BMI and ASCAP represent many musical artists and songwriters in the United States. But they have some subtle differences that could affect your business.
For example, if BMI and ASCAP represent a song you play, you must pay both organizations. Luckily, we are here to help!
Performing Rights Organizations
As the name suggests, Performing Rights Organizations (PROs) manage and track the performance royalties for their members – songwriters, composers and music publishers. PROs offer a consolidated clearinghouse approach to fulfill a business’s obligation to obtain prior authorization from copyright owners for every song it uses in a public setting.
The two major PROs are ASCAP and BMI. They each have a massive catalog of songs from different artists that they represent. BMI has over 735,000 songs represented by the organization, while ASCAP boasts a catalog of more than 640,000 artists. This is a good thing for musicians, as it eliminates the need for each musician to send out an invoice every time their song gets played.
Understanding the distinctions between ASCAP vs. BMI licenses gives businesses a public repertoire to license. Any song in the public catalogs of ASCAP or BMI may be used by a company that purchases a license from those organizations. Businesses previously needed to buy a separate license for every piece. Thus, this is a shift. This is also known as full-work licensing, resulting from the consent decrees written when ASCAP and BMI were created in 1941. The decrees state that ASCAP and BMI must offer “100% licensing” versus fractional licensing.
Licensing Fees
To play music publicly, businesses must obtain a license from ASCAP, BMI, SESAC and GMR. These organizations are charged with licensing the copyrighted work of songwriters, composers and music publishers to those who want to use it in their establishments, such as restaurants, hotels, bars and nightclubs. By negotiating blanket licenses, the PROs remove the need for individual businesses to negotiate and sign contracts with each artist they wish to play.
The PROs are not-for-profit entities that operate under U.S. Department of Justice antitrust consent decrees. As such, their rates are not set freely by market competition but rather regulated by judges in two different district courts, commonly known as the rate courts. This is intended to prevent PROs from engaging in monopolistic business practices.
As the industry continues to evolve, there have been strides toward increasing transparency in this marketplace.
This information helps businesses understand which PROs to license and how much they must pay for a blanket license. It also eliminates the need to pay for multiple licenses from individual songwriters, composers and music publishers. This saves businesses money and simplifies the licensing process.
Copyrights
Music copyrighted by a musician is like any other intellectual property, meaning musicians must receive compensation when their songs are played publicly. Businesses that play copyrighted music without the proper license can be considered copyright infringers and face substantial fines.
As a result, most businesses form relationships with ASCAP, BMI or both to ensure they have the correct licensing for their needs. The PROs act as a bridge between music creators and the businesses that play their songs. They also manage the rights to specific musical works by monitoring radio and TV, paying based on “loggings” of particular songs that are played.
The PROs have recently made several changes to address competitive concerns that prompted the original consent decrees, such as increasing transparency.
While the PROs have similar goals, they maintain very different structures, pricing models and rules. As a result, some artists may choose to work with one PRO over another. This can lead to subtle contractual alterations that can make one PRO seem more or less enticing to a potential licensee.
Royalties
Performing rights organizations (PROs) like ASCAP and BMI provide businesses with a music license that allows them to play over 17 million musical works. They also collect royalties for the artists who created those works and distribute them to the songwriters, composers, and publishers their memberships represent.
ASCAP and BMI have advantages and disadvantages, but both have much to offer musicians. For example, both split their royalties 50/50 with songwriters and pay 88 percent of that amount to the artists they represent. Both also provide various benefits and perks for their members, including access to workshops, award shows, discounts on music products and services, multiple conferences, and a Songwriters Hall of Fame membership.
Both groups are working to keep up with the times and evolve their license offerings. For example, ASCAP and BMI recently launched a joint database to simplify finding music ownership information. This new tool will allow businesses to search BMI and ASCAP repertories in a single place and determine where other rightsholders may be interested in a particular musical work. It’s an important development in a world where music creators increasingly have more and more options for licensing their songs.
