fractional licensing

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In the United States, performing rights in musical compositions (or “musical works” as the Copyright Act refers to them – the words and music of a song) are generally licensed by a “performing rights organization” or a “PRO.”  The U.S., unlike most countries where there is a single organization that collects these royalites, has multiple such organizations.  The recent doubling in the number of PROs triggered the Copyright Office to initiate a Notice of Inquiry last week requesting public comment on issues related to these organizations.  What are the issues that led to this inquiry? 

As set out in the Notice, in the U.S., performance rights in musical compositions have for over 80 years been licensed by three PROs – ASCAP, BMI, and SESAC.  Yet, since 2013, three new PROs have begun (GMR, PRO Music, and AllTrack).  These new PROs are not all equal. GMR has compiled a roster of songwriters who wrote many well-known songs in many different musical genres, and it has aggressively pursued royalties for the music in their repertoire – see, for instance, our articles here and here on their aggressive efforts to compel the radio industry to pay royalties.  PRO Music, while it has sought to receive licenses from various businesses, is a newer organization with music that appears to be concentrated in certain musical genres.  AllTracks is the newest of the PROs and, at this time, their licensing strategy remains to be seen. 

With at least six PROs representing composers of musical works in existence, Congress has received complaints that businesses using music have been confused by demands for royalty payments from these new organizations, accompanied by threats of lawsuits if royalties are not paid.  The Notice of Inquiry does not even note that the landscape is even more complicated, as there are additional PROs claiming rights in the underlying compositions in spoken word recordings – see our article here – and, from time to time, PROs arise that purportedly represent certain foreign-language recordings.  There is, no doubt, confusion among those who publicly perform music and need to be licensed to play that music about who they have to pay, and what these users are getting when they pay their royalties. Continue Reading Copyright Office Commences an Inquiry into the Proliferation of Performing Rights Organizations – Looking at the Complexity of Licensing Musical Works in the United States

In 2019, the Antitrust Division of the US Department of Justice began a review of the court-administered antitrust consent decrees that have bound ASCAP and BMI since the 1940s.  We wrote about the issues in their review here.  The formal review of these decrees began as part of the DOJ’s broader review of its antitrust consent decrees covering many different industries.  The DOJ received almost a thousand comments on the questions that it asked about the ASCAP and BMI decrees.  It also held public roundtables as well as private discussions with interested parties during its review.  Last week, Makan Delrahim, the outgoing head of the Antitrust Division, presented remarks at a Vanderbilt Law School virtual event where he said that the review would be ending without any proposals for reform.  While the statement notes some of the reforms that were sought by the music industry, it also notes that music users around the country rely on the systems established under the decrees and judge them to be working well.  Mr. Delrahim’s statement says that because of the complexity of the issues and the interruptions caused by the pandemic, no reforms would be offered at this time, but it urged the DOJ to continue to review these decrees on a regular basis – at least once every five years.

This action is significant for broadcasters and other music users as it leaves in place these consent decrees that are the basis on which so many businesses use music in their day-to-day operations.  Given the volume of music they have under license, most businesses do not have an alternative to using the blanket licenses offered by these organizations.  The only alternative would be to license the music themselves which, due to the complexity of the copyright laws and the lack of transparency in music ownership, would be exceedingly difficult for a business where music is but a secondary component to their operations.  Together, ASCAP and BMI provide a license to broadcasters and other music users (including any business that performs music to the public, such as bars and restaurants, retail stores, digital music services, concert venues, hotels and so many other locations).
Continue Reading DOJ Ends its Review of ASCAP and BMI Consent Decrees – For Now…What Does it Mean?

The Department of Justice’s Antitrust Division yesterday announced that it was starting a review of the ASCAP and BMI antitrust consent decrees that govern the United States’ two largest performing rights organizations for musical compositions (referred to as the “musical work”). The DOJ’s announcement of the initiation of the examination of the consent decrees poses a series of questions to which it invites interested parties – including users, songwriters, publishers and other interested parties – to file comments on the decrees, detailing which provisions are good and bad and, more broadly, whether there is a continuing need for the decrees at all. Comments are due on July 10.

This re-examination of the decrees has been rumored for many months. Back in March, we wrote about those rumors and the role that Congress may play in adopting replacement rules should the DOJ decide to fundamentally change the current provisions of the consent decrees. The DOJ itself just recently looked at the consent decrees, starting a review only 5 years ago with questions very similar to those it posed yesterday (see our post here on the initiation of the last review 5 years ago). That review ended with the DOJ deciding that only one issue needed attention, whether the decrees permitted “fractional licensing” of a song. We wrote about that complex issue here. That issue deals with whether, when a PRO gives a user a license to play a song, that user can perform the song without permission from other PROs when the song was co-written by songwriters who are members of different PROs. The DOJ suggested that permission from one PRO gave the user rights to the entire song, an interpretation of the decrees that was ultimately rejected by the rate courts reviewing the decrees (see our article here).   So, effectively, the multi-year review of the consent decrees that was just concluded led nowhere. But apparently the DOJ feels that it is time to do it all again. To fully understand the questions being asked, let’s look at what the consent decrees are, and why they are in place.
Continue Reading DOJ Starts Review of BMI and ASCAP Consent Decrees – Exploring the Background of the Issues