The street fight over EMI's publishing catalog.

On April 19th it was announced that Sony Music had gotten the nod from the European Union to go through with their purchase of EMI's publishing rights. You can read the full article on The Guardian's website. Warner has been fighting Sony's attempts ever since EMI defaulted on a $5.4 billion dollar loan in early 2011 and was put up for sale by CitiGroup to ease the debt. Almost immediately the big four major labels were left to but three, Sony, Warner, and Universal.

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At that time Universal already controlled the market with roughly a 27% of the business and was able to pounce on the fire sale going after EMI's recorded music division which holds the rights to such artists as Norah Jones, The Smashing Pumpkins, Keith Urban, Brad Paisley, and some small band known as The Beatles. The purchase will boost Universal's market share up to 36% dominating Sony's at 23% and Warner at 15%. Despite this fact the war over EMI's assets hasn't revolved around their recorded music division, but rather their publishing division which, according to Rolling Stone Magazine, holds the rights to 1.3 million songs including works by Rihanna, The White Stripes, Sting, and many others.

Ever since EMI's publishing assets were put up for sale Sony and Warner have gone to war trying to secure these copyrights. Each company has attracted outside investors to help sweeten their offer until Sony was able to throw down $2.2 billion for the catalog ousting Warner from the race. But the third largest music conglomerate in the world wouldn't go down without a fight. Since then Warner has challenged the deal both in the U.S. and European court systems hoping to thwart Sony from gaining such a huge market share in the publishing business of the music making world. But why such a fight for publishing rights?

The reasoning has to do with the current trend of musical consumer buying behaviors, and how these behaviors can equate to large amounts of income for whomever owns the proper rights. Recorded music rights provide income to the persons who control the actual recordings of a work. So if you buy a CD, or you license Sting's recorded version of "Every Breath You Take" for a movie you have to fork over some dough to whomever owns the copyrights to the actual recordings you use. Publishing rights on the other hand cover many more situations. Not only would you have to pay whoever owns the recorded version of the Sting tune you plan to use, but you would also have to pay the publishing company for the underlying music and lyrics in the song. So what's the big deal if you own the recorded music you are getting a piece of the pie and if you own the publishing you get the other half? The answer lies in how we are using music today.

Take for example the popular FOX hit Glee. These teenagers, whom all appear to be in their mid twenties by the way, perform a number of popular music hits in each episode, but because they are the ones performing the hit the owners of the recorded music are paid less, if even paid at all. This is because they aren't using the original recording of the song, instead they are remixing it in their own way.  Yet despite this fact they still must pay the publishing holders the statutory rate. Now think about all the television shows, movies, and advertisements that do this. We've got American Idol, America's Got Talent, and The X Factor all presenting contestants singing their favorite hits and that's just in the U.S.. Still don't think it's a big deal? Now think about the millions of videos on YouTube of people performing these hits with their own bands or by themselves with their dogs singing harmony.

But the income stream gets much larger for publishing rights holders. In the current musical landscape touring has become a major breadwinner for bands. In these situations the only people getting monies from these performances are the performance rights organizations whom pay the publishing holders of the songs that are performed. Many of these publishing houses also own the rights to the Artists images, signatures, fragrances, and whatever else can be branded with their namesake.

So to put it in simple terms the recording music royalties will make you money on the uses of the actual recording while the publishing royalties will earn you money on those items plus any other way that the song may be used in the marketplace from other performers singing your tune, to public performances, and even a bunch of people trying to impress judges or sing about their high school angst on television. Which income stream would you rather have?

That is why there is a street brawl over EMI's publishing division. The big boys know how much money is at stake, and the company whom holds the largest stable of hits will eventually win the battle when it is time to knock it down to the big two.