JASRAC Losing Grip

Entertainment juggernaut Avex Group Holdings is transferring rights to some 100,000 of its songs to a corporate affiliate, e-License through its subsidiary Avex Music Publishing, which previously made contracts with JASRAC.

JASRAC collects licensing fees from record companies, TV broadcasters, karaoke establishments, restaurants and other entities and distributes the revenues to writers and composers, minus a service fee. It collects 6 percent on CDs and 1.5 percent from broadcast use.

However, JASRAC’s monopoly has been a serious drag on competition in the Japanese music industry, as it has put record companies at a disadvantage when negotiating terms. Avex wants to change this. Its music publisher can delegate licensing to any company it wants if all the copyright holders of a song agree to the terms.

Avex’s catalog contains 100,000 songs, many of which were written and performed by some of Japan’s top-selling artists, and it plans to move the rights administration for 90 percent of them from JASRAC to e-License by the end of the year, according to the Nikkei Asian Review. e-License’s advantages are clear. It will keep only 5 percent fees from CD sales, giving artists a higher percentage of their royalties. It also will not charge fees for promotional CDs, allowing record companies to expand their marketing activities without worrying about rights.

If more companies enter the business and follow e-License’s lead, the situation for publishers could improve significantly. Moreover, CD prices and streaming fees could come down, boosting sales overall. The main problem is volume. JASRAC has 3 million songs, and its terms for broadcast rights are very simple. Broadcasters, restaurants and the like may prefer JASRAC’s system, as they pay flat fees regardless of what they play. e-License is reportedly talking with other, much smaller licensing companies to form a kind of coalition to set new royalty rates.