Universal Music Intl. has filed a complaint with the European Union over what it says are unfair royalty rates charged by songwriters’ collections agencies.
UMI charged that the Intl. Office of Recording and Mechanical Rights Collecting Societies (known by the French acronym BIEM) bullies record companies into accepting royalty terms that are among the highest in the world.
At the core of the dispute is a historical rule that set the mechanical royalty rate at roughly 9% of the “published price to dealers,” a source closed to the labels said.
The record companies complain that the flat rate is higher than those outside the EU, and that it doesn’t take into account discounted or free goods that are distributed for marketing purposes.
The official contract that set the rate expired more than two years ago, but the labels have continued paying at the 9% level as renewal negotiations dragged on.
Universal, whose roster includes such acts as Andrea Bocelli, U2 and the Cranberries, acted alone in the complaint, but other labels are expected to line up in support of the action.
BIEM, which reps 41 separate royalty-collection societies in 38 countries worldwide, administers “mechanical” royalties, or payments made to a song’s authors when a hard copy of a recording (like a CD) is produced. The Paris-based org was not immediately available for comment.