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Direct Licensing as an Alternative to the Traditional Blanket License

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Direct Licensing and the Music Industry

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Abstract

The digital world is embracing alternative forms for the licensing of musical compositions, and in the process reducing the barriers to entry for competitors looking to bring innovative new services to the marketplace at a lower cost to retailers and consumers.

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Notes

  1. 1.

    See Passman (2000, pp. 237–238).

  2. 2.

    See Robertson (2011); Towse (2008).

  3. 3.

    See BMI vs. DMX, ASCAP vs. THP CAPSTAR (2012). It is no wonder that the public view the PROs as having one foot in the grave and the wounds are largely self-inflicted when technology and competition diminishes the intermediate role of incumbent PROs. This is a classic example of the Innovator’s Dilemma.

  4. 4.

    See BMI vs. DMX (2010); US vs. ASCAP & In Re Capstar (DMX) (2010) for the court rulings and the law review article of both cases by Olson (2012).

  5. 5.

    See Patry (2011, pp. 82–83). The music publisher can also be described as just another music licensing agency whose role is to exploit revenue opportunities from copyrighted music.

  6. 6.

    See Grant and Wood (2004, p. 43–92).

  7. 7.

    See BMI vs. DMX (2010); US vs. ASCAP & In Re Capstar (DMX) (2010).

  8. 8.

    See BMI vs. DMX (2010); Cardi (2007); Christman (2014b); Meredith Corp. v. SESAC LLC (2014); Patry (2011); RMLC v. SESAC (2013); Robertson (2011); US vs. ASCAP & In Re Capstar (DMX) (2010).

  9. 9.

    See AFJ2 (2001); BMI vs. DMX (2010); US vs. ASCAP & In Re Capstar (DMX) (2010).

  10. 10.

    See Christman (2014a).

  11. 11.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  12. 12.

    See BMI vs. DMX (2010); US vs. ASCAP & In Re Capstar (DMX) (2010).

  13. 13.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  14. 14.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  15. 15.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  16. 16.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  17. 17.

    SESAC is a distant third in terms of affiliates, copyrighted songs and market share, but their repertory may not be as negligible as they are often treated in the industry.

  18. 18.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  19. 19.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  20. 20.

    See Spotify’s Video Play, Billboard Magazine, May 30, 2015, p. 16.

  21. 21.

    See Passman (2012, pp. 83–87).

  22. 22.

    See Passman (2009, pp. 79–83).

  23. 23.

    See Passman (2009, pp. 79–83), Jefferson (2010).

  24. 24.

    See Economic Characteristics of Music Production, Pitt (2010a, pp. 9–14) and Grant and Wood (2004, pp. 43–92).

  25. 25.

    See Thall (2006, pp.17–21).

    See also these readily available online articles.

    RIAA Accounting: Why Even Major Label Musicians Rarely Make Money From Album Sales here:

    http://www.techdirt.com/articles/20100712/23482610186.shtml.

    Wixen (2014, pp. 152–153) discuses why auditing a record company is necessary.

    In addition, the following two online articles contain separate links to court documents filed by singers Brad Paisley, Kelly Clarkson, Carrie Underwood, and others in their lawsuits on allegations that Sony Music has been systematically robbing them of millions of dollars in royalties.

    See Bombshell “American Idol” Lawsuit Claims Sony Stiffs Carrie Underwood, Kelly Clarkson (Exclusive) that is available here:

    http://www.hollywoodreporter.com/thr-esq/bombshell-american-idol-lawsuit-claims-681625.

    The link to the Clarkson court document (19 Recordings Limited vs Sony Entertainment) appears here:

    http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/American_Idol_Clarkson.pdf.

    Country Superstar Brad Paisley Sony Music Stole $10 Million From Me! appears here:

    http://radaronline.com/exclusives/2014/04/brad-paisley-lawsuit-sony-music-10-million-dollars/.

    The link to the Paisley court document (Brad Paisley vs Sony Entertainment) in a PDF format appears here: http://amradaronline.files.wordpress.com/2014/04/pasileybb.pdf.

    In particular, the Paisley court document contains an extensive list of accounting items necessary for conducting an audit of the record label royalty payment process.

    The author has not seen disputed-earnings lawsuits similar to ones mentioned above in which well-known songwriters or composers have sued their PROs for alleged fraud, intentional malfeasance, corruption, theft, conflict of interests, and underpayment of royalties—when such an audit is justifiable—and those lawsuits received national attention in the trade press.

    Perhaps, some of the PRO lawsuits were settled privately and the details of these “convenient mistakes” were not made public, or songwriters may not have exercised their right to an audit, pursuant to licensing agreements, if such an agreement existed.

    It is not uncommon for PROs to audit the books of music users in their pursuit of royalty revenue.

  26. 26.

    See Murphy (2014, pp. 74–76).

  27. 27.

    Emphasis added.

  28. 28.

    See http://www.ascap.com/~/media/Files/Pdf/members/payment/drd.ashx.

  29. 29.

    http://www.ascap.com/members/payment/payment.aspx.

  30. 30.

    Many recording artists and copyright holders are now calling for changes in the anachronistic legislation and policies in the various consent decrees to make sure that all music users are monitored by a digital fingerprinting service to eliminate the flawed sample surveys.

  31. 31.

    See US vs. ASCAP & In Re Capstar (DMX) (2010).

  32. 32.

    See BMI vs. DMX (2010).

  33. 33.

    BigChampagne is owned by Live Nation Entertainment.

  34. 34.

    See Patry (2011).

  35. 35.

    See Scope of Digital Rights Withdrawal at http://www.bmi.com/licensing/entry/drw.

  36. 36.

    See BMI vs. Pandora Media Inc. (2013); Christman (2013a, 2014c); Sisario (2014); US vs. ASCAP & In re Petition of Pandora Media (2013); and Section VI: The April 2011 ASCAP Compendium Modification, and Section VII: Second Compendium Modification in December 2012: the “Standard Services” Agreement in US vs. ASCAP & In re Petition of Pandora Media (2014) for more analysis on the recent rate court rulings on the matter.

  37. 37.

    See Brabec and Brabec (2011, p. 316), Christman (2013b).

  38. 38.

    See US vs. ASCAP & In re Petition of Pandora Media (2014, pp. 38–39).

  39. 39.

    See Christman (2011a); Christman et al. (2013); Smirke (2011); US vs. ASCAP & In Re Capstar (DMX) (2010). In 2012, following regulatory approval, EMI’s music publishing and record label assets were acquired by Sony and Universal, respectively.

  40. 40.

    See BMI vs. Pandora Media Inc. (2013); US vs. ASCAP & In re Petition of Pandora Media (2013, 2014).

  41. 41.

    See Christman (2011c).

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  2. BMI vs. DMX (2010). No: 08 Civ. 216 (LLS), S.D.N.Y. July 26, accessed online: http://www.leagle.com/decision/In%20FDCO%2020100727985.xml/BROADCAST%20MUSIC},%20INC.%20v.%20DMX,%20INC, pp. 1–33.

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    Ivan L. Pitt (Former Senior Economist American Society of Composers, Authors and Publishers)

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Pitt, I.L. (2015). Direct Licensing as an Alternative to the Traditional Blanket License. In: Direct Licensing and the Music Industry. Springer, Cham. https://doi.org/10.1007/978-3-319-17653-6_5

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