Sometimes tough times breed a certain sense of solidarity among those suffering together, creating a sense of unity and a determination to stick together for the good of all. The English in World War II come to mind. Sadly, one seems to have to go back in history a bit for such tales of shared sacrifice in the name of a common interest.

On other occasions, economic or physical hardship can lead to a desperate willingness to do anything and everything, including dining on the bones of your buddies, if that’s what it takes to survive. Try throwing a tiny scrap of meat to a group of hungry lions, then watch the carnage ensue. Or just turn your eyes to the 21st century music industry, and watch the weasels beg, borrow or steal from each other, in a desperate grab for a piece of their quickly-shrinking pie. Not pretty.

Of course, it’s not surprising, either. As much of the formal structure of the music business evaporates (including such small structural details as “creator makes music; listener purchases music”), the large players begin to fall apart, and the whole playing field becomes increasingly populated by individual entrepreneurs trying to fight their way through the crowd, it’s only natural that an “every man (or woman) for himself” mentality takes over. We’re all just trying to make a living after all. Nevertheless, there is a real danger for the creative community, when we begin to undermine any effort to act collectively in advancing our own economic interests.

Needless to say, the people who use music, whether in advertising, on records, in television shows or in bars and restaurants, have noticed the growing levels of economic desperation among those who write songs and publish them. They’ve also noted that there is more than enough music to go around. Consequently, we’re beginning to see efforts by those who request music licenses to circumvent the collective organizations that have represented American songwriters for decades. Why license songs through Harry Fox, ASCAP, BMI or SESAC when you can go directly to the songwriters and publishers? Those using music as part of their business can negotiate directly with the music creators, eliminating the middleman and all the bloated overheads of those admittedly bureaucratic organizations. In some cases, they may actually increase the amount of money going directly to the copyright owners.

This issue came to mind recently when I heard about the licensing policies of DMX, a music programming service that has emerged as one of the chief designers and suppliers of music to a variety of different venues, including retailers, bars and restaurants, hotels, and airlines.

www.dmx.com

Traditionally, companies like DMX function in much the same way as commercial broadcasters, obtaining blanket licenses from ASCAP, BMI and SESAC which allow them to use any and all the music represented by those organizations in return for an annual fee, which is negotiated by each of the performance rights organizations. Those fees are collected by the PROs, and divided among their members (the songwriters and publishers) based on which songs are being used most often. Clearly, it’s not a perfect or even remotely precise system, which partly explains why DMX is so eager to offer publishers an alternative.

Rather than licensing through the PRO’s, DMX encourages publishers to issue direct licenses to DMX, in which DMX will have access to all of the songs in the publisher’s catalog (or in an individual songwriter’s catalog) and will pay the songwriters and publishers directly, rather than through a performance right organization. At first glance, it seems a pretty good deal. What writer or publisher wouldn’t want their music played in public venues? Why wouldn’t the payments for those uses be higher if ASCAP or BMI weren’t taking their fee off the top?

All true. By most accounts, DMX pays more money with greater accuracy for these music uses than the PROs. The truth is that BMI and ASCAP have never managed to pay more than a tiny dribble of money for this particular type of public performance. In fact, DMX also has “blanket licenses” with the PROs, in order to allow the company to use music that the individual publishers or songwriters might not be willing to license directly. Presently, writers and publishers have a choice: to license and collect directly through DMX, or to simply collect through the traditional blanket licensing system of the PROs.

So why would any publisher elect to receive less money, less efficiently? It all comes down to a sad, but simple reality:

No one lives at the top of the charts all of the time. Unless of course they’re Dr. Luke or Stargate, and even they have to cool down eventually. By requiring radio stations, television stations, and yes, companies like DMX, to take out “blanket licenses”, the PROs have been able to use their strongest songs and members as the basis for negotiating licensing rates that benefit all of their members. In order to have access to the biggest classic songs and contemporary hits, companies like DMX have to pay a fee that can then be shared with the songwriter who had only one big song, or the small publisher who has some golden oldies, but not much else. The power of a few hit-makers is leveraged to benefit the whole music community. Given the realities of the music business (in any era), most of us will find ourselves at both ends of the spectrum, from stars to starving, at different times in our careers.

Call me a cynical old music business weasel (you won’t be the first one to do it), but my instinct is that companies like DMX, or those insisting on receiving direct mechanical licenses rather than going through Harry Fox are not acting out of a general beneficence toward songwriters and music publishers. They are seeing an opportunity to undermine the organizations that license, collect, audit, lobby politicians and pursue legal action on behalf of songwriters and publishers, large and small. Even if they have to offer to pay a bit more money in the short-term, if these music users can eliminate the pillars of the creative community, then all the rules of the game can be changed at will. Each songwriter and individual publisher will be left to fend for themselves, based on the value and desirability of their particular catalog at any particular time.

We all like to see our music used, and we all benefit by those who help place the music in public venues. But think twice about issuing direct licenses to companies like this. These people are not your friends.

Sadly, there are two sides to this story, and the flip side is not so pretty either. If we’re going to be cynical about the motives of those outside of the creative community, we have to bring a little of the same skepticism about the motives of some of those working on our behalf. There are some ugly secrets at ASCAP and BMI that need to be exposed—more on that next week. If one is looking for heroes, the music biz in decline is not the place to find them.

Still, a little perspective is in order. Songwriters in the 21st century are far better off than those in the 19th. American songwriters are far better off than those in countries without strong PROs. The principle of collective bargaining power is a large reason why. Just because times get tough, we might want to think twice about killing off our old friends on behalf of some new ones.

    Very interesting and informative article. As an independent production company, it seems like there is an overwhelming amount of information to consume. thank you for the detailed and concise feedback on this topic

    Shawn:

    So glad the blog was helpful. Look forward to staying in touch.

    Best,

    Eric

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