We here at the legal affairs desk think a lot about how money, music, and the law interact. Hell, we made a desk to sit at and ruminate on those very topics! Well, last week The New York Times came out with this fascinating article on how licensing firms collect royalties. I whole heartedly recommend this article to anyone who is curious about intellectual property and the economics of the music industry. However, while the article provides a descriptive view of the individuals involved in collecting artist’s royalties, it does leave the reader wanting for an explanation of how musicians get paid when songs get played.
The article explains that a P.R.O., or performing rights organization, such as BMI or ASCAP, employs licensing executives to track down businesses that play music in their establishment and ask them for royalties. These licensing executives are often met with resistance from the business owners, however in 51 years, BMI has never lost a single case it has taken to court. So, as you would guess, BMI usually gets these music users to settle out of court. What happens with the money that BMI collects is less certain.
The article mentions that, “The fees are distributed to artists based on what BMI calls “an appropriate surrogate” — local radio or TV — that reflects a sampling of bars and restaurants in the area.” If you are like me, this answer feels unsatisfying. So, in order to get the full picture, check out these additional links to get both sides of the issue on whether BMI fairly compensates artists:
http://www.bmi.com/royalties (BMI’s explanation on how they pay royalties to artists)
http://www.hiphopdx.com/index/news/id.11008/title.bmi-tracks-small-concerts-increases-royalties-for-songwriters (post on how BMI is increasing its artist’s royalties)
http://www.woodpecker.com/writing/essays/royalty-politics.html (an essay on the problems with the music royalty system)
I’m glad you posted this. The very same notion struck me when I read it, namely, what about all the smaller bands that perhaps don’t get radio airplay but nevertheless do get plays on a jukebox at a bar or restaurant. It seems like they would get cheated out of their money since BMI uses a ‘local surrogate.’ One would think that in this day and age, with current jukebox technology, it wouldn’t be very hard to track exactly which songs are played where.