Apple, Google music clouds can't snub publishers

The influence of music publishers is growing, and one man is leading them to what they hope is more digital music dollars.

David Israelite, CEO of the National Music Publishers Association, has developed a reputation for being a tough negotiator and is said to be on his way to becoming one of the most influential people in digital music. Greg Sandoval/CNET
NEW YORK--Those in digital music should take notice of the olive branches being extended by David Israelite, the president and CEO of the National Music Publishers Association.

Israelite advised NMPA members Tuesday in Manhattan during the trade group's annual conference that it was in their best interest to help legal music sites thrive, Billboard reported. To do this, Israelite wants to streamline the process of licensing rights, a time-consuming task for Internet services that has frustrated managers from SpiralFrog to Apple to Google. Still, Israelite's comments about bridge building with the tech community could surprise some there.

For much of his six years as chief of the NMPA, the group that represents publishers and songwriters, Israelite has generated more notoriety in Silicon Valley for his condemnation of those he accused of distributing music first and asking permission second. He engaged in a war of words with the Electronic Frontier Foundation, the technology advocacy group. A former deputy chief of staff for U.S. Attorney General John Ashcroft, Israelite has filed suit against illegal file-sharing networks on behalf of publishers and lobbied Congress for more copyright protections.

Certainly, Israelite's statements reflect how important Internet distribution has become to the overall music industry. But the comments also come from a man who is quickly becoming one of the most influential in digital music. Over the next couple of years, Israelite could have much to say about the kinds of features cloud music services offer as well as how much they cost consumers.

For decades publishing was a less lucrative business than recorded music and often had to follow the lead of that sector when cutting deals. Only now, in a post-Napster world, has publishing closed the revenue gap and has earned more respect within the industry.

So, now Israelite prepares his group to vie for a larger piece of the digital pie. To help achieve that goal, he has displayed a greater willingness to exercise some of his newly acquired and hard-won clout.

CNET reported last September that Apple planned to announce that it would extend song samples from 30 seconds to 90 seconds. After reading the CNET piece, Israelite and his lawyers informed Apple managers that they couldn't legally offer longer samples without the NMPA's permission, according to an NMPA attorney.

"The old saying is that records are a dollars business and publishing is a pennies business," said Neil Gillis, a longtime industry exec. "David wants to help change that." Greg Sandoval/CNET

Apple backed down and only released the longer samples months later after negotiating with the publishers.

This spring, the Recording Industry Association of America was trying to force Lime Wire founder Mark Gorton to pay big damages after defeating Gorton in a copyright case, it was Israelite who swooped in at the last minute and negotiated a settlement with Gorton first. And more recently, Israelite was working behind the scenes during the publishers' iCloud negotiations with Apple. He wasn't actively participating in the talks, but multiple music industry sources said Israelite made his presence felt by advising publishers to play hardball--something that displeased the major labels.

In the end, it was the top four record companies that appeared to take a little less to get a deal done. Music industry sources told CNET that revenue from iCloud, a service announced on June 6 that enables users to store and access music libraries from Apple's servers, will be split like this: top four record companies (58 percent), Apple (30 percent), publishers (12 percent).

It is these kinds of tactics that have not endeared Israelite to some in tech circles or in corners of his own industry but has won him a loyal following among NMPA members. Fans of the NMPA chief, these Israelites, hope that their leader can lead them to greener pastures.

Related links
• iTunes song-sample plan runs into music publishers
• Music publishers accuse XM of copyright infringement E
• Lime Wire settles copyright suit with publishers

"The old saying is that records are a dollars business and publishing is a pennies business," said Neil Gillis, a longtime industry exec who recently helped found his own publishing house, Round Hill Music. "David wants to help change that."

Gillis isn't being overly dramatic. The statutory rate for a mechanical license, which is set by Congress, requires that a songwriter be paid 9.1 cents for each composition sold. This is what songwriters earn for each download sale and when a CD is sold that features the writer's song (why Apple had to negotiate with publishers for iCloud instead of just paying the statutory rate is that cloud-music rights are new and aren't included in mechanical licenses).

Israelite wants to work with the top labels and digital music services to convince Congress to split a $1.29 download more evenly. "For every $14 that Pandora pays the record labels, the company pays us $1," Israelite told CNET.

He also wants to see more online music retailers enter the market. To do this, he knows he must remove a significant obstacle that confronts anyone who wants to offer music over the Internet.

Speaking before hundreds of composers, music publishers, and lyricists at the NMPA's annual meeting in Manhattan, Israelite said the process of licensing music must be streamlined.

Before a distributor offers a song for download or streaming, multiple rights must be acquired. Often, multiple composers and songwriters must sign off on a single track. The different parties sometimes aren't represented by a publisher and are difficult to find. Some publishing companies own the rights and sometimes they just administer them for creators.

To give some idea of how daunting a task it can be, a former SpiralFrog employee told CNET that the company once hired four women to secure the publishing rights for the millions of songs the company wished to offer. After several months, the now defunct company gave up. Managers concluded that it would take more than 20 years for the team to complete the process.

Gillis said this hurdle represents lost revenue for publishers. "There is no centralized repository of metadata, no one place to license our music," he said. "I want to license to all these (digital services)."

 

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