BMG Cuts Controversial Controlled Composition Clause, Calls On Others To Do Same

Label services company BMG will eliminate a controversial part of the standard record label contract that reduces the income of songwriters, composers and lyricists.

The controlled composition clause limits the amount that a label will pay for songs that are written, co-written, or otherwise controlled by a songwriter artist when it appears on one of their albums. The clause allows the label pay a reduced rate, typically 50-70% of the statutory royalty rate for compositions covered by such a clause.

However, the clause typically applies to only physical product and is not included in calculations for digital streaming.

According to BMG, the decision to drop the clause from their contracts is another step in their efforts to “rebalance” the industry to bring artists and songwriters into parity with labels.

“It is unacceptable for the record industry to continue to apply deal terms which are solely designed to reduce the incomes of musicians. We have heard a lot during the coronavirus crisis of initiatives by music companies to support artists. The best way to support artists is not to subject them to unfair terms in the first place,” said BMG CEO Hartwig Masuch.

Groups representing rightsholders such as songwriters were quick to laud BMG’s decision to drop the clause.

“BMG deserves enormous credit for eliminating this poisonous practice. Controlled composition clauses in recording contracts have been one of the most harmful things to ever happen to songwriters. While their impact has been minimized thanks to NMPA’s efforts to make them illegal for digital products, there is still enough of a physical product market for controlled composition clauses to continue to plague the songwriting community. This is a wonderful pro-songwriter move by BMG,” said David Israelite, President and CEO of the National Music Publishers’ Association

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