I've been keeping up with this issue since the convention, and one consideration is what is covered under the blanket licenses with the performing rights organizations ("PROs") such as BMI, ASCAP and SESAC. Most songs that are commercially available are within the library of one of the PROs. Generally, businesses such as venues (and, as I understand it, the McCain campaign) maintain "blanket licenses" with these organizations, so for a fee they have the right to play most songs publicly at events they hold.

Then there are synchronization or "synch" licenses, which permit broadcasters such as T.V. networks to sync their programming to a specific song. But in the case of, say, the convention, a television network probably doesn't have to get a sync license if the songs that are being played are incidental to a news broadcast. The campaign probably doesn't have to come out and get a license for its use.

But if the campaign was planning on using a specific song such as in an ad, then, yes, a master use license for the recording and sync license would be required. The master license is usually acquired through the record company, and the song license through the publisher and the writer. Since it must clear both sides, the McCain campaign can't use a cover of "My Hero" done by, say, Alter Bridge. That takes care of the master side but not the synch.

The X Factor here is this: When the song is used in a political campaign, it's different from a typical performance at something like a sporting event: it smells like an actual endorsement, which would require additional licensing. There may be an argument on the part of the rightsholder that this particular use requires a license beyond the blanket license because of its political overtones.

Should BMI, ASCAP, or SESAC address limitations within their agreements? Should it have a clause about whether or not the rightsholders of these songs are offended by particular uses? If you're a major political campaign like the McCain campaign, and your choices are go and negotiate a license for a song or just use it and get sued later, maybe the best approach is just to use it and risk it. The McCain campaign's going to have trouble clearing anything!

While none of the Web companies involved would comment on the judge's decision, a source close to the three sounded like the players on a baseball team after the other side just hit a walk-off home run.

"This wasn't good for us, to say the least," the source said, adding that the judge's order isn't yet final and that the three companies plan to continue fighting.

If the final fee structure looks anything like what is prescribed in the judge's written opinion, RealNetworks, Yahoo, and AOL would likely have to raise prices. It may also mean that the cost of doing business for anyone streaming music over the Web just went up.

"What this means to other licensees is, they now see what a standard benchmark fee should look like," [ASCAP CEO John] LoFrumento said. "They now know what to expect from the rate court."

Somehow no online-music services announced that they'd be closing today, but I guess part of that is because the fees were retroactive to 2002 so they'd be in for paying up anyway.
What the ASCAP decision means for consumers [news.com]
Court Sets Royalty Fees To Be Paid To ASCAP [WSJ]

Donny: Yo, what's up?

Counter man: Welcome to Jester Burger, you want to ubersize your ......

[interrupted by ringtone]

Fat ringtone dude, that's Walrus Tusk from '72!

Donny: Who knows Yo, some poser I downloaded, still livin' large off his one hit millions, no doubt!

Counter man: Actually no, he's divorced with 3 kids and working counter duty at Jester Burger. You want fries with that?

Are they serious? Who knows, yo! Obviously they're dead serious, even if the video excerpt from Donny on the ASCAP site looks like it was dreamed up by Saturday Night Live's Robert Smigel and the "interactive component, where students perform a special "Donny" skit to help reinforce what they've learned" seems designed to goad surly pubescents into a riot. On the bright side, it certainly doesn't look like a ton of money went into it.

Donny The Downloader [ASCAP]

Says an ASCAP capo: "ASCAP is simultaneously filing these 26 actions to create awareness among music users and the public that it is a Federal offense to perform copyrighted music without permission. ... Taking legal action is always ASCAP's last step in a long process of contacting, informing and educating business establishments. ... With many of these cases, the process has been going on for over a year, so they have had plenty of time to do the right thing." By which they mean stop letting DJs play music, since that's what "perform" means here. So bad news, Tegan and Sara fans: when you go see them tomorrow, you might not be able to see someone spin "tampon rock" between sets. Which is ridiculous; surely the Hiro could've covered the license costs with the profit on their $8 goddamn beers.

ASCAP Initiates Infringement Actions Against Establishments Performing Copyrighted Music Without Permission [Marketwire]
Hiro Ballroom [Official site]

It makes sense that businesses would need to pay for the right to have music in their establishment; after all, the estate of Jim Croce deserves to get paid when Rich butchers "Time in a Bottle" at Common Grounds' open-mic Wednesdays. It's only fair. However, even when establishments try to do the right thing and pay for a license, the payouts may only be beginning:

Laurie and Jim Hall decided to offer live music on Friday and Saturday nights.

The performers...mainly covered songs written and made famous by other musicians. There was no cover charge, no pay for the musicians...

Then a few months later, music industry giant ASCAP started calling and sending letters saying East Coast Coffee & Tea was in violation of copyright laws. The fee to continue the music was $400 a year.

"At the time, the shop was losing money, so we had to break it up into payments," said Laurie Hall. But the Halls paid, and the music continued.

Six months later, other music copyright companies began calling the Halls and demanding money. Most days there would be three or four phone calls from each company, Hall said. Finally, unable to afford the fees, she had to call most of her musicians — those who did not play original music — and tell them they would not be allowed to continue performing....

[Lou] Andrus, the owner of Lou's Blues, said he has had many run-ins with the copyright companies over the years.

"It started 15 years ago when I had a guy come out to our other place, Cantina dos Amigos, and play Mexican music on his guitar on the patio," Andrus said. "They came after me for money. Are they really sending royalty checks to the songwriter in Mexico?"

Andrus said he pays BMI and ASCAP about $3,000 a year but is ignoring the smaller companies that seek royalties from him.

"There are so many damned companies you don't know who to pay," he said. "One guy called and said I had to pay him if I played any gospel music at all. It's really a mess."

While there certainly needs to be a system in which songwriters are paid for the public performance of their work, the system falls apart with the increasingly large number of rights-management companies and the commission-based sales people those companies hire to collect the license fees for music that might or might not be played at any given time. What's the solution? For many businesses, it's easiest to just stop having music, or purchase commercial satellite radio to avoid the various companies with their hands out. However, just ridding your establishment of performers might not be enough.

And in no way do the songs have to be performed live, or even on the radio, to elicit calls for royalties.

Andrus said a friend of his who owned a restaurant that did not feature music was contacted by a company looking to charge him because it owned the rights to a Hank Williams Jr. song, "Are You Ready for Some Football?" The song preceded every "Monday Night Football" telecast, which the restaurant carried on its televisions.

He said his friend simply chose to turn the volume down when the song came on.

Music licensing companies come calling for royalties [Florida Today]

The judge wrote that under the Copyright Act, there is not a "public performance" unless there is first a performance. To perform a work means to recite, render or play the work. For a song to be performed, it must be "transmitted in a manner designed for contemporaneous perception," the court wrote. A person must be able to perceive the song as it is being transmitted.

Downloading a music file is more accurately characterized as a method of reproducing the file, the court wrote. Digitally reproducing a file requires a digital phonorecord delivery (DPD) license, similar to a mechanical license for physical goods like CDs.

In the 12-page opinion, the court noted that its position was supported by the Copyright Office's 2001 report to Congress on the effect of new and developing technologies and the Commerce Department's 1995 report of the Information Infrastructure Task Force. They did not endorse the position that a download constituted a public performance.

ASCAP had argued that downloaded music files are indistinguishable from streamed performances because, after a certain amount of data has been transmitted, the purchaser can begin listening to the transmitted portion of the music file. The court wrote that it was not persuaded by this argument.

"The mere fact that a customer's online purchase is conveyed to him in a piecemeal manner, each segment of which is capable of playback as soon as the transmission is completed, does not change the fact that the transaction is a data transmission rather than a music broadcast," the court wrote.

ASCAP's argument is a kind of novel one, if you think about it. And it makes us curious to hear whether or not, following this logic, the organization would want to charge double for downloads that have to be started again because someone's bandwidth craps out—sure, the person may be able to hear a bit of the downloaded song, but would it be fair to charge a full royalty for half a "performance"? We're thinking that the judge may have a not-so-stable wireless connection at home, and that may be why he found ASCAP's case just a bit lacking.

No Performance Fees For Music Downloads [Billboard.biz]

ASCAP has reported record revenues of $785 million for 2006, royalty payments to members of $680 million, and an all-time low operating expense ratio of 12.0%, the performing rights organization revealed Tuesday. Revenues exceeded those of 2005 by $37 million, showing a 5% growth...

Contributing to the revenue growth was ASCAP's recently negotiated licenses with both terrestrial and satellite radio. In 2006, total radio revenues increased 11% to $22 million. Of that amount, terrestrial radio revenues rose by $14 million, and satellite radio revenues rose by $8 million from the prior year. ASCAP anticipates continued growth from satellite radio as a result of a new five-year agreement with XM Satellite Radio that derives revenues from both advertising and subscriber fees.

The story also notes that ASCAP recently signed a new licensing deal with ABC, meaning that the entire Tuesday-night 8-to-10 p.m. programming block will now consist entirely of Patrick Dempsey staring across the water, all scored to a two-hour remix of the Fray's "How To Save A Life."

ASCAP reports record revenues of $785 mil [Billboard.viz via The Hollywood Reporter]

ASCAP and BMI claim that a download or even its "transmission" to a consumer - even if the media file is never opened and made audible or visually perceptible to the recipient - is a "public performance" that justifies an additional license and royalty. "This sophistry is based in fear - that ASCAP and BMI will have no service to offer publishers and songwriters if direct-to-consumer distribution substantially eliminates subscription or advertiser-based performance media," stated Potter. "This fear seems unwarranted, but regardless, the law clearly states that a transmission justifies performance royalties only if the transmission is of a 'performance.'"



"If ASCAP prevails its double-dip scheme will inflict an unfair and discriminatory cost burden on innovative online music and media services and our creative partners in the sound recording, motion picture and television industries," Potter continued. "This result would inhibit the growth of legal, consumer-friendly digital media, and would in turn promote piracy which remains our toughest competition."

As Hypebot points out, by "inhibit the growth" DiMA means "inflate prices, resulting in even more people fleeing to peer-to-peer services." Seriously, we're starting to run out of jokes about the cluelessness of old music-biz people here, although we'd be remiss if we didn't point out that even the RIAA realizes ASCAP's idea is a bad one.

Digital Media Association Asks Court to Deny Music Publisher Double-Dip on Music, Movie and Television Downloads [digmedia.org, via Hypebot]