Digital Services Face 18 Months of Licensing Negotiations, Says Study

From Billboard:

Most everybody in the music business knows that new digital services have a tough road to license music from content owners. Few people know exactly how long it takes.

Now they have a good estimate: a year and a half. A new study by David Touve, an assistant professor at Washington & Lee University, dives into the process required to launch a digital music service in the United States. Touve collected data for more than 20 digital music services spanning services still in business, services that shut down and services that never launched. He has posted a two-page summary of the study at his blog.

Here are the major findings of the study:

– The vast majority of time — five out of every six months — spent licensing musical works goes toward major record companies who also are major music publishers, according to Touve. The other one-sixth of the time is spent negotiating with rights aggregators and collectives.

– Touve estimates between ten and 15 separate sound recording deals are necessary to build a catalog of ten to 12 million tracks.

– The time spent acquiring direct licenses from this set of sound recording owners has decreased roughly three months over the last decade.

– Blanket licenses from performing rights organizations take, on average, 45 days or less. However, those negotiations have taken much longer — years, in fact — if a proposed service differs materially from its predecessors or “do not match those defined for statutory terms.” In other words, doing something different can throw a wrench in the negotiations.

– Webcasters can build a “sufficient collection” of licenses in fewer than 90 days if they meet the requirements for a compulsory mechanical license and licenses under the “notice of intent” Section 115 process.

– No greater than two or three law firms, or individual lawyers and their staffs, play a central role in facilitating direct licenses.

Continue reading the rest of the story on Billboard