CANNES – A tough deal was struck at the Midem music market late Tuesday night when the various European record royalty collection societies agreed to a significant reduction in the percentage the societies charge for their services.
The four-year pact, which begins in July, sets a new cross-society average of 6.9% for the deal’s first 18 months, 6.2% for the second 18 months, and finally a drop to 6% in the year 2001. The current European average is 8.34% with, for example, the German society GEMA at 8.0% and small territories as high as 20%.
The deal, to be finalized in about one week’s time, should pacify a bitter dispute between the British collection society MCPS and its continental sister societies. MCPS struck a direct distribution deal with music giant Polygram last year at 6%.
Direct distribution bypasses the other societies. Were it to become the norm, the fracture of centralized collection would seriously erode the amount continental collection societies earn, in that British music repertoire is particularly lucrative in Europe.
In announcing the new deal, Jean-Loup Tournier, the chairman of BIEM, the European organization that represents all the societies, described direct distribution as “strictly and totally out of the question.”
Even so, Tournier said that the agreed percentage reduction required serious rethinking in how the societies managed their money, and will likely lead to staff cuts and a “harmonization” of inter-society documentation through electronic media. He joked that he would seek a cheaper hotel room at next year’s MIDEM.
Although MCPS and the other societies agreed to retain central collection, Polygram’s assent is still to come.