In recent months, SESAC has been writing letters to broadcasters who are streaming their signals on the Internet, asking for royalties for the performance of SESAC music on their websites. More than one broadcaster has asked me why they have any obligation to SESAC when they are already paying SoundExchange for the music that they stream. In fact, SoundExchange and SESAC are paid for different rights, and thus the payments to SoundExchange have no impact on the obligations that are owed to SESAC. SESAC, along with ASCAP and BMI, represent the composers of music in collecting royalties for the public performance of their compositions. SoundExchange, on the other hand, represents the performers of the music (and the copyright holders in those performances – usually the record companies). In the online digital world, the SoundExchange fees cover the public performance of these recordings by particular performers (referred to as "sound recordings"). For an Internet radio company, or the online stream of a terrestrial radio station, payments must be made for both the composition and the sound recording.
To illustrate the difference between the two rights, let’s look at an example. On a CD released a few years ago, singer Madeleine Peyroux did a cover version of the Bob Dylan song "You’re Gonna Make Me Lonesome When You Go." For that song, the public performance of the composition (i.e. Dylan’s words and music) is licensed through SESAC. The actual "sound recording" of Peyroux’s version of the song would be licensed through SoundExchange, with the royalties being split between Peyroux and her record label (with backing singers and musicians receiving a small share of the SoundExchange royalty).
One reason for the confusion about SESAC may be that the other performing rights organizations representing composers, ASCAP and BMI, cover the costs of streaming a broadcast station on the Internet as part of the same process that broadcast stations use to pay their over-the-air royalties. Thus, broadcasters do not see a separate invoice for their streaming royalties due to these organizations. SESAC, on the other hand, has determined that streaming (and HD radio channels) are potentially independent revenue sources, so they charge a separate royalty for the music used by broadcasters providing these services. However, it should be noted that both the ASCAP and BMI agreements with broadcasters are up for renewal this year, so these issues could conceivably be up for consideration in the negotiations about the new royalties to be paid by broadcasters in the future.
But for now, broadcasters who are streaming their signals on the Internet should understand that the rights covered by ASCAP, BMI and SESAC are different from those covered by the SoundExchange royalty, and thus there are obligations to all of these organizations for music royalties. Thus, don’t ignore that letter from SESAC asking for Internet radio royalties.