NEW YORK-Recording-industry giants EMI and Sony BMG have teamed to fight illegal music swapping with the announcement last week of an agreement to address licensing issues for music on mobile phones, PCs and other digital platforms.
The partnership teams EMI Music Publishing, the world’s largest publishing house, and Sony BMG Entertainment, which was formed by the merger of Japan’s Sony Music and Germany’s Bertelsmann Music Group earlier this year. Together, the companies control more than one-third of the global music market.
Terms of the deal were not disclosed.
The pact sets working guidelines for bringing copyrighted digital content to market via existing and emerging distribution channels. The agreement covers North American rights for master ringtones and ring backs; digital video; copy-protected CDs; and DualDisc, a new disc that incorporates CD and DVD functionalities.
Also included is “locked” digital music content on hard drives and mobile devices that consumers can access by purchasing rights to the music. Several emerging technologies also were included.
The deal sets specific rates for ringtones, ring backs and DualDisc; rates for other platforms have yet to be determined.
“This agreement will enable us to rapidly expand into new markets as we distribute music and entertainment content over a broad variety of platforms, including innovative products for the traditional retail market, music services in the mobile space, and video-on-demand,” said Andrew Lack, chief executive officer of Sony BMG. Lack added the pact will allow both companies to “reach a set of real solutions that will benefit both companies for years to come.”
The announcement comes amid a massive effort by the recording industry to stamp out illegal file sharing, which it claims has contributed to four straight years of declining revenues. Peer-to-peer file-swapping systems such as Kazaa and Grokster have come under fire for facilitating illegal downloads, and the Recording Industry Association of America has sued more than 7,000 users for illegally downloading music.
Just as emerging mobile technologies present opportunities for record labels to sell ringtones and other applications, they also present new opportunities for music lovers to share files. Music companies that failed to learn from their mistakes during the past four years will continue to suffer even as the popularity of mobile music explodes, according to Bill Diggins, rock manager turned mobile marketer.
“(Record companies) certainly have some culpability (for diminishing revenues in recent years),” said Diggins, founder and chief executive officer of the 2-year-old Diggit Entertainment Group. “As kids were hungry for digital downloads, music companies never gave them an offering, so they found an alternative source of getting musical downloads through Napster and other (portals).”
It’s not certain the new agreement will stand. Independent labels that are already seeking to overturn the Sony/BMG merger may seek assurances the alliance won’t be anti-competitive. But it seems clear that similar agreements are likely to be announced in the near future, as companies scurry to establish structures to help quickly, profitably and securely bring digital music to market.
Said EMI Chairman and CEO Martin Bandie: “An agreement that facilitates more consumer-friendly and piracy-deterrent formats is a big step for our industry and a huge win for artists and music fans.”
