Law in the Internet Society
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Has Copyright Law in the Music Industry Gone Too Far?

-- By SamSchaffer - 11 Oct 2019

Girl Scout Cookies Not Accepted As Payment

In 1996, the Wall Street Journal reported that the Girl Scouts of America were subtly being threatened that they were infringing copyright law by singing campfire songs. The American Society of Composers, Authors & Publishers (“ASCAP”) had sent letters to the American Camp Association – which runs many of the camps the Girl Scouts use – demanding licensing fees from the Association for the rights to sing copyrighted songs at their camps. The article created a public relations nightmare for ASCAP, who later insisted it never intended to license Girl Scouts singing around the campfire. But this assertion is belied by a quote from ASCAP’s then-chief operating officer, John Lo Frumento: “They buy paper, twine and glue for crafts – they can pay for the music, too.”

The Girl Scouts’ favored place in Americana may have saved the day, as the American Camp Association reached a deal with ASCAP for a nominal yearly licensing fee of $1 per camp. Nonetheless, this deal demonstrates that the underlying copyright law would have allowed ASCAP to assert a viable claim. Campsites that do not fall under the American Camp Association’s purview lacked the bargaining power to push back against ASCAP, and they have been charged higher fees than the nominal $1.

The federal copyright law enables composers and music publishers to ask for royalty payments for any public performance of copyrighted material. A public performance is defined as a gathering of “a substantial number of persons outside of a normal circle of a family and its social acquaintances.” This exceedingly broad language is what allows perverse extensions of the copyright law such as the above case.

Leave It To The PROs

Obviously, the ability to collect on royalty payments hinges on the ability monitor public venues. Artists generally do not have the wherewithal to ensure that they are paid whenever one of their songs is played. This is where performance rights organizations (“PROs”) come in. ASCAP was the first such organization, founded early in the 20th Century. Since then, other PROs have emerged on the scene, including Broadcast Music, Inc. (“BMI”) and the Society of European Stage Authors and Composers (“SESAC”). These organizations are essentially the enforcers of the music industry. Songwriters and music publishers agree to assign their copyrights to the PROs, and the PROs then ensure that the songwriters and publishers receive compensation whenever their music is played publicly. Most of these organizations are structured as nonprofits, with most of the revenues collected sent back to the songwriters and publishers.

So have the PROs lived up to their end of the bargain? By most measures of corporate enterprises, the answer is undoubtedly “yes”. In 2018, ASCAP collected $1.227 billion in licensing fees, $1.109 billion of which was distributed back to the artists and publishers. This represents a 10% growth over 2017. BMI – who initially emerged on the scene as an alternative to the bully that was ASCAP – has become a behemoth in its own right. For the fiscal year ending in June 2019, BMI collected $1.283 billion in licensing fees, $1.196 billion of which was sent back to the artists and publishers, a 7% growth over last year. Both organizations consistently distribute 90% of their revenue to their artists and publishers.

The reach of these organizations is massive. Their industry spans network television, cable, film, radio, digital, bar/restaurants, hotels, concerts, retail stores, fitness centers – and campfires. Last fiscal year, BMI processed 2.19 trillion performances. ASCAP similarly tracks its figure in the trillions. The vast majority of these “performances” are digital – 98% in BMI’s case. It’s no surprise that the industry is moving in that direction, with the emergence of platforms such as Spotify. While digital only constituted 28% of BMI’s domestic revenue last year, it largely drove domestic growth (75%). Despite this trend, the bulk of PRO revenues still come from traditional sources, such as TV, film, and radio. Cable and satellite sources generated 30% of BMI’s domestic collections, while radio and TV generated a combined 24%. Everything else is lumped into a catch-all category that ASCAP and BMI refer to as “general” or “background” revenue. This category, which includes bars, restaurants, fitness centers, and other live performances, makes up only 18% of collections in BMI’s case.

Is This What We Want?

These figures demonstrate that PROs are undoubtedly good for published artists. But are PROs good for music?

Despite the nonprofit status of ASCAP and BMI, a brief look at the makeup of each organization’s board of members reveals deep ties to the already wildly successful corporate music industry, which makes their nonprofit status more akin to that of the National Football League pre-2015. Half of ASCAP’s board is comprised of “publisher members”, who hail from companies such as Sony/ATV Music Publishing, Welk Music Group, and BMG. A music publisher is like an agent, working on behalf of the songwriter/composer to secure royalties and licensing agreements. They also promote already existing compositions for use in TV and film and by recording artists. The majority of the other half of ASCAP’s board – which is reserved for “writer members” – is comprised of film and TV scorers and songwriters for big-name acts.

Where Do We Go From Here?

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r1 - 11 Oct 2019 - 16:27:36 - SamSchaffer
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