Blog Post

The Ringtone War Between Labels And Publishers

The Register has a very detailed piece on the current battle between labels and publishers concerning ringtones, and why some artists (eg, the Beatles) haven’t been made into ringtones yet. While labels own the copyright to an actual recording of the song, the publishers control the underlying music — the lyrics and score. The main argument is whether ringtones came under a compulsory licensing law in the US, and a recent decision by the Register of Copyrights found that they do, but left some doubt as to whether the ringtone licenses would fall under the compulsory rate. So now the labels and publishers are arguing about how much the publishers should get. The publishers are arguing for a complicated structure: “a rate equal to the greatest of (i) 15 per cent of revenue; (ii) one-third of the total content costs paid for mechanical rights to music compositions and right to sound recordings; or (iii) 15ยข per ringtone subject to periodic adjustments for inflation”, while the labels via RIAA are arguing for 7.8 percent of the wholesale price.
The upshot is that publishers can no longer withhold certain songs from being made into ringtones, but may get the opportunity to charge through the nose for them — which vendors are likely to insist comes out of the carriers share.