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VEVO accused of short changing indie publishers

By CMU Editorial | Published on Wednesday 8 February 2012

“Oh, VEVO, where will you go”, as they say down my way. The Sony/Universal owned video site has been accused of unfair play in the US by Matt Pincus, the boss of indie publisher Songs Music Publishing. In a piece for US website The Wrap, Pincus claims VEVO is failing to pay royalties to independent music publishers, despite recently boasting $150 million in revenues last year, and of having paid $100 million over to rights owners in its first two years in business.

The fault actually lies with the major record companies, though as the two biggest majors own VEVO that’s not necessarily much of an excuse for the music video website. Pincus says that, in the US, when Sony, Universal and EMI licence VEVO their video catalogues, they pledge to cover any publishing royalties, saving the video site from having to get licences direct from the publishers or their collecting societies.

But, Pincus claims, the majors then exercise clauses in their artist contracts that allow them to sidestep any royalties due on songs written by the artists themselves when used in videos for promotional purposes. This is called the Controlled Composition Clause, and was designed to ensure labels didn’t have to pay an additional royalty to their artists’ publishers every time they used music videos to promote record releases, presumably on the basis that the publisher also benefited if the promo led to record sales.

However, those clauses should not apply now that music videos are a direct revenue stream for rights owners rather than merely a marketing tool to aid record sales, says Pincus, especially as video sites like YouTube and VEVO arguably compete head on with audio-only streaming services like Spotify, which are licensed directly by the publishers or their collecting agencies.

The Songs Music chief notes that indie publishers in the US, via their trade body, recently agreed licensing terms with YouTube over the use of their songs in user generated content, but he points out that agreement doesn’t cover VEVO which, although utilising YouTube technology, and getting much of its traffic via its YouTube partnership, licences content directly from its parent companies and EMI.

Presumably the major publishers are also losing out if VEVO and its major label partners are indeed using the Controlled Composition Clause in this way, though, as Pincus remarks, as the major publishers are also major labels, it’s less of a problem for them. The exception, of cause, being Warner Chappell, as Warner Music is neither a shareholder in VEVO nor do its labels provide videos, so the soon to be mini-major has no direct income from the video service, even if songs in its publishing catalogue are used.

Pincus concludes: “Are record companies to blame for relying on shoddy language to withhold royalties, or is it VEVO’s responsibility to ensure that the songwriters that helped it pull in $150 million this year share in their success? Whatever the case, this issue of fairness must be addressed”.

VEVO is yet to respond. Meanwhile, Pincus’s polemic can be found here.

It’s worth noting none of this applies to the UK, where VEVO licences the publishing side via collecting society PRS For Music, so doesn’t rely on the record companies to pay the songwriters and publishers, and therefore can’t utilise any contractual terms to not do so.