MBW Explains is a series of new analytics features in which we explore the context behind the music industry’s key talking points – and suggest what could happen next…
WHAT HAPPENED?
This week, Association of Italian Authors and Publishers (SIAE)representing tens of thousands of musicians in Italy, issued a press release announcing that US tech giant Meta has decided to “exclude” its musical repertoire from services such as Facebook.
According to SIAE, the members’ decision to remove the song has left Italian authors and publishers “bewildered”.
SIAE states that they have been asked to accept the license agreement proposed by Meta, “regardless of any transparent and shared assessment of the actual merits of the performance”.
Explaining the complaint, SIAE told MBW that “Meta made an economic offer of ‘accept it or drop it’, threatening to remove the content if the offer was not accepted by SIAE”.
SIAE says it Are not accepted the offer and that Meta – apparently without a license to operate for SIAE repertoire as of January 1, 2023 – “suddenly and unilaterally” began removing its content.
“SIAE is being asked to accept Meta’s proposal unilaterally, regardless of any transparent and shared assessment of the actual value of the performance. This position, coupled with Meta’s refusal to share relevant information for a fair deal, is clearly contrary to the principles established by the Copyright Directive that authors and publishers on throughout Europe were strongly supportive.
press release issued by SIAE on Thursday (March 16)
SIAE states that Meta’s decision to remove content applies to all works managed directly by SIAEexcept those obtained through sublicensing and, as a multi-territory license, valid in all European countries and outside the EU (with the exception of some countries, for example such as the United States).
SIAE states that they have officially informed Meta that it is “[impossible] accepted the offer” because Facebook’s parent company “never shared background information necessary for a fair negotiation.”
SIAE adds that “oobjections regarding Meta’s offering of package value without providing the necessary information for the SIAE to assess whether it is really a fair compensation for rights holders.”
SIAE stated that Meta’s explanation for their non-negotiable offer was due to a “budget limitation”.
WHAT IS THE BASIS?
There is a two-part background behind this story.
Part One: This news comes at a time when the music industry’s relationship with Meta is improving.
Last summer, Meta announced that it’s changing the way artists and music rights holders will get paid from Facebook – and it’s moving to a ‘revenue sharing’ model for user-generated video content.
This is a policy that many in the music industry are now calling on TikTok to implement.
Also: according to its latest music in the air report, Goldman bookestimate that Facebook has contributed 29% of the total ad revenue of ’emerging platforms’ paid to the record industry by 2021.
That thing 29%MBW calculation (based on Goldman/IFPI number), which is equivalent to more than 400 million USD.
Remember: It’s only one year and only includes payments to the record industry (not the music publishing business)
Part two: Now we turn to Meta’s financial situation.
This month, Meta announced a new round of layoffs, with 10,000 won Employees are expected to lose their jobs in the measure of cost savings.
That comes after another round of widespread layoffs at Meta announced in Novembertotal 11,000 won redundant. So, through two layoffs in the same six-month period, Meta is letting through 20,000 won staff go.
Writing to Meta employees earlier this week, Zuckerberg said: “For most of our history, we’ve seen rapid revenue growth year over year and have the resources to do so. invest in many new products. But last year was a modest wake-up call.
“The world economy changed, competitive pressure increased and our growth rate slowed down significantly. We’ve downsized our budget, downsized our real estate footprint, and made the tough decision to lay off 13% our workforce.”
“We should be prepared for the possibility that this new economic reality will continue for many years.”
Mark Zuckerberg, Meta
“At this point, I think we should prepare for the possibility that this new economic reality will continue for many years,” he added. Higher interest rates lead to a weaker economy, more geopolitical uncertainty leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation.
“Given this outlook, we will need to be more efficient than we were previously with downsizing to ensure success. Faced with this new reality, most companies will narrow their long-term vision and investments.”
Of course, Meta isn’t the only tech giant to announce employee layoffs and other cost-saving measures. Google and Microsoft both cut their workforces significantly.
But if Meta .’s “budget limit” To be a major reason behind the decision to pull SIAE’s repertoire from its platforms – and since it is looking for cost-saving opportunities across its business – whether negative licensing costs Will their future music be on a high level?
Furthermore, could the demise of SIAE signal the beginning of budget tightening that would have a knock-on effect on music licensing negotiations between tech giants and other copyright holders?
WHAT HAPPENS NOW?
After SIAE’s repertoire is removed from Meta’s platform, users in Italy and Europe will no longer be able to use music from the repertoire on Facebook or Instagram.
SIAE However, it tells us that it “questions Meta’s ability to completely remove it SIAE repertoire from all its platforms”.
That means in practice, without an active license agreement, any music represented by SIAE used on Facebook and Instagram going forward will not be licensed. (Hopefully SIAE will issue a series of takedown requests when this happens.)
The shooting between SIAE and Meta in Italy has attracted the attention of the global music publishing community.
On Friday (March 17) ICMP – the trade body representing the worldwide music publishing industry including major publishers, Ununiversal Music Publishing, Music Publisher Sony and Warner Music Publishing – consider the dispute.
ICMP general manager John Phelan said in a statement: “The goal of the Italian and European music industry is simple – to ensure companies like Meta comply with their obligation to pay musicians to use their music. their products on services like Facebook”.
“Today, the music publishing industry is in talks to ensure that companies like Meta are now in compliance with the law, which is very clear thanks to the Italian government which has shown strong support for the new Directive on Music. rights of the European Union. That law states that if companies like Meta and services like Facebook want to use other people’s music, they must obtain a license and pay the creator.
“What Meta is doing is using the unsurprisingly strong tactics of asking for a ‘take it or leave it’ fee and, when not satisfied, delete the music to try to devalue the deal. “
John Phelan, ICMP
Phelan added: “What Meta is doing is using the unsurprisingly strong tactics of asking for a ‘take it or drop it’ fee and when not satisfied, delete the music to try to break it. agreed price.
“Today’s music catalog includes more than 100 million tracks, spanning more than 5,000 genres. A company like Meta refusing to pay an appropriate licensing fee for the use of these works would affect the livelihoods of millions of music creators and professionals.”
The International Forum of Independent Music Publishers (IMPF) also weighed in, calling the move “nothing more than a bullying tactic used to force the SIAE to accept a one-sided proposal that disregards all reviews.” fair price, shared in the value of music”.
“Meta’s move is nothing more than a bullying tactic used to force SIAE into accepting a one-sided proposal that disregards any reasonable, shared assessment of the value of music.”
International Forum of Independent Music Publishers
Furthermore, Meta’s refusal to share relevant information in order to establish a fair agreement is in stark contrast to the principles established by the Copyright Directive, as established by the authors and Publishers across Europe are strongly supportive.”
The question now is, will this criticism from the music publishing business be enough for negotiations to lead to an agreement between Meta and SIAE?
FINAL THINKING…
This isn’t the first time a tech giant has lost ground to the music industry in one territory outside the Top 10 major music markets in recent weeks.
If you’ve been following our coverage of ByteDancevideo platform owned by TikTok for the past few months, you’ll remember that TikTok is currently try to prove that it doesn’t need major label music on its platform in Australia.
In February, TikTok started restricting access to certain tracks in Australia – effectively ‘mute’ some tracks contracted by major record companies on existing videos – where TikTok claims to be a “test” of ByteDance to see how it affects user behavior.
Source MBW tells us that TikTok is aiming to use the results of its testing in Australia in licensing negotiations with record companies.
Meta could allegedly refuse to negotiate higher licensing fees with SIAE – and the tech giant’s decision to remove SIAE’s content from its platform – But also is an experiment that it intends to replicate elsewhere?
Interestingly, in the statement issued today by ICMP’s John Phelan, he said that Meta’s “hard-hitting tactics” are “not new” and that “they have been tested in France, Australia, Denmark, Canada and now Italy.”
He added: “They have failed in these other countries and they will not be allowed to succeed in Italy.”Global Music Business
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