Court Lets Venues Deduct Fees From BMI License For Directly Licensed Music

While ASCAP is busy attacking Creative Commons and refusing to debate, it appears that the performance rights organization may have a bigger problem on its hands. Reader Beefcake alerts us to an important ruling against BMI, the other big US performance rights group (there’s also the somewhat smaller SESAC). The case itself involves a commercial music company, DMX (who provides music to various venues such as stores, restaurants and bars), that had been licensing some music directly from publishers and writers. But, as plenty of venues have learned, the big Performing Rights Organizations tend not to care whether or not you’ve directly licensed works (or just used public domain or non-covered works). They still demand a blanket license. This ruling, however, says that if you “directly license” works, you can get an adjustable fee blanket license, which would let venues decrease the amount they pay BMI (and, one would assume, ASCAP and SESAC), by deducting a portion for the directly licensed music:

Now, it’s important to point out that this seems to cover specifically deductions for when DMX directly licenses BMI music. The way DMX’s fees are set up, it appears to pool all the royalties it needs to pay into a certain bucket, and then splits it up by percentage of music played. So, theoretically, playing lots of freely licensed music could also decrease the rate paid to BMI.

The key here, however, is that this not only gives venues more incentive to directly license music in some cases (many won’t, of course, because it’s too big of a hassle), it also may force more transparency on BMI and the others. One major complaint we constantly hear about ASCAP and BMI is the lack of transparency in how they act in terms of counting performances and determining payouts. But, as the analysis of this ruling notes, DMX appears to be the opposite:

DMX’s accounting to publishers and writers for direct licensed works features quarterly accounting 45 days after the end of each quarter, as opposed to the typical performing rights organization schedule of 9 or more months after a performance. DMX also provides direct counts of the number of plays of each work.

So, for artists upset about the way BMI or ASCAP treats them, it can now make more sense to just deal directly with DMX, which will pay them faster, give them more accurate and up-to-data data, and potentially pay out higher rates. It creates a bit of a competitive element that BMI and ASCAP could really use.

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