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BMI boss welcomes conclusion of 100% licensing dispute, considers extending his society’s licensing remit

By | Published on Tuesday 27 March 2018

BMI

The boss of American collecting society BMI has written an opinion piece for Billboard following the recent passing of a key deadline in the long-running 100% licensing dispute. In it he hails his society’s victory in that battle and then talks mechanicals.

A quick recap. Songs are often co-written and therefore co-owned. In the US, there are multiple collecting societies representing the performing rights in songs, meaning songwriters must decide which one to join. Once the writer is joined up, that society represents their performing rights.

Collaborating writers may choose to join different societies, which means that any one song may be concurrently represented by BMI, ASCAP, GMR and SESAC, with each society representing a percentage of the work. Where that is the case – convention has generally held – anyone wishing to broadcast or perform that work must have a licence from all the societies, and pay royalties to each, pro-rata according to what percentage it controls.

That system is called ‘fractional licensing’. You get every licence you need until you have 100% of the song covered. But when the US Department Of Justice reviewed the consent decrees that govern BMI and ASCAP in 2016, it announced that – by its reading of said decrees – the two big American collecting societies were obliged to operate a so called ‘100% licensing system’.

That would mean that, where BMI controlled part of a song, a licensee could make use of that song with just a BMI licence. BMI would then collect 100% of the royalties at whatever rates it had agreed with the licensee, but would then have to pass on a share of the money to ASCAP or whoever, who would then pay the writer who was not a BMI member.

Both BMI and ASCAP objected to the DoJ’s new interpretation of the rules, the former fighting the ruling in the courts, the latter lobbying against it in US Congress. BMI’s pro-fractional licensing position was then endorsed by the courts much quicker than anyone expected. The DoJ then appealed that ruling, but just before Christmas last year an appeals court upheld the original judgement saying that a fractional licensing system was just fine.

The DoJ could have pursued a further appeal, but the deadline for doing so passed last week with no appeal being filed. As that deadline passed BMI said in a statement: “With no action taken, the final decision of the Court Of Appeals stands that BMI is free to continue to engage in the historic practice of fractional licensing. This development definitively ends litigation between BMI and the DoJ in this matter, and represents a significant victory for songwriters, composers and publishers, as well as the music industry at large”.

Writing in Billboard, BMI boss Michael O’Neill says: “We are incredibly gratified by our victory in this matter, and believe the industry should view it as an overwhelmingly positive outcome as well. To put it in context, the negative ramifications of the DoJ’s 100% licensing interpretation were so sweeping that it was important enough for BMI to take the US government to court”.

He goes on: “We did this even though some said we could have increased our strength as a performing rights organisation if we had agreed with the DoJ. We did this purely because it was the right thing to do, and the courts agreed with us”.

And, he adds: “Our win means songwriters can keep collaborating with whomever they choose, businesses that use music can continue to license that music in the same manner as they always have, and BMI can focus on protecting and growing the profession of songwriting and modernising music licensing, which was always our intent”.

O’Neill then goes on to consider other current and future developments in the collective licensing domain in the US, including the possibility of the PROs getting involved in other aspects of song licensing, which presumably means the mechanical rights.

ASCAP’s consent decree specifically limits the society’s operations to licensing performing rights, whereas the BMI consent decree is less explicit about any such limitations. The ruling in the 100% licensing dispute, O’Neill reckons, confirms that BMI could get involved in mechanicals.

“We have long believed our consent decree allows for the licensing of multiple rights, which is why four years ago we asked the DOJ to amend our decree to clarify that ability, among other much-needed updates”, he writes. “Thanks to our recent victory over the DOJ, we now have definitive confirmation”.

He continues: “The Court Of Appeals ruled that if the language of our consent decree does not expressly prohibit a business activity, in this case fractional licensing, then it is permitted under the decree. That opens up opportunities for us to better serve the needs of our affiliates, and we are exploring what it would look like for music users, creators and copyright owners if BMI licensed or administered multiple rights”.

Mechanical rights have been much debated in the US of late, of course, because of the issues around streaming services paying mechanical royalties to music publishers and songwriters. That is in no small part because of the lack of a collecting society able to offer a blanket licence for this element of the song copyright, which does exist in most other countries.

You can read O’Neill’s full article here.



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