The looming music copyright battle in 2017

Music copyrights in the United States are mostly controlled by three organizations ASCAP, BMI and SESAC.

In the beginning was the American Society of Composers, Authors and Publishers. It was formed in 1914, long before radio started in the 1920s. At the time, music was being sold on phonograph records and sheet music printed for live performances.

As ASCAP turned up the pressure on radio stations and artists in the late 1930s, radio launched a boycott of ASCAP, creating BMI (Broadcast Music Incorporated). Radio stations would only play music controlled by BMI. Most artists stuck with ASCAP, leaving BMI signing up mostly unknown music in genres not generally heard on radio up to that point – black gospel, R&B, country, regional music. A for-profit organization in Europe also saw a window of opportunity – The Society of European Stage Authors and Composers (SESAC). SESAC is still a relatively minor competitor in the United States.

In late 1941, with the world on the precipice of another World War, there was an urgency to settle the dispute, and ASCAP and BMI entered in an antitrust “consent decree” with the Department of Justice that established a fair system so that music composers, lyricists and publishers were paid for their work.

Note that the performers of recorded music are not part of the story yet, as it is the publishers that sell the music and pay performers for their performance on negotiated terms, often meaning the performer got nothing.

Under current law, radio stations do not pay performance royalties to the artists, unless they stream music digitally (which now almost all stations do) – that is handled separately by a similar organization called SoundExchange.

In part motivated by artists getting large unexpected checks from $oundexchange (mostly funded by SiriusXM, Spotify and Pandora), many artists are refusing to license their music compositions and performances through BMI, ASCAP or SESAC. The era of Big Radio and Big Record companies colluding to screw the musicians is breaking apart. The pioneer in this fight was Frank Sinatra who refused to allow ASCAP or BMI give his music away for free, a position his estate still holds and enforces.

A new Performance Rights Organiztion – not bound by the 1941 consent decree – is kicking into full gear in January. BMI and ASCAP are non-exclusive – publishers and artists are free to negotiate different rates outside the rates set under the consent decree. Clear Channel started working the edges on this a few years ago, signing with artists who agreed to lower royalties, in exchange for more exposure than they might get otherwise.

Welcome Global Music Rights to the battle. With Congress unwilling to strip the free airplay exception for radio, artists are moving to this new organization that is not subject to the consent decrees and has the objective of maximizing revenue to the artists. Enforcement of those rights against radio will start at the end of January. Radio Stations are compelled to play only artists still available under ASCAP, BMI or SESAC under the statutory license – or negotiate with Global Music Rights with no statutory limit on the rates.

If only a handful of obscure publishers and artists left BMI or ASCAP, this is a hollow threat – but radio is no longer the driver of music sales. Who are the artists that may vanish from radio in a month? I’m not a big music person, but just the first names I recognize:

Adele, Aerosmith, Alice Cooper, Allman Brothers Band, Anthrax, Average White Band, Backstreet Boys, Beyoncé, Billy Idol, Boston, Britney Spears, Carry Underwood, Celine Dione, Cheap Trick, Cindi Lauper, Dan Fogelburg, Diana Ross, Diddy, Duran Duran, Eagles, Elton John, Eric Clapton… More complete list

That list screams “critical mass”. Have I mentioned recently that radio has about $25 billion in debt that aren’t even keeping up with? I wonder why CBS wants out of the radio business, dumping it on IPO suckers…

You might notice there are no Country Music artists in that list. Country Music is waiting in the wings to take over radio airplay. What is old is new again.

Radio has been trying to fight this development in the courts, but caved today and withdrew their request for a restraining order.

They radio industry negotiated only a temporary framework, giving radio stations until the end of September 2017 to negotiate permanent rates.

I noticed on several recent waits on hold on the phone that the phone system was playing random algorithmic music while I was on hold. No composer, no lyrics, no musicians – just robots. That is not unrelated.

9 Replies to “The looming music copyright battle in 2017”

  1. God I hope with new president they don’t ever play maria carey ‘all I want for christmas’
    anymore ! terrible song with the screech and then CBS this moning on christmas morning had that song as feature AAArrrrrgh !
    You know how hard it is to find a radio station that plays good christmas music from say 1980 on back and not twenty commercials in a row after every song.
    Have to try canadian stations next year hard to find.

    1. While testing stations, I wasn’t listening much, but I do remember hearing one station I left playing music in the background was playing the most unlistenable stuff I had ever heard. Back before the Happy Birthday song was declared in the public domain, radio stations would play substitute songs with names like “have a happy happy birthday” that were pretty dreadful.

      Welcome to 2017 music radio. No George Michael music for you!

      When Drudge flashed the headline, my brain thought Bob Michel had died (former House minority leader from Illinoise), but he died a long time ago.

  2. Just a clarification: There are several country music acts listed on GMR’s FAQ page:
    Alison Krauss
    Blake Shelton
    Brandy Clark
    Carrie Underwood
    Darius Rucker
    Florida Georgia Line
    Johnny Cash
    Kacey Musgraves
    Keith Urban
    Kenny Chesney
    Kid Rock (yes, him)
    Little Big Town
    Luke Bryan
    Miranda Lambert
    Randy Travis
    Rascal Flatts
    Shane McAnally
    Sheryl Crow (yes, her)
    Taylor Swift (her country-promoted stuff)
    The Band Perry
    The Randy Rogers Band
    Tim McGraw

    1. Since I don’t follow Music closely, is this as big a deal as I think it is? How do the record labels fit into this?

      Taylor Swift has been pretty vocal leading the charge of not giving away her music for free. Who else are the ones who will appear in Congress when the radio lobbyists and NAB fight back?

  3. Reading a bit more about George Michael points to the risks of this game. Musicians operate under the illusion that they are a star because of their talent. Georgios Kyriacos Panayiotou became somebody because Sony Music made him a star. Without their distribution, publicity machine, access to music composers and musicians, production facilities and concert promoters, his career would have been singing in bath houses in San Francisco for tips.

    His ego outran his talent and he decided that Sony was holding his real talent back, and started a legal fight in 1992 to break the contract that was holding him in “slavery”

    The court ruled in 1994 that Sony’s contract was legal and binding. Part of that deal was signing over the copyrights to the work. The soundexchange wrinkle is the law and the courts in the US decided that existing contracts with musicians did not cover digital music sales.

    This was originally pushed by the radio stations to bankrupt SiriusXM and later Pandora, Spotify and others and exploit radio’s exemption for free airplay. Apple iTunes totally destroyed the music discovery model where people heard new music first on radio. The weapon has boomeranged – Sirius has about 30 million US customers paying ~$20 a month for their service without ads. New music spreads via social media, not because a record label gives a DJ drugs, prostitutes and cash.

    Musicians now expect to be paid whenever someone uses their music, not necessarily indirectly through a record label.

    Baba Booey!

      1. Bluegrass music is some of the most problematic and is a good study in the role of the PROs. (ASCAP/BMI/SESAC). If you listen to niche music – bluegrass, polkas, Italian, etc the host might describe the recording – this was recorded at the bluegrass festival in 1953 in Beckley West Virginia. The performers had no real expectation that anyone other than the immediate audience was listening, Who was playing the fiddle? Nobody knows and nobody remembers. Could someone come forward and claim it was their grandmother and demand payment? Definitely.

        So while people do not like the idea of paying for music, the PROs provide a safe harbor for assuring that the appropriate people are being paid, and they’ll deal with people who might show and demand to be paid. The PROs are more than just radio – they deal with jukeboxes in restaurants and the airing of music inside a restaurant. When the DJ is playing music at a wedding, the venue needs to pay royalties. There is no radio exception if there is no broadcast station.

        ASCAP and BMI have a significant number of undercover investigators and lawyers. You will get caught eventually and they win 100% of the time if you don’t agree to their settlements. Even churches can get in trouble if they provide recordings of church services with copyrighted music used in the service.

        Since radio doesn’t pay for performances, their exposure is limited to the tune and the lyrics. But since that doesn’t apply to digital, soundexchange has to deal with the problem of tracking down the singers and musicians on 60 year old music and who has rights to an estate that nobody cared about because the person died penniless.

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