The Fight Against Direct Licensing

UPDATE – Since the post below was written, Discovery Networks have U-Turned on their decision to proceed with Direct Licensing. However, we will leave the below post active as a guide to Direct Licensing in general.

 

The hot topic in the media composer community right now is that Discovery Networks (who own Discovery Channel, Animal Planet, HGTV and Food Network amongst others) have announced that, beginning in 2020, composers working on their shows must give up their performance royalties when the shows air in the USA, plus sign away their ability to collect royalties on all past shows on it’s networks.

With a lot of confusion about what Direct Licensing is and how it would work, I spoke to a cross section of people, from BMI through to the Production Music Association, to untangle what it means. I also looked at some of the ideas being floated as to how the composer community might effectively push back against these deals.

 

What exactly is a direct license?

 

Discovery Networks will start issuing composers contracts that they refer to as “direct licenses” from the start of 2020. The deal would mean that the composer takes the upfront, flat fee for the show only and would forgo royalties.

(If those shows are then licensed to non-Discovery networks, the assumption is that composers will receive the traditional royalties associated with that show, but nobody seems to be able to clarify that at this early stage.)

Yet there still seems some confusion in the composer community as to how exactly this set-up might work: Would the music still create a royalty and Discovery then take both publisher AND writer share? (And was that even allowed?) Or would they somehow circumvent the Performing Rights Organisations (“P.R.O.s”) altogether?

I too was initially confused: TV Networks pay a license fee to the P.R.O.s and the P.R.O.s then distribute royalties to publishers and composers. How were Discovery going to save money when they had to pay the P.R.O. for a music license regardless? (There would be music other than that on their network: Showing a Coca Cola commercial on Food Network for example, for which a P.R.O. license would be required.)

Production Music Association board member, Joe Saba, helped me break it down:

Joe: When a composer does a direct license, they are bypassing ASCAP/BMI/etc.. They are doing an upfront buyout for all the royalties they might potentially have received.  Therefore, there are no P.R.O. royalties to collect. 

Michael: So when the show is broadcast, nothing goes through the P.R.O.: No publisher share royalty generated and no writer share generated? But they still need to pay the P.R.O. a set license fee each year presumably, if only to cover the payouts to commercials aired on the channel that contain music. So how are Discovery actually saving money by doing this new arrangement?

Joe: Yeah, it gets even more complicated! If they buy out the performing rights here, they can use that as leverage to negotiate down the amount they have to pay to the P.R.O.s. They can also try to avoid triggering royalty payments in other territories or digital media. Luckily, most of Europe has strong copyright protections and that’s where a lot of the money is outside the US. Networks still have to pay something to cover the commercials, promos, etc. that they did not create, but that’s a small percentage of the the overall amount and those royalties would still go to, in your example, the Coke composer. The important thing to remember is that when you do a direct license, try to assess the lifetime value of those rights. Often they are many, many multiples of what the direct license offer is. There’s a significant economic reason composers are being offered these deals, so always ask yourself: ‘who benefits?’.

 

Keep in mind that this deal won’t just be in working for Discovery directly, but will most probably find it’s way into your composer contract when working for a third party production company who are making a show destined for Discovery Networks.

 

Is Netflix doing the same thing?

 

Not to such an extent.

Top Netflix music Lawyer, Carolyn Javier, recently met with 90 composers and songwriters from around the world in Budapest, where they reported that Javier sought to reassure them that Netflix does not require buyouts, even if independent producers working with them asked for those terms.

Billboard.com reported:

“Composers from other countries, especially continental Europe and Britain, have stronger copyright protections than the U.S. and other parts of the world. In Europe, music industry advocates and composers point to the passage earlier this year of the EU Copyright Directive, which is expected to provide protections to composers as it is adopted over the next two years. 

British composer Dru Masters says he received a standard Netflix contract containing a buyout clause. The contract, however, also had a clause exempting British composers who have agreements with the country’s Performing Rights Society for Music, [the UK P.R.O.] which negotiates on behalf of composers and songwriters, and collects royalty payments for them, says Masters.

[However], one award-winning composer says he agreed to a buyout because it was his only option if he wanted to score a Netflix documentary.”

Netflix insists that these agreements aren’t mandatory.

 

Why are Discovery doing this?

 

Variety.com reported estimates that “avoiding ASCAP, BMI and SESAC royalty payments might save them $25 million or so”, but to put it into context, it noted that this is “Less than 1 per cent of Discovery’s third-quarter 2019 revenue of nearly $2.68 billion.”

 

What is the stance of the Performing Rights Organisations (“P.R.O.s”)?

 

I reached out to BMI in New York to get their take. They advised:

“At BMI, we’re very concerned with reports of a policy change at Discovery Networks that would decimate the livelihoods of the composers who create music for their programming.

 “Discovery’s plan would set a very dangerous precedent for all creators and also take advantage of composers who either don’t fully realize the impact on their future earnings or simply have no other choice but to sign away their rights. 

 “We are surprised to hear that Discovery would take such an aggressive position against creators and urge it to reconsider.”

 

So what’s to be done?

 

A few potential solutions are being thrown around. Here are the main three at this early stage. Interestingly, it seems possible that all three could be implemented together to attempt to kick back against Discovery’s new policy.

 

Option 1: A Discovery Blacklist

Composers including Hollywood A-listers Hans Zimmer, John Powell and Carter Burwell have supported yourmusicyourfuture.com, a resource that aims to teach the composing community about it’s compensation options. That’s a great start, and seems to point towards an end goal of composers concluding that they should turn down such direct license deals. Perhaps even a composer-wide blacklist of working for Discovery Networks on their new deal.

YMYF’s Joel Beckerman (composer of “CBS This Morning” and “30 for 30”) advises young composers:

“I’ve composed music for about 50 scores and series. There’s only 5 or 6 of them where I made most of my income [through royalties].

“If any young composer was talking to me I’d say don’t take a buyout. Even if they offer you a lot of money upfront you’ll find out that’s it’s really a career killer.”

Whilst sound advice, the issue with that as a strategy against moves like Discovery have made is that many composers at the start of their careers are keen to get a foot in the door and some credits on their IMDB pages. They may well go for the deal, and you can’t write off that they’ll do a great job on those scores too.

 

Option 2: Unionise

Some composers have suggested that if the direct license is a sign of things to come, that means that a composers union may be the most effective way forward.

The AFM in the US, (or MU in the UK), whilst arguably being useful for musicians, often aren’t seen as an advantage for composers in the way unions such as SAG (Screen Actors Guild) have been for actors. Additionally, the fact that so many Hollywood film scores are recorded in Europe, (to avoid U.S. musician union terms), shows you how a union might not be effective when companies have good international options.

So perhaps more effective than a union in the fight against direct licensing may be for the P.R.O.s to unofficially take on that role themselves by making a policy change: Interestingly, this would be to change their policy towards their members, (not on companies like Discovery), in order to make this effective.

Here’s how it might work:

If the P.R.O.s stipulated in their rules that their members were not allowed to sign direct license deals (or any deals that circumvented the P.R.O.s right to collect and distribute royalties) the composer marketplace would be split between P.R.O. composers and non-P.R.O. composers. Put another way, as a composer you’d need to decide if you wanted to be able to do work that generates you royalties, or access none of this work. This would create a situation which severely limits the composer options for companies looking to do direct licensing deals – arguably forcing them to use inexperienced composers – who these companies would then lose, as those composers were offered work elsewhere that required P.R.O. membership.

It has been raised in composer forums that ASCAP and BMI in the U.S. may have their hands somewhat tied on this front by a consent decree that limits their ability to do this. I wasn’t able to get confirmation of this from the P.R.O.s, but if this is true, it still may be easier to overturn this legality in the light of direct licensing than to legally take on companies such as Discovery over their decision as to how they want to operate.

 

Option 3: Time to call in the big guns?

Government intervention would, of course, be ideal and hopefully bodies such as the P.R.O.s are planning to lobby government, at least to have the US follow the lead of the EU in terms of stronger copyright protection.

However, with no obvious legal route currently surfacing to stop Discovery doing what they are doing, some, (including me), feel that A-list Hollywood composers need to lead the charge. It may be that a name-and-shame of Discovery to the public at large is one of the only options that could make them U-turn away from their decision. It would aim to try to hit them where they might take note: Public perception of their brand. However the only composers that could get this kind of press are the big names, by perhaps grouping together and pointing out to the public that, without royalties to see them through the early days of their career, there wouldn’t be those iconic themes and scores that have become part of everyones childhoods.

“Cold Case” composer and Mpath Music Library curator Michael Levine agrees that this may be one effective way forward:

“To those who say Discovery can’t be shamed, look no further than the #MeToo victories in recent years. Corporations do react when it threatens their bottom line – and negative publicity is one way to do that. I suspect many A-listers would be willing to speak up.

“The bigger fish though would be celebrities the public at large would recognize – George Clooney and JJ Abrams are more significant than Hans Zimmer or even John Williams.”

 

Certainly some A-list composers have taken note of the Discovery situation. Michael Giacchino (Up, Jurassic World, The Incredibles) tweeted:

 

“Composers, unlike other creative trades, don’t have a union to protect their benefits and livelihood. Their only real source of income is performance royalties.

“Remember, composers are people. People with families, a mortgage to pay, food to put on the table. The vast majority of composers are in the MIDDLE CLASS.

“This 90% drop of income will not only affect composers. It will dramatically affect the income of musicians, recording engineers, studios and affect the purchase of music gear, music and sample software, etc. There will be a big ‘downstream’ effect. Are you listening @Discovery?

 

Whilst encouraging to read, it will take more than a tweet here and there to make Discovery sit up and take note.

 

Conclusion

 

Keep in mind that, whilst clearly the concern is that the direct license could become a popular way of contracting the majority of composers moving forward, we are far from that scenario right now. There are many networks, productions companies and executives who understand and support composers and the role they play in making a show come to life. Many people in the industry are finding what Discovery are doing morally unacceptable.

But what does seem certain is that action needs to be taken by the community swiftly and some form of effective coming together must happen. Ideally, this will take the form of an across the board veto from composers on such deals. Intervention on a government level would also be at least worth pursuing and a social media hashtag campaign might also go some way to being effective in raising awareness.

The banning by P.R.O.s of their members to be allowed to take direct license jobs would undoubtedly be impactful, if this were possible. Until then, what might be most realistic would be for industry organisations (The Oscars, Emmys, etc.), P.R.O.s, eminent musicians and Hollywood A-listers to come together and act swiftly to publicly pressure Discovery to reverse their decision, or to at least associate so much of a backlash to it that other networks think twice before following suit.