Intellectual Property Newsletter

Royalties for Public Performances

In order to comply with the copyright laws of the United States, most establishments that play copyrighted music are required to secure permission before doing so. A commercial or private entity (or individual) may do this by obtaining licenses from the appropriate performing rights organization (PRO), which tracks and pays royalties to copyright holders for the broadcast of their work.

The General Functions of Performing Rights Organizations

Generally, a PRO protects the rights of its members (including songwriters, composers, publishers and other copyright holders) by ensuring that they are compensated for the use of their music. To protect such rights, a PRO will license and collect fees for “public performances” of its members’ copyrighted works, including:

  • Radio airplay
  • Network and cable television
  • Internet performances
  • Use in nightclubs, restaurants, elevators, hotels, department stores, theme parks, etc.

After the PROs collect the licensing fees from the various entities seeking to use copyrighted music, the PROs then distribute this income as royalties to their members, after deducting administration costs.

By obtaining a license from a PRO, music users can legally play any song in that PRO’s collection. Conversely, playing a song without a license from a PRO places music users in danger of copyright infringement.

Selecting a Performing Rights Organization

The United States has three PROs a copyright holder can choose from, depending on which one they decide would best suit their needs:

  • Broadcast Music, Inc. (BMI) is a nonprofit company that represents approximately 300,000 songwriters, composers and music publishers. BMI was founded in 1940 and has a repertoire of approximately 4.5 million musical compositions.
  • American Society of Composers, Authors and Publishers (ASCAP) is the largest and oldest PRO in the U.S., created in 1914. ASCAP represents hundreds of thousands of music creators worldwide and is the only PRO in the U.S. that is created and controlled by composers, songwriters and music publishers. Further, ASCAP’s Board of Directors is elected by and from the membership.
  • Society of European Stage Authors and Composers (SESAC) was founded in 1930 and is the smallest of the three PROs. Unlike ASCAP and BMI, which permit artists to become members as soon as they have published works, SESAC implements a selection process for affiliate songwriters and publishers.

While all PROs perform the similar task of making sure their members get paid, each performs the task in a slightly different way. As such, a prospective member might consider such factors as the size and selection process of a particular PRO, along with recommendations from current members, in making their decision to join a PRO.

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