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Association Bisnow
December 4, 2007

Association Takes
On YouTube

Sponsor Update:  Led by Ellen Herman, Staubach’s Non-Profit group is doing a 340k SF warehouse consolidation for the Smithsonian and a 17k SF headquarters relocation for the International Center for Research on Women.

A “Corleone business model”—that’s what National Music Publishers’ Association CEO David Israelite calls YouTube’s formula for success:  Build an illegitimate empire first, then worry later about going straight.  Why is he saying those things?  Because the NMPA doesn’t just cheer from the sidelines when its 800 members fight for a fair share of the revenue generated by their tunes.  They often lead the charge for members and go to court.  The latest suit was in September:  a federal case that would require YouTube (now a part of Google) to license the popular music strewn across the website.

David insisted on answering all of our interview questions in song.  Ok, not really.  He just did a quick demonstration of his guitar skills, which the humble CEO describes as beginner-level.  “Those who can’t do, lobby,” he says.  He might be in a position to know:  after managing the ’98 campaign of Sen. Kit Bond (R-MO), David served as the RNC’s Director of Political and Government Affairs until 2000.

David says that calling YouTube a “user-generated” site is a misnomer, as much of its musical content—a big attraction of the site—is actually generated by NMPA members, without any compensation.  “What did Google really buy, except copyrighted material?”  David asks.

On the eve of its purchase by Google, YouTube signed deals with a number of record labels, but that does not address the NMPA’s stake.  (Music publishers own the rights to songs themselves, as opposed to an artist’s particular rendition.)  In fact, David claims that by cutting deals with the record labels, as well as a group of music publishers in England, YouTube has virtually admitted the need to license songs owned by NMPA members. 

Before landing at the NMPA in 2005, David was Attorney General John Ashcroft’s Deputy Chief of Staff.  Which naturally made us wonder:  How did that long hair fly with the buttoned-down AG?  (David says he kept his locks a little shorter back then—and we bet he didn’t wear jeans to work, either.)  Here, he talks on the phone with Mick Jagger while checking the Billboard Top 100 on his Blackberry . . . or something like that.

Music publishers make their money—or are supposed to, anyway—through royalties on sales (downloads, CDs); performances (radio play); commercial use (ads and movies); and by selling tablature.  The case against YouTube is a class action, and David says that his association’s prominent role in the suit is natural because the issues at stake are common to all his members.  The NMPA was also a plaintiff in the famous Grokster case, in which the Supreme Court unanimously ruled that trading copyrighted material on unauthorized peer-to-peer networks is illegal.  (Note to prosecutors:  Bisnow immediately deleted our vast Neil Diamond collection.)  And in March, the NMPA filed suit on behalf of several individual music publishers against XM Satellite Radio, seeking compensation for songs distributed through its digital download service.

David stands in front of one of his best perks:  a wall of CDs.  David was too diplomatic to single out a favorite artist for us, but he says that since coming to the NMPA he’s become a country music fan.  “They really take pride in their songwriting,” says David.

The NMPA job “requires” David to attend the Grammys and rub elbows with the likes of famed guitarist Steve Vai, who David recently chatted up backstage at the Birchmere.  He’ll also be speaking at the upcoming Consumer Electronics Association Show in Vegas, where David says he’ll be sure to squeeze in some poker. 

At NMPA’s Constitution Avenue office, David keeps a lean staff of seven.  The association also runs a wholly-owned subsidiary, the Harry Fox Agency, whose 100 employees license and collect revenue on the works of NMPA members.  David hopes that will soon include money from YouTube. 

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