Apple\'s Plans for Internet Radio Come Up Against Big Music Publisher

Music September 28, 2012, 7:29 pm

By BEN SISARIO

The rough news for Apple lately is not only about its much-derided new maps program.

Apple's plans for an Internet radio service have recently hit a snag over the licensing of music controlled by Sony/ATV, a joint venture between Sony and the estate of Michael Jackson, which recently became the world's biggest music publisher.

The two, naturally, are at odds over what rate Apple should pay to stream Sony/ATV songs on its service, but what's new is that Apple needs to negotiate at all. Typically, streaming services have obtained publishing rights from the major performing-rights organizations, Ascap and BMI, which for decades have acted as clearinghouses on behalf of publishers and songwriters.

But in recent years, some music companies have moved away from that model, figuring that the returns would be better if they handled licensing deals directly and opted out of the “blanket” rates set by those organizations.

When an investor group led by Sony bought EMI Music Publishing in June for $2.2 billion, Sony/ATV took control of the world's largest music publishing catalog, with two million songs, including most Beatles songs as well as current hits by Lady Gaga and Taylor Swift. EMI had already withdrawn its digital rights from Ascap, and Sony/ATV will follow suit with the rest of its catalog, effective Jan. 1.

In other words, just as Apple hopes to line up the licenses it needs to operate a streaming radio service, obtaining those licenses has suddenly become more complicated.

Critics of Sony's acquisition of EMI, and of the Universal Music Group's parallel deal for EMI's record la bels for $1.9 billion, warned that this consolidation would give the companies too much market power. These companies will now be so big, the argument goes, that no credible Internet radio service can operate without making a deal.

Martin N. Bandier, the chairman of Sony/ATV, said in an interview on Friday that the disagreement with Apple was simply an effort to get a higher royalty rate for his songwriters.

“This wasn't us not wanting the service,” Mr. Bandier said. “We want the service. It's like oxygen. We just want to be paid fairly, no different than the N.F.L. refs. Do you want replacement writers?”

Apple declined to comment. The news of Sony/ATV's negotiating standoff with Apple was first reported by The New York Post.

While Ascap and BMI still handle digital licensing for Sony/ATV's catalog through the end of the year, it was unclear whether Apple would be able to go to those organizations now. Mr. Bandier said any deal struck in the n ext few months would expire once Sony/ATV withdraws its digital rights in January. But Vincent Candilora, the senior vice president for licensing at Ascap, said that any deal would last as long as its agreed-upon term.

“When Ascap enters into a final license with any licensee,” Mr. Candilora said, “the permissions to the songs in our repertory at the time remain with that license until it expires.”

A spokesman for Sony/ATV said the company is still negotiating with Apple.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.