CBS owned social music network Last.FM has signed a deal with SonyBMG to bypass SoundExchange and other middle men and direct license music from SonyBMG. (press release) That leaves Universal the only major label holdout. Start-up Slacker is also cutting direct deals with the major label groups.
Kurt Hanson of AccuRadio and the Radio Internet Newsletter thinks that this kind direct licensing is the real end game for the major labels and that they are using absurdly higher royalty rates demanded
starting next week from SoundExchange to force broadcasters to deal with them directly.
Who looses if the major labels make direct deals with the major broadcasters? Artists and indie record labels both loose. Some of the potential ramifications of direct deals include:
- lower payments to labels and artists
- major labels could set priorities effectively shutting out indie product. Remember the "special arrangements" labels had with MTV that guaranteed certain videos got played?
- indie labels could be forced to waive all royalties in an attempt to compete thus cutting off an important revenue stream
- internet stations that want to play indie music are forced to license product from thousands of small and often understaffed companies
Are direct licenses and higher royalty rates part of a conspiracy by the major labels to take back the power that they lost when the digital age arrived? We're starting to wonder...
Tell us what you think.
