Record labels seek to restructure how music is licensed to airlines


Record labels’ long-running concerns over music licensing abuses in the airline industry have bubbled to the surface in the form of various lawsuits involving US major carriers and the largest Content Service Provider (CSP) in the world, Global Eagle Entertainment. Now airlines are being told they could face potential liability if they continue offering audio-on-demand and streaming audio to passengers without reaching direct licensing agreements with music companies before the New Year.

Multiple parties tell RGN that the music industry’s licensing bodies have informed CSPs that record labels are forcing them to change their licensing procedures effective from January 2015, with the result being a potentially significant restructuring of the process.

Historically, the onus has been on airlines to take out performance licenses with collective management agencies in their respective territories. The problems associated with this model are manifold. For instance, some territories do not have collective management agencies, leading to confusion about who is the point person for music licensing. Some airlines simply don’t take licensing seriously enough, while others assume that CSPs are responsible for ensuring all licensing is in place.

“There appears to be a developing level of mistrust on the part of the record labels with regard to all of these intermediaries so by the time licensing goes through a collective management agency and by the time a collective management agency goes through a CSP it gets really, really murky for them,” says a source, adding, “It’s murky enough that record labels smell mischief.”

For instance, after Sony informed American Airlines that the airline had not paid performance fees and was infringing on its intellectual property rights, American sued its CSP, Global Eagle subsidiary Inflight Productions, claiming Inflight is responsible for obtaining all licenses and paying music royalty fees. United and Global Eagle are the focus of other lawsuits involving music licensing.

United passengers report on social media that the carrier has not offered music for some time. “Music tracks disappeared from UA sometime late last year. I noticed it was gone on our IAD-ZRH and AMS-IAD flights last Nov/Dec,” tweeted human resources consultant Steven Sullivan. Joey B, a producer, added that United’s music library was certainly missing this past Saturday, when he flew.

Though we requested broad comment on the current state of play, Global Eagle said only that it cannot comment on litigation. Calling the issue “complicated”, American Airlines manager inflight entertainment Mark Smith said the airline has no comment.

“Because of the American situation, record labels want to deal directly with US carriers,” says a source. “Video delivery is pretty cut and dry. Audio is a different animal. You’ve got this volcano simmering for years, especially now that audio content is being streamed. If I were a consultant for the industry, I’d say ‘cover your butts’. I would tell airlines to inform themselves on their obligations for the payment of these rights to the local entities.”

Emirates is among the airlines taking proactive measures. “Technology has moved on over the years. The iPod and music streaming services have revolutionised the way people consume music, and inflight has evolved too – therefore it’s no surprise that the music companies are looking at restructuring their relationship with airlines, as they are also doing with other channels such as car companies. We’ve already started a dialogue, directly and indirectly, and look forward to establishing a way forward, hopefully finding creative ways to do stuff that was not possible before,” says Emirates VP of corporate communications, product, publishing, digital & events Patrick Brannelly.

“One problem that has to be overcome is the sheer number of airlines, and the complexity and cost of maintaining one-to-one relationships between record companies and airlines – this will most likely result in the need for middlemen licensees…and we need to ensure that this does not another cost layer on an industry that already runs on razor thin margins!”

The Emirates executive notes that music is a very important part of the carrier’s overall inflight entertainment mix, which is typically dominated by new movies and TV (it is showing over 500 movies on board at the moment). “A long-haul flight gives passengers a great opportunity to discover new music, as well as rediscover old music – frankly a lot of frequent business travelers don’t find time otherwise to listen to music except when on a flight,” says Brannelly.

Though many other airlines are not fully aware of what’s going on, those who are aware are asking – what do we do? Do we take off our audio-on-demand library, change our IFE graphical user interfaces, and reprint our guides? And how do we deal with angry passengers? A lot of airlines have extensive libraries; therefore millions of dollars worth of music content is at risk.

At least one inflight entertainment system provider is “thinking about suggesting that its airline customers [and their CSP partners] leave current music libraries in place until agreements can be reached with the record labels”, says a source with knowledge of the situation.

Music licensing and rights will be discussed today during a conference session at the Airline Passenger Experience Association (APEX) conference and exhibition in Anaheim, California. Representatives from Sony Music Entertainment and Universal Music Group (UMG) are among the panelists slated to discuss how business arrangements are being evaluated.

“APEX knows music and music rights are a hot topic for the industry right now so we’ve assembled a panel of experts from major record labels and publishing companies to help educate us,” says APEX president Alfy Veretto, an executive at Virgin America. He adds that “many in our industry are very much looking forward to this education session”.

Indeed, some carriers declined to comment for this article pending further information from this panel. “We are awaiting updates during the upcoming APEX conference in September. No final decisions on this issue have been taken yet,” says Lufthansa.