In a move being hailed as “groundbreaking,” Universal Music Group has struck a significant licensing deal with the National Music Publisher’s Association (NMPA) in which independent music publishers will receive a cut of the royalties for their songs being performed in music videos and streaming on video websites such as Vevo.
These things are always complicated, but here’s the scoop in plain English (as best as we understand it). Up until recently, streaming music videos were considered a promotional tool by the labels to encourage music sales, so they neither licensed nor paid for the music appearing in those videos. But as streaming content is rapidly becoming the norm in our increasingly mobile culture, more people have been opting to stream music videos from sites such as YouTube and Vevo on their devices, rather than buy CDs or downloads. As a result, Vevo (which is partly owned by Universal) netted a reported $150 million in revenue last year, none of which went to the indie music publishers and songwriters whose songs were playing in the videos. This discrepancy has resulted in increased pressure on the labels to start paying royalties on music videos as a deliverable product.
Under the terms of this deal, NMPA member publishers will license their works for use in music videos under the UMG umbrella, and will receive royalties calculated on a percentage of revenue. The deal reportedly also extends to ringtones and other similar products offered by UMG.
The Universal deal is being hailed by NMPA’s CEO David Israelite as a “model licensing deal.” In a recent statement, he said:
“Music videos have become an important part of the music business ecosystem. They are not simply promotional tools to help sell recordings. The agreement announced today is an important first step in resolving industry-wide music video issues.”
The deal is the first of its kind between NMPA and a major label, and will no doubt increase pressure on other labels to follow suit as a rapidly changing music market continues to present challenges to ensure that songwriters, musicians and publishers are fairly compensated for their work.