Soundcheck

Volume V Number 6 July/August 2005

2005 NMPA Annual Meeting A few words from Gary Churgin, HFA President & CEO fact that we had a very large royalty Our parent organization, the NMPA, just compliance settlement in the first quarter of had its annual meeting in June, and I want to 2004. We are cautiously encouraged by the share with you some of my remarks from fact that core mechanical collections through that meeting. This includes a preview of our May are actually up almost 2% compared to next technology release, which will take the same period in 2004, especially in light place on Labor Day weekend. of the reported Soundscan album units’ declining year-over-year in Q-4 2004 and The playing field for music publishers is Q-1 2005. rapidly changing, and both publishers and the organizations that support them need to Based on retail trends to date, we don’t become more flexible – and even reinvent expect the mechanical market to greatly themselves – in order to remain competitive improve, and we may be challenged to in today’s creative marketplace. sustain the gains in core mechanicals we’ve seen so far this year. But we have planned This is absolutely true for HFA. When I for this, and have been charting a joined the company in January 2001, I was conservative course. I do want to remind charged with transforming HFA’s processes everyone that the NMPA activities are and technology to better handle the financially supported by a portion of HFA’s challenges of the 21st-century marketplace, proceeds. We have not included in our and most important, to be more responsive budgets a projection for the still-awaited to your needs. The goal is to make the establishment of rates for on-demand company one that is client- and customer- streams and limited downloads, which began focused – one that listens, understands, and to be licensed in 2001. With these factors in acts. It’s generally held that this type of mind, we are holding the commission at institutional change takes about five years – 6.75%, and we have no plans for an increase and I think we are beginning to see the fruits in the coming year. of our labor. At the same time we are under pressure to First, a brief financial recap. As keep expenses down, we have been corroborated by the RIAA and IFPI numbers continuing to streamline our traditional for last year, while the overall numbers for licensing business, while exploring new 2004 were more stable than previous years, revenue opportunities. sales declined in the later quarters, and that trend is continuing in early 2005. But now I’d like to focus on one of the most visible changes to HFA -- the technology HFA’s 2005 total collections through May upgrades of “Transformation 2,” or as we are down nearly $27 million from the same like to call it, T2. This is the new approach period in the prior year, primarily due to the we adopted to upgrade our technology

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infrastructure to better handle the acknowledgment. The September release will opportunities in the marketplace. The include second acknowledgement as well. development of these tools has been a collaborative effort between HFA, our We’ve also created a number of innovations publishers and our licensees, and the results for licensees, including eMechanical, our of this collaboration to date have been new licensing tool, which replaces our prior outstanding. system, SirNet. Since its launch last October, use of eMechanical has reduced the T2 officially began in February 2004. Since number of paper license requests by 17%, then, we have followed a planned release which allows us to operate more efficiently. schedule, with larger releases about every And this is just the beginning. As part of the six months, and smaller maintenance Labor Day release, we will add the releases monthly. We completed the first eSignature feature, which will permit and second large releases in August 2004 licensees to sign their licenses electronically. and February 2005, with the next major This feature will allow a license to be release scheduled for Labor Day weekend. completed end-to-end, from request to signature, in two minutes or less, instead of These releases have included new tools and days or weeks. We expect this will result in applications for publishers and licensees that an even bigger reduction of costs for paper, can be accessed through a registered user postage and labor. area of our new and improved harryfox.com website, which we call HFA Online. The rollout of new products continues. One Working with our publisher steering of the planned updates is the re-design of committee made up of representatives from Songfile, our website for obtaining BMG Music Publishing, Carlin America, mechanical licenses for recordings of 2,500 Cherry Lane, EMI Music Publishing, copies or less. The new version will also Famous Music, Sony/ATV, Universal Music launch on Labor Day, and will be easier to Publishing, and Warner/Chappell, we have navigate, have improved transaction used a phased approach to introduce the new processing, retain a history of the licenses publisher and licensee tools and applications that a user has purchased, and perhaps most in a controlled way. importantly, will expand beyond licenses for physical product to include DPDs. We get I’m very pleased to say that we now have many, many calls from church choirs and over 2,500 registered publisher and licensee other groups who want to create a limited users of HFA Online. Since the launch of number of recordings of their performances. the new website last August, we have Songfile is a great tool for them to easily increased from an average of 5,000 unique license the songs that they need. visitors a week to over 7,000 – a 35% increase in traffic. One of the most important projects of T2 will also be implemented in the September The three major products for publishers through release: DARWIN, a new database structure the website are the Publisher’s Online Inquiry that will give us more flexibility to develop system (POLI+), Online Licensing Reports, and new business structures, but of more Online Royalty Statements, and there are also immediate import to our publishers, allows options to view Royalty Compliance us to provide more and better information on Examination schedules and act on shorter-term the songs in our database. The better our licensing arrangements. We are also phasing in data is, the better it can be identified and Common Works Registration, or CWR. We are licensed, and the easier it is for our adhering to version 2.1 of this global standard, publishers to match HFA reports on these and have already implemented first licenses and royalties to their records.

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To make this happen, we have been working on a data clean-up project for the past year. I think it’s become clear that there is no easy This included adding fields for publisher solution to the situation that the music and song codes and Composer/Author/Editor publishing industries now find themselves codes. We worked with a publisher in. There’s no one format or new product subcommittee to create the criteria and that has emerged as a frontrunner to replace started with re-formatting of writer the CD. We need to pursue opportunities on information into a standard layout on 30,000 a number of new fronts, while working of our most-licensed songs. better, faster and smarter on our traditional areas of business. It is often difficult for an Our process was so successful that we were established and entrenched business to rise able to expand the effort, and to date, we to these kinds of challenges. I’m proud to have now parsed writer information on over say that by working collaboratively with our 360,000 songs. Changing these structures publishers and licensees, the team at HFA has required us to rewrite or change a has re-engineered this 80-year-old company significant number of programs that access into a “21st Century Fox” – an innovative, this data. You’ll be able to see the results on adaptive, solutions-focused partner this work when DARWIN is put into committed to our customers and clients. production. I can’t wait to come back to you at the 2006 The data cleansing project also included the annual meeting to tell you about all the great creation of tools to identify duplicate songs things that I know HFA will have achieved in our database and for the resolution of in the coming year. conflicting split information, and these will also be moved forward in an upcoming release.

So we’ve been busy – and I don’t think that the pace is going to slow down any time soon.

Clear Channel’s Instant LiveTM TM Enters into HFA’s “Express Live” CD and DPD Licensing Agreement

In June, HFA announced that Clear Channel’s Instant LiveTMTM service has entered into HFA’s “Express Live” mechanical licensing arrangement for CDs and permanent digital downloads (DPDs). The HFA Express Live license accommodates the special needs of Instant LiveTM-type recordings, making the format’s quick turnaround possible.

HFA began to offer Express Live mechanical licensing in December 2004. This license arrangement is targeted at companies that enable music fans to purchase recordings or downloads of concerts almost immediately after the last note is played, either at the venue or from a web site after the concert.

“HFA’s Express Live licensing program is a significant milestone in the development of the Instant LiveTM business,” said Stephen Prendergast, General Manager, Instant LiveTM, LLC. “HFA has proven that it can create a different, flexible licensing program that accommodates the immediacy of our live concert product that is also practical and easy for a licensee to use.”

Others who have entered into HFA Express Live licensing agreements include Gov’t Mule, Hyburn, Encore Distribution and Widespread Records. Licensees interested in HFA’s Express Live licensing program can contact Lauren Apolito at [email protected] or 212-922-3225.

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Update: Ory Class Action Settlement In Response to Objection by HFA and Others, Parties Renegotiating Settlement

As mentioned in Gary Churgin’s column in last month’s issue of HFA Soundcheck, HFA and a number of its affiliated publishers filed an objection with the U.S. District Court in the Central District of California arguing that the proposed class action settlement of the litigation against the Columbia House and BMG record clubs, Ory v. Columbia House Music Club, BMG Direct, should be rejected.

In the objection, HFA stated that the proposed settlement failed to meet requirements of the U.S. Constitution, federal rules applicable to class settlements, and federal copyright law for a number of reasons. The publishers included in HFA’s objection were Bourne Co. Music Publishers, Casa David, Carlin America, Chrysalis Music Group, Hal David, Demi Music Corp., Famous Music Publishing Companies, Galahad Music, Inc., Helene Blue Musique, Ltd., International Music Services Corp., Stanley Mills, MPL Communications, Inc., Peermusic, Ltd., Southern Music Publishing, The Rodgers & Hammerstein Organization, September Music, Shapiro Bernstein & Co., Inc., Sony/ATV Music Publishing LLC, Southern Music Publishing, and Windswept Holdings, Inc.

HFA also filed 100 additional objections submitted to it by its publisher principals and foreign societies, and is aware of several other publishers that have filed their own objections, including the Universal Music Publishing Group and Disney Music Publishing.

In response to these objections, the parties in the Ory case have asked the Court to delay implementation of the proposed settlement in order to negotiate an amendment to the existing agreement. The Court agreed to allow the parties time to complete these discussions and has scheduled a hearing on the anticipated revised settlement plan for August 15, 2005. In the event the Court preliminarily approves the revised settlement, new notices informing Class Members of the revised settlement will be issued.

HFA will continue to post updates in the News area of www.harryfox.com. The full objection is posted in the News Archives.

Be POLI-tically Correct!

Sign up for HFA Online to get access to HFA’s Publisher’s Online Inquiry system (POLI+). POLI+ lets publishers:

• Have 24/7 access to HFA song and license information • Approve license requests with a mouse click • Request song additions and changes electronically using eSong: 100%-controlled songs can be updated in one business day • And more!

To get started, contact HFA Client Relations by email at [email protected] or call 212-834-0100.

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HFA & NMPA Applaud Unanimous U.S. Supreme Court Decision File-Sharing Services that Promote Illegal Activity Can Be Sued

In a unanimous decision issued on June 27, 2005, the U.S. Supreme Court ruled in the MGM v. Grokster case that file-sharing services that promote illegal activity can be held liable for resulting acts of infringement. The National Music Publishers’ Association (NMPA), on behalf of a certified class of over 27,000 songwriters and music publishers, along with the RIAA and MPAA, brought the case against the illegal peer-to-peer music services Grokster and Streamcast to the U.S. Supreme Court after it was heard by the Ninth Circuit Court of Appeals in California.

David Israelite, President and CEO of the NMPA, responded to the U.S. Supreme Court’s ruling in the case of MGM v. Grokster by saying, “Speaking on behalf of the over 27,000 music publishers and songwriters that were supported by the NMPA, we are tremendously gratified by the Court’s unanimous decision that peer-to-peer services which promote piracy can be sued. Grokster and Streamcast knowingly facilitated piracy on a massive scale. This decision is an enormous victory for all of those who value the creative process, and will promote the growth of legitimate, legal entertainment services on the Internet while sending a clear message to those who promote piracy that they can no longer profit at the expense of the creative industry.”

Gary Churgin, President and CEO of HFA, added, “This was never a case about technology. This case was about the ability to prosecute companies that advocate piracy. We hope that this verdict will stimulate the market for legal music services, and we expect that the discussion on rates for these services can now be resolved.”

The NMPA and HFA are also members of the Music United for Strong Internet Copyright (“Music United”) Coalition, which announced on June 27 support for the “Feed a Musician, Download Legally” advertisement campaign. The ads will appear on outdoor poster spaces in 11 major cities and be seen in such areas as metro stops and the side of buildings undergoing renovations. In addition, Music United joins Childnet International in a worldwide educational campaign to help parents understand how to keep their children safe and legal when downloading music on the Internet. A new parental pamphlet, “Young People, Music and the Internet,” a guide for parents about P2P, file-sharing and downloading, will be distributed worldwide in the coming months and on websites including www.musicunited.org. Childnet International is leading the campaign with various partners in 18 countries worldwide in eight languages.

The NMPA’s efforts on behalf of the publishing industry, such as the prosecution of the Grokster case, are supported by annual NMPA member dues and a portion of the commission earned by its licensing affiliate, HFA. NMPA membership is separate from HFA affiliation. If your publishing company is not already a member of the NMPA, an application can be downloaded from the organization’s website www.nmpa.org, or call Client Relations at 212-834-0100 to have one sent to you.

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NMPA Announces Results of 2005 Election of Board of Directors

The National Music Publishers’ Association (NMPA) announced the results of the biennial election of the organization’s Board of Directors at its annual meeting, which was held June 13, 2005 at The Four Seasons Hotel, Los Angeles in Beverly Hills. The eighteen members of the NMPA Board are:

Martin Bandier, EMI Music Publishing Maxyne Lang, Williamson Music Freddy Bienstock, Carlin America, Inc. Leeds Levy, One Four Three Music Helene Blue, Anna Teresa Music Evan Medow, Windswept Pacific Holdings LLC Beebe Bourne, Bourne Company Mary Jo Mennella, 20th Century Fox/Fox Music Inc. Arnold Broido, Theodore Presser Co. Stanley Mills, September Music Corp John Eastman, MPL Communications, Inc. Jay Morgenstern, Warner/Chappell Music Nicholas Firth, BMG Music Publishing Ralph Peer, peermusic Donna Hilley, Sony/ATV Music Publishing David Renzer, Universal Music Publishing Dean Kay, Demi Music Corp. Irwin Z. Robinson, Famous Music Publishing

The majority of incumbents were re-elected to the Board, and they are joined by one new member, Mary Jo Mennella, 20th Century Fox – Fox Music Inc.

The NMPA Board of Directors was elected from a slate of 27 candidates by the members of the NMPA, who are all active U.S. music publishers. Board members serve a two-year term. At a subsequent Board meeting, the Directors will elect officers and the members of the Board of Directors for the NMPA’s licensing organization, HFA.

Members of the NMPA Board of Directors, NMPA and HFA at the Annual Meeting on June 13, 2005 at the Four Seasons Hotel in Los Angeles (left to right): Back row: Dean Kay, Demi Music Corp.; Ralph Peer, peermusic; Evan Medow, Windswept Pacific Holdings LLC; Freddy Bienstock, Carlin America, Inc.; David Israelite, NMPA. Middle row: Gary Churgin, HFA; Nicholas Firth, BMG Music Publishing; Jay Morgenstern, Warner/Chappell Music; Maxyne Lang, Williamson Music. Front row: Peter Felcher, Paul Weiss Associates, NMPA General Counsel; Mary Jo Mennella, 20th Century Fox – Fox Music Inc.; Arnold Broido, Theodore Presser Co.; Irwin Z. Robinson, Famous Music; Beebe Bourne, Bourne Company; Stanley Mills, September Music Corp. Not pictured: Martin Bandier, EMI Music Publishing; Helene Blue, Anna Teresa Music; John Eastman, MPL Communications, Inc.; Donna Hilley, Sony/ATV Music Publishing; Leeds Levy, One Four Three Music; David Renzer, Universal Music Publishing. Photo credit: Lester Cohen

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Word on the Street . . . HFA Affiliate Publisher News

Mark Batson, a GRAMMY®-winning of Arts and Letters, the National Endowment producer and co-writer of the new major for the Arts, and the Guggenheim Foundation. studio release by Dave Matthews Band, He is currently a Professor of Composition at Stand Up, has signed an exclusive, world- the University of Michigan. wide administration deal with Universal Music Publishing Group. Batson has an Sony/ATV Music Publishing announced impressive discography of over seventy- today that it has acquired a partial ownership eight album credits, both performing on and interest in rock superstar Richie Sambora’s producing tracks for prominent pop and hip- music catalog. This catalog includes hop artists. Some of his notable production Sambora’s share of all songs he wrote work includes: credits as co-writer and during his career as a member of Bon Jovi. producer on The Game’s double-platinum Through this agreement, Sony/ATV Music album Documentary; co-writer and producer Publishing will also administer the balance on Eminem’s multi-platinum album Encore of the catalog, as well as Sambora’s future (Shady/Aftermath); co-writer and producer songwriting with Bon Jovi. Sambora’s on Beyonce’s multi-platinum album collaboration with Bon Jovi has turned out Dangerously in Love; co-writer on Gwen such hits as “Livin’ On A Prayer,” “You Stefani’s double-platinum album Love Angel Give Love A Bad Name,” “I’ll Be There For Music Baby, a Top 10 global hit; co-writer You,” “Wanted Dead Or Alive,” “Born To and producer on Anthony Hamilton’s Be My Baby,” “It’s My Life,” and “Bad Comin’ From Where I’m From; and co- Medicine,” just to name a few. writing and producing seven songs on Seal’s multi-platinum album Seal IV. In Other News. . . BMI announced today that the members of Boosey & Hawkes, Inc. signed an the soul/funk group The Gap Band will be agreement to exclusively publish the music honored as BMI Icons at the performing of Michael Daugherty, an American rights organization’s 5th annual Urban composer. The agreement, effective July 1, Awards. The gala ceremony and dinner will covers all of Daugherty’s future take place on August 26 at Club Tropigala in compositions plus nine existing works Miami. including Fire and Blood for violin and orchestra, Brooklyn Bridge for clarinet and “Word on the Street” is taken from press release material symphonic band, and Time Machine for three conductors and orchestra. The American Symphony Orchestra League recognized Daugherty as one of America’s ten most performed living composers. Forthcoming commissions include works for the Bournemouth Symphony/Marin Alsop, the Chamber Music Society of Lincoln Center, a consortium of the Charlotte, Nashville, New Jersey, Rochester, and Syracuse Symphony Orchestras, guitarist Manuel Barrueco, the Verdehr Trio, and the College Band Directors National Association. His achievements have been recognized by the Chamber Music Society While in Los Angeles, HFA staffers checked out EMI Music of Lincoln Center, the American Academy Publishing/ SDRM artist Keren Ann at the Buffalo Club. L-R: Danielle Boone, HFA; Keren Ann; Ed Hunt, HFA.

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“Return to Sender, Address Unknown” Publishers MIA: Can You Help Us Find Them?

If you are a music publisher (or the assign, successor in interest, heir or beneficiary of a music publisher) that has been affiliated with HFA, and you’re not sure whether HFA has your current contact information, it is possible that HFA is holding royalties due to the lack of a valid mailing address.

To find out if HFA is looking for you and to provide current information so we can pay you any royalties we may be holding, visit “Help Us Find Publishers” at www.HarryFox.com, or call HFA’s Client Relations

Department at 212-834-0100. And please remember to update your

contact information with HFA if it should change in the future.

If you have any comments regarding HFA Soundcheck, please contact Laurie Jakobsen, Senior Director, Communications, at 212-834-0133 or [email protected].

HFA Soundcheck is published 10 times a year by The Harry Fox Agency, Inc. (HFA). All rights reserved. Established in 1927 by the National Music Publishers Association, HFA represents almost 28,000 U.S. music publishers for their mechanical and digital licensing needs, and the collection and distribution of royalties. HFA also provides collection and monitoring services to its U.S. publisher clients for music distributed and sold in over 75 territories around the world. For more information about HFA, or to become an affiliate publisher or a licensee, see www.harryfox.com.

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