Summary:

Independent labels are taking legal advice over what they say is illegal use of their repertoire by CBS’ (NYSE: CBS) Last.fm, after efforts…

imageIndependent labels are taking legal advice over what they say is illegal use of their repertoire by CBS’ (NYSE: CBS) Last.fm, after efforts to strike a royalty accord stalled, paidContent.org can reveal.

Merlin, the “fifth major” representing labels with up to 12 percent of global music sales, began negotiating with the CBS site several months ago to agree a license that would govern master rights. But “disappointed” CEO Charles Caldas told me talks had “stalled” beause Last.fm had “failed to keep the negotiation going at a pace we think is acceptable”.

Asked if Merlin was taking legal advice, Caldas said: “Yes, we have in-house legal resources, we also have legal teams acting on our behalf, so we’re fully legally represented in that negotiation. Our prime aim is to strike an agreement with Last.fm on behalf of our members – we’re still hopeful and confident we can come to a proper commercial solution. On the other hand, we’d do whatever we feel is necessary to ensure that our members’ rights are properly protected. We’re considering what evidence we can put in front of Last.fm to show that there is a vast amount of our members’ repertoire being used on their services without licenses.” We’re awaiting comment from Last.fm.

Last.fm in February agreed to pay royalties to collection bodies for use of music in its radio service. But Caldas said: “The on-demand and interactive elements of the service are not covered by their licenses with either SoundExchange or the British collection societies. The issue is, beyond those two deals, there are no other deals in place in any other territories. Bearing in mind the service is globally available, there is still a vast amount of music that is not properly licensed.”

Caldas said the situation was “not acceptable”. Last.fm today switched on the recording rights payment scheme for unsigned artists that it announced in January, saying it had already seen 450,000 tracks uploaded from artists who hope to benefit. In response, Merlin emailed its 12,000+ members to decry the site’s “illegal infringing activity”, urging labels to seek legal advice.

Any such steps could be a second licensing blow to Last.fm, after Warner – its first major-label partner – last month refused to renew in a disagreement over payments, resulting in its music disappearing from the site’s on-demand facility. But Caldas would rather talk than follow that example: “We’ve been trying to negotiate in good faith to a level where we don’t have to do that – that’s counterproductive for everybody.”

Last.fm told us: “While we are disappointed that Merlin is talking publicly about our discussions, we respect them and their members, and will continue to work hard to close a deal with them. The Artist Royalty Program … which goes beyond working just with the majors and big indies where we have deals, extends the benefits to independent artists, giving them a chance to share in the value their music creates.”

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