much larger than a PRO is in terms of a market share?  I mean these are questions that I think need to be asked.

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In what form, though?  How do you actually get to a place where it has to be addressed by the Justice Department?

There are a lot of moving parts. You have the Department itself.  You have the parties to the consent decree.  You have NMPA which represents all the music publishers and its engagement.  You have Congress, which, you know, may decide to get engaged in this question.  There are a lot of different things, and I think it’s very fluid right now, as you can tell from just last week’s court case.  By the time anyone listens to this, the landscape may have changed again.  So it’s hard to predict exactly how it changes, but I think that there is a building momentum for a change.

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The “Next Great Copyright Act”

Hear David Israelite on the “Next Great Copyright Act”…

Now in terms of the Copyright Reform Act, which is more change, you say you think it will happen very slowly?

If at all.

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What are your biggest issues?

Well, when I think about the copyright modernization, I kind of divide it into two different buckets.  You’ve got the issues that are specific to music publishers and songwriters, kind of music-focused issues.  And then you have the broader issues that are copyright, where we’re a part of a larger coalition of copyright interests.  On the music interests, there are some things that I think are very important.  Number one, if we are going to be told that we must continue to operate under a compulsory license for our reproductions, at a minimum, the rate standard used by the judges should be willing seller, willing buyer.  Which means, the three judges try to approximate what would have happened in a free market vs. the current rate standard which is an 801b standard that uses four factors, two of which depress the value of our intellectual property.  So that’s a very important change that I think is needed.  With regard to the consent decrees, open question about whether those are engaged or not in this process, but at a minimum, when ASCAP and BMI go to rate court in front of a federal judge, they ought to be able to introduce as evidence other rate structures that would be comparable.  And right now the law prohibits that. Licensing reform: I think that there are things that could be done cooperatively with the digital media companies about how we license our mechanicals.  Right now it’s a very broken system that was made for that old analog world, as you called it.  We need a licensing system that’s made for a digital world.

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Do you feel that there can be that kind of cooperation?

Oh, I do.  We’ve actually been meeting on this for a long time, and we think that we have an idea that we both agree on about how to do it.  Now there are a lot of details to work out, but I do think that we could come to an agreement on how to improve the licensing system so that, not for the record label that wants to put out an album, but for the digital store that wants to offer twenty-seven million tracks tomorrow.  That’s our challenge, and I think as an industry we’ve got to do a much better job of figuring out how to monetize the future, instead of just complaining about the changes of the way we used to do business.  So I think licensing reform could be a part of it.  On the broader copyright issues, there are so many issues that could come up.  We talked about the DMCA.  Statutory damages may get attacked, orphan works, fair use, the term of copyright.  These are all things that might come up in a copyright modernization.  So I’m worried about all of them, but the one area where I think we could most hope to improve our situation would be the responsibility of others with what they do when it comes to our property being online.  And the DMCA, as we’ve talked about,  is just so broken.

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So now you’re talking about ISPs or search engines or both?

I’m talking about it all.  Everyone who has a role, really, in what goes on in today’s world.  Again, I’m not optimistic that the government’s going to fix this, but sometimes government pressure leads to private market negotiation in deals about how to improve things.  Take, for example, which you were probably just about to ask me about, the voluntary agreements going on right now between ISP’s and the music and motion picture industry about notices for people that are stealing.  This is an experiment in a private negotiated deal as opposed to the government coming in and doing something.  It’s too early to know whether it’s working well or not, but it’s an example of where, before this deal was done, years ago, ISPs would never have dreamed of being a partner in this kind of an effort.  But their economic interest has changed a little bit.  And the same may be true with search engines or things like that.

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You said “we” were, meaning NMPA and…? are discussing solutions for the future.  I was just wondering who “we” is?

Well you have discussions on a lot of different levels.  You know, the core copyright groups get together and talk about working collaboratively all the time.  We work through the Copyright Alliance.  We work through the Chamber.  We work through the IIPA.  So there are a lot of different forums where these discussions happen.

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So maybe One Music could become a bigger “one”?

That would be great.  That would be wonderful.

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SIRA Revisited

You had said in 2011 that you were looking some kind of new revisiting of SIRA(Section 115 Reform Act of 2006).Can you talk to me about that?

Sure, and that’s the same thing I was talking about with licensing reform and Section 115.  So, go back to how we do business.  Our past in mechanical licensing was very simple.  Music publishers would license songs to record labels; record labels would put out albums, they’d collect our money, and they’d pay the music publisher, who’d pay the songwriter.  And as a result we didn’t build a licensing system that was designed to do much more than license that transaction.  Compare that to performances, where because of the need for a licensing system that was more aggregated, the market produced three PROs, where if you’re a licensee and you go to all three, you’re covered.  You don’t worry about missing copyrights, and every songwriter and music publisher joins one of the PRO’s.  It’s just the way we do business.  The government didn’t mandate it.  No one came up with a grand plan to have three PROs.  It’s just how the market developed based on the need.  What’s happening in the mechanical space is similar to what already happened in the performance space, which is, the need in mechanicals is becoming the need for aggregated content with a limited number of places to go to be covered.  So for example, we use the example of a new store that wanted to open with  twenty-seven million tracks.  If it was a radio store, they would go to three PRO’s, get a license, and they’d be covered.  But if it’s a download store, think about it.  They’d go to the major music publishers, they’d go to the Harry Fox Agency (HFA), and then they would be left with millions of missing copyrights.  All in a place where we have a compulsory license.  There is no negotiation over rates.  Now when it first came to download stores, the record labels provided a solution.  What the record labels did is pass through the publishing rights to the digital store, collect the money, and pay the publisher.  Just like they did for an album.  That wasn’t a great system.  We don’t like it when our money goes through record labels.  And as the late fee settlement proved, when we found a couple of a hundred million dollars of our money, it’s just not a great way to do business.  But for download stores, that kind of worked.  But now you have all these other types of interactive streaming, locker services, bundled services, where the record labels are not passing through the publishing rights.  And the digital service is expected to go get all of the mechanical rights.  But unlike a performance where they would go to three places, they are left with an impossible puzzle with their mechanicals.  My argument is, this is stupid, because we are making it harder for new digital services to launch and be successful, which we want to happen, because we’ve made licensing so hard.  And it’s not because we planned to make it hard; it’s because we built a licensing system for a different purpose.

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And what about the fact that they all have different rate structures and different rules; how would that work?

It would be easier than a PRO, for example.  So take a PRO, every licensee with a PRO goes through either a negotiation or a rate court decision, a rate comes out, they administer all kinds of different performance rates, they collect all the money, and then they distribute it based on formulas.  In the mechanical space, you currently have thirteen different categories of 115 licenses, and they have set rate structures.  If you had a limited number of aggregating bodies, like you have in the performance space, that administered those mechanical licenses, and everybody had to join one, the problem would be solved.  Now if you’re a small music publisher, you’d have to join one just like you have to join a PRO.  There should be competition; there should be transparency.   But you should have to join one, because right now if you wanted to just sit out the mechanical ride and not affiliate with HFA and just make people come find you, think about the impossibility of that from the licensee’s perspective, when they want twenty-seven million songs to do business.

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Isn’t HFA doing this a little?

Sure they are.  The problem is not everyone belongs to HFA, that’s the problem, and I don’t think it’s a fair answer to say everybody must join HFA.  So our solution involves creating a marketplace that looks a lot like the performance marketplace.  In the performance marketplace, three companies sprung up, there could be more, there could be fewer, but that’s how many there are.  In the mechanical space the idea is to have a limited number of designated agents (DAs) and everybody has to join one.  And as many people that want to compete against HFA, that have a minimum amount of market share and the technical capability to do it, should be allowed in that space.  But then if you’re a licensee, you go to those limited number of DAs and you’re covered, just like you go to ASCAP, BMI and SESAC and you’re covered.

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Now that was an issue last time, right…the Designated Agent part of it?

There are a couple of issues that came up in the last legislation that we’ve solved.  One of the issues is what if you don’t choose one.  You just sit back and say I’m not going to do it.  What the legislation said was that one of the DAs would take responsibility for that missing market share.  Now in the original legislation that was going to be HFA, not because we thought this was something that would be good for HFA, because quite honestly it’s a real pain.  We just thought it was the best solution.  That caused some problems among small independent publishers that didn’t want to join HFA.  So the new thought is it doesn’t have to be HFA.  Let the Copyright Office take responsibility for that function, perhaps.  Either contract it out to a third party or do whatever they want.  But it would not be an option to just say I’m not joining one.  The best example of this is, I’m not aware, if someone takes an ASCAP, BMI, or SESAC license, never in history, am I aware, has a licensee been sued for infringement because they were missing a license or a copyright.  You just are covered if you took those three licenses.  The same should be true in the mechanical DA space.  If you take however many DAs there – three, four, five – however many, you’re covered; which means one of those DAs has to serve that function as kind of like the insurance agent for any missing copyrights.  They would collect the money, they would look for the owner, but ultimately you wouldn’t have an infringement lawsuit if you were one of those small publishers that didn’t join a DA.  That was one of the problems.  The second problem with SIRA is that as part of the deal, we eliminated the pass-through license.  Under Section 115 right now, record labels have a right to pass-through the publishing rights to a third party.  We hate that.  So in the legislation we put in, that ended.  Under the new thinking, we’re not going to eliminate that.  We think it will go away, because once you create a licensing solution directly with publishers, there’s not going to be a need to go through the record labels.But we avoided that fight by not trying to get rid of the pass-through license.  So that’s another improvement that we’re looking at.  A third improvement is, right now in our Copyright Royalty Board (CRB)proceeding, which happens once every five years, you have a small window of time to negotiate or go to trial, and then you’re locked in for a five year term.Well, as you know, the marketplace evolves a lot faster than once every five years.  So we’ve come up with an idea that if the industries come up with a settlement in-between the five year period, we would have an ability to go back to the CRB and have any agreements adopted as law.

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Now “the industry” would include…?

Anyone who participated in the last CRB proceeding.  So for example, every five years, the CRB opens up the doors and says who cares about the 115 rate structure.  Ah, my memory is going to fail me, but I think there were thirty-four parties in the last CRB.  On one side you’ve got interests that represent songwriters and music publishers.  On the other side you have interests that represent the licensees – record labels, digital service providers, cell phone companies.  Now when we settled the rates this past time, it was a settlement that was signed off by all the parties.  We got unanimity of the settlement.  If any of those parties had objected, there was a process for them to go to the court and say we object to the settlement.  The same system would be true in between the five year terms, so the parties there in the CRB or any new party that had a reason they didn’t participate last time, such as they didn’t exist but now they came into being, could petition to be a part of it.  But at least leave open the window for a voluntary agreement.  I’ll give you the best example of this.  We agreed on a locker category in the most recent settlement, but only a certain type of locker.  After the deal was closed, a different type locker was developed, and there was an agreement reached among most of the major players.  We can’t go back and make that part of the statutory rate structure.  So for five years that has to exist outside of the compulsory, which creates a lot of problems for licensing.  So this would be something good for everybody, to leave open the window for settlements inbetween the five year terms.  Those are the things different in concept from the last SIRA.  The other thing that has changed, which I think probably is the biggest difference, is there are a lot of digital players that now care about licensing reform that didn’t care before.  For example, take Google; they weren’t in the business of selling music last time, when SIRA came about.  Now they are.  Amazon. Apple used to only sell downloads and get a pass-through.  Now they have a radio service that just launched, and a locker service.  So you’re seeing more of an interest by the digital players in figuring out a better way to license.  So I don’t know whether… it’s so hard to change the law, and there are so many interests involved, but this is one that we should be able to work out, because it doesn’t involve money, and it doesn’t involve the scope of rights, which we will always fight about.  It’s a process fix.  And that makes sense to me.

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Would this all be within a copyright reform act, or is this anyway?

It could be part of a larger bill or it could be on its own.  It probably just depends on what happens with the other issues.  I suspect that Congress will hold hearings later this year where they will focus on this licensing question.  And this will be my message to Congress, is that we could do this collaboratively with the digital services and the publishers and songwriters agreeing on a fix.  If it gets caught up in the broader copyright bill, then we’re hostage to what happens with that.

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And do you think that Congress would want complete cooperation among all parties?

Most likely; I don’t see it happening unless we all go together and say we agree on what to do.

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The RIAA (Recording Industry Association of America)… how is your relationship there?

We have a great relationship with the RIAA, even though half the time we fight with each other over legitimate things.  Uh, the RIAA’s role in this is interesting, because we’re talking about licensing situations that they are not a part of.  These are licensing situations directly between music publishers and digital services.  If the record labels are passing-through our rights, we largely don’t have a licensing problem.  We may have other problems, like getting paid properly, but it’s not a licensing problem.  When the labels don’t pass-through, that’s when we really have a licensing problem.  I don’t know that they have a lot of interest in what we and the digital services do together to make this work.  The problem is, when you open up a discussion about licensing, the RIAA has issues that they care about and things they want to accomplish that may be different, and it’s an opportunity to add those to the discussion.  So for example, there has been an interest in expanding the scope of Section 115 to include things like lyrics, music video rights.  We would never do that.  We believe in the marketplace and we don’t want the compulsory license to expand.  There is an effort by the RIAA to perhaps look for a weakening of First Use Rights.  As people that are in this business know, a record label must secure permission the first time that the song is used.  Some labels find that inconvenient and would like to see some legal relief.Of course not.  So the discussions so far have largely involved the RIAA wanting to add issues to the mix that have been unacceptable to songwriters and music publishers.  So we are not on the same page yet with record labels.

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With 115.

Yes, that’s with 115.  What I think will change over time is, as the record labels become more and more dependent on the success of these  new business models, and as these new business models demand more and more a better way to license, I think you’ll have to see the record labels come along.  But we’re not there yet, to be frank.

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“If you spend all your time trying to preserve what’s shrinking away, with no ability to stop the shrinkage, instead of focusing on building out the future, you’re going to be left in the dust.”

The GRD

The GRD (Global Repertoire Database):  In talking about all the streamlining the processes, what do you feel about the GRD?

I’m probably not the best person to interview about the GRD.  NMPA is very involved in it.  I personally have not been, as much.  My general counsel is significantly involved and Ralph Peer, who chairs our International Committee, is very involved in this and has attended many of the meetings and travels to Europe often.  But my view about the GRD is I think it would be great, but I don’t think we should hold our breath, if there are other things we could do to make progress.  The other thing about the GRD which I’ll say  — and which you can probably tell from this total interview is that I speak pretty bluntly and I don’t pull a lot of punches —  I do think there needs to be an adjustment of the attitudes of the music industry about ownership data.  I think we treat ownership data as something that has value, which it does, but because of that we don’t want to share it, because those that possess it have an asset.  And if everybody knew what everybody owned, that asset wouldn’t be valuable any more.  So what you are seeing is a tension between a lot of money that was spent, a lot of hard work that was spent to build databases that are owned by people, that have value, that produce money for them vs. an effort to make all information free and known by everybody.  Probably not that — I’ve never thought of this analogy before, but — probably not that different than how an encyclopedia publisher/owner feels about Wikipedia.  You know, there are definite benefits and interest in a public free source like a Wikipedia, but yet that may put that encyclopedia manufacturer out of business.

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I think it did.

So I do think — and by the way, we own the Harry Fox Agency, which has one of the best and most valuable databases in the industry,so this is a personal issue for NMPA and HFA –so I do think, though, that the data itself needs to become at some point not what’s valuable.  The right is what’s valuable, and the data is there to facilitate the proper licensing and proper payment for the right.

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Now one thing that I’ve heard is that there’s a fear that this is really just so that certain entities can create a licensing hub.

It depends who owns the data, I suppose; what the hub looks like.

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Have you heard about that at all?

Sure, and, you know, it’s a real question.  Who pays for it? And it’s obviously not fair for some people to pay to build it and then others to come use it without any sharing of the cost.  It’s the equivalent of a road structure being built, and then someone not paying their taxes but wanting to enjoy the roads the same way.  And so we’re building a highway system here; everybody needs to be taxed for it or they shouldn’t be allowed to be on the roads.  I think that’s kind of the full crux of the problem is there is no way to tax everybody like a government can with citizens, so how do you build it on the front end but then have fair access rules on back end.

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Also, it seems to me that really there’s a lot of songwriter money — and a lot of American songwriter money — going into this, whereas in fact, it is an administration situation where, should songwriter money be bearing the cost?

Great question; it’s one of my pet peeves about licensing in general.  The songwriters and music publishers often are the ones paying for the licensing cost.  Take 115, for example.If you use the compulsory license, you have to pay for it, but under the voluntary licensing scheme that goes on, we pay for it.  You go and use Harry Fox, and Fox takes the commission off the top to pay for its expenses.  Those expenses aren’t passed-through to the licensee.  Now a lot of that is changing, but I do agree that we have a mutual interest in this being built, it shouldn’t just be built with songwriter/publisher money.  Now the GRD, as I understand it, that hasn’t been settled and there is a discussion about who’s kicking in money.

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And who’s going to continue to put in money…

And who will continue to, which is why I say don’t hold your breath, but I think, long term, it makes no sense to not have a global database.

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Net Neutrality

Net neutrality; still an issue?

I think less so.  I think it had its moment when it was a hot topic.  I don’t think it’s being discussed very much, any more.  And I think what’s interesting is, you ask people what they mean by net neutrality, and ten people will give you ten different answers.  And so it’s hard to say what you think about net neutrality.  As a general rule, I think it’s very important that content not be discriminated against, but at the same time, I think what we are trying to do is maximize the value of intellectual property.  And so anything, that when people say net neutrality, if they mean anything that devalues a songwriter’s intellectual property, then we have problems.

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And what would that be?

Well, for example, what if you have an exclusive method of delivering certain content at a higher price?

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The tiered payments of ISPs, for example.

Sure, sure.  Is that something that’s good or bad for songwriters?It depends, is the answer.  But, if it’s something good for songwriters, I don’t know that we would be against it under some principle of net neutrality.

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So it depends on the deal.

It does.  You know, as we move from the analog to the digital world, I don’t know that it’s any different.  Physical stores, some of them had certain advantages over others.  Sometimes they paid more to have better retail space.  You know, net neutrality…I don’t think songwriting issues will drive what happens in net neutrality, but that would be our interest in it.

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Probably the film community has more at stake because of the high bandwidth, I would think.

I think that bandwidth brings down everybody to the music level in terms of the concerns about a lot of these issues.

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The Clear Channel/Warner Deal

Hear David Israelite on Clear Channel/Warner and voluntary deals…

Any thoughts on the Clear Channel/Warner deal?

Woo, I’ll get myself in a lot of trouble.

I believe that there should be a performance rights act in law.  And so these voluntary deals are not the ultimate solution, if that means some artists are not getting paid by some broadcasters.  However, I’m fascinated by the voluntary deals, because it begs the question of winners and losers, and how there can be a win, win situation.  The basic premise behind the voluntary deal is that the radio station will pay something for terrestrial performance, which they didn’t have to before, and they will get some kind of a break on their digital performance.  So if you boil it down to that simple of an equation, both sides are making some kind of gamble on what they think the revenues are for broadcast, terrestrial and what reductions or what payments are being made vs. the future of digital performance and what discounts are being given and how that balances out.  Now you can throw in other things like promotion and other kinds of tie-ins, and I know those are parts of the deals.  But if you boil it down, it’s really about taking less in one area, taking more in another area.

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Similar to Section 114…

Well, 114 is the digital part of what these broadcasters do.  So if you’re a terrestrial radio owner and you want to send your signal over a digital signal, you have to pay the 114 rate, even though for your terrestrial broadcast signal you pay nothing.  What companies like Clear Channel recognize is that their future is largely going to be tied into digital performance where currently they are paying a very high rate.  So by agreeing to pay something for their terrestrial and by getting some kind of break on their digital, they are making a bet on their future.

Right now, the way that the 114 right, which is not publishers and writers, it’s a hundred percent artists and record labels — their performance rights, their limited performance rights for digital performance — they go through a rate setting every five years.  And the three judges that make up the CRB set those rates.  One of the concerns is that in these voluntary deals, if certain labels are giving discounts on the digital side to get paid something on the terrestrial side, is there a bad precedent being created that the judges will later use to lower everybody’s digital rate, even though everybody is not getting the upside of the terrestrial performance.

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Why don’t they raise everybody’s rates?

That’s part of the issue that’s going on.  It’s interesting to see, as the record labels have tried for a long time to get this performance right into law and I don’t know that they are any closer today.  In the last Congress they didn’t even really go for it.  So you’re starting to see these private deals being made.  Up until recently, it was with none of the major record labels.  Now Warner’s done one.  I am sure that Sony and Universal are in discussions or having conversations internally about what to do about this, but it is a piecemeal approach.  It is not a way to fix the problem long term.  Now, the problem will shrink over time as terrestrial becomes a smaller part of the market and digital, whether it’s satellite or internet, becomes a bigger part of the  market. The problem solves itself over time, if you believe that terrestrial will eventually go down and digital will go up.  But what they are doing now is a very interesting gamble, and hard to know who wins, who loses, but it’s interesting to watch from the other side of the equation where we have nothing to do with this from the publishing/songwriting part of the equation.

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I suppose in this deal they re-evaluate at a certain point.

I’m sure so.

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Moral Rights

What do you think about the European concept of Moral Rights, Author’s Rights?

I think it depends on what it means here.

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I’m wondering if it would ever get a foothold here, and whether that would be a good or bad thing.

I would not be tremendously optimistic about the idea of European concepts finding their way into American law as a general proposition.  If you compare a songwriter’s position in the United States vs. Europe, for example, there are big differences.  Some you could argue maybe better, some worse, but very different.  You know, with the mechanical space, in Europe, you are mostly dealing with single societies.  In the United States you have this situation of the scattered licensing.  In Europe the performance right is regulated.  In this country, we have consent decrees, but there may be a future where it’s not regulated. In the European situation, a lot of the issues are cross border issues of different countries trying to operate as one entity, whereas in the United States, the states don’t provide that same kind of complication for songwriters in the United States,so we don’t have really those issues here.  The competition laws are different.  The antitrust scrutiny tends to be greater in Europethan here.  They have a communication to the public right which sometimes is discussed here.  Would it be better in the United States if we had a broader communication to the public, and not the way our Copyright Law works?  But, overall, I guess I would focus more on…I think our best path forward for songwriters is to deal with the unique parts of American law that affect them and not try to lay over a concept from Europe that they think would improve their situation.  That’s my sense.

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“First of all, I think that there is going to be a weakening and ultimate destruction of the controlled composition clauses in recording contracts. I think controlled composition clauses have been one of the most harmful, destructive things that have ever happened to songwriters. Because in many ways they have pitted artists against their writing partners, and it’s just been horrible.”

The Future of Professional Songwriting

Hear David Israelite on the future of the songwriting profession…

Do you think that this industry will be able to continue to support songwriters as professionals?

I do.  I think it’s changing, what it means to be a professional songwriter.  Some of that change, I don’t think there is anything we can do about it.  Some of it I think is in our control and we can try to improve.  There’s just less money in the industry right now, which means there are going to be fewer professional songwriters.

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Do you see that changing?  Do you ever see it?

I could.  I absolutely could, which is why I’m so focused on how do you monetize and grow the new income streams.  If you spend all your time trying to preserve what’s shrinking away, with no ability to stop the shrinkage, instead of focusing on building out the future, you’re going to be left in the dust.  And so I think the industry is going to ebb and flow.  I don’t know that we’ll ever recapture the heyday of where CDs were king and there was no one else profiting other than record labels, music publishers and the creators, whereas now you’ve got all these digital companies that have a piece of it, and the consumer’s not forced to buy an overpriced piece of plastic that bundles together songs they don’t want.  But there are opportunities, too.  And some of them are exciting opportunities.And so that’s why the focus ought to be on growing that, sure.

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What do you see as the opportunities in terms of a professional songwriter?

In terms of a professional songwriter, lots of opportunities that I see.  First of all, I think that there is going to be a weakening and ultimate destruction of the controlled composition clauses in recording contracts.  I think controlled composition clauses have been one of the most harmful, destructive things that have ever happened to songwriters.  Because in many ways they have pitted artists against their writing partners, and it’s just been horrible.  And they’ve been abused, and people have been taken advantage of, and I think you are going to see a pushback on that front which might be one area of improvement.  Secondly, if we can figure out how to monetize models that don’t involve ownership, then we might see a future that has a lot more revenue, which then obviously means it would be easier to make a living as a songwriter.

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What’s an example of that?

YouTube would be a perfect example.We’re two years into trying to make the YouTube licensing work. it’s very young, it’s very immature.But long term, if the way we access music is through involving video and lyrics and maybe a subscription payment, maybe it’s just advertising base, but there is a broad base of everyone doing it, can that revenue pool ever match the pool that we use to get from selling CDs?  I don’t know, but that’s what we ought to be trying to get, and so that’s an area that I think long term we could benefit from.  I mean if you look at the movie industry, for example, you know when the VCR came out they thought it was the death of them.  And now how much of their revenue stream comes from downstream sources other than people buying movie tickets.  You know, the industry has transformed.  The music industry has done a lot to transform.  It has a lot more to do.  But those would be the areas, I think, where a writer could be optimistic.

I’ll end there.  Thank you.

You’re most welcome.

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