BMI, SESAC, ASCAP, SoundExchange: what do these acronyms mean for your internet radio station? These performance rights organizations (PROs) handle music licensing and royalties for copyrighted music played in the United States. You must have stream licensing to legally broadcast copyrighted material on your internet radio station. Without it, you could be breaking the law and placing yourself at risk of steep financial penalties of $150,000 or more and up to five years in prison.
So just what is stream licensing, and how do you obtain it? In this article, we'll talk about the various licensing agencies in the US. We'll explain the purpose of performance rights organizations such as ASCAP, BMI, SESAC, and SoundExchange. We'll cover each of these organizations and other notable PROs, including GMR, AllTrack, and Word Collections. Finally, we'll show you how to use automation to streamline music licensing for your internet radio station so you don't have to deal with each of these PROs individually.
- Music licensing agencies, also known as performance rights organizations (PROs), protect copyright holders in the music industry from unauthorized use of their work by negotiating licenses, handling royalty collection, and monitoring broadcasts.
- The three biggest traditional PROs in the US are the American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC (originally the Society of European Stage Authors and Composers), all dating back to the first half of the twentieth century and the era of terrestrial radio.
- SoundExchange is a more recent PRO dedicated to managing performance rights for digital recordings.
- Other recent PROs include Global Music Rights (GMR), AllTrack, and Word Collections.
- Internet broadcasters can only play music from PROs that include that music in their catalogs.
- An internet radio platform can save you time and money managing licensing arrangements with PROs.
Performance Rights Organizations: What are PROs?
Music licensing organizations such as ASCAP, BMI, and SESAC are examples of performance rights organizations (PROs), also known as performing rights organizations, collective rights management organizations, or collecting societies. These organizations protect the rights of copyright holders in the music industry and other creative industries such as publishing and film. They handle the negotiation of licensing fees, royalty payments, and monitoring of unauthorized usage.
Each PRO has its specific eligibility requirements. In general, creators can join if they have at least one work accessible to the public. For example, a songwriter with at least one song available as a digital download would be eligible. Publishers also can join. Some PROs are invitation-only.
The main benefit of joining a PRO is getting paid public performance royalties for using copyrighted music. PROs collect public performance royalties, splitting them between creators and publishers when applicable. PROs also initiate legal action on behalf of copyright owners in infringement cases. In addition to performing these core functions, PROs offer membership benefits, such as award show access and insurance discounts.
What Is the Purpose of PROs?
PROs protect the rights of copyright holders and make sure they get paid for the use of their work. They also streamline the process of negotiating licensing arrangements and monitoring the usage of copyrighted works. Without PROs, each radio station would have to seek out copyright holders individually, and songwriters and musicians would be responsible for monitoring all airing of their work. PROs publish catalogs and issue blanket licenses so radio stations can simultaneously negotiate the rights to large numbers of works. They ensure that radio stations have signed up for any required licenses.
ASCAP vs. BMI vs. SESAC: The Big Three PROs
ASCAP, BMI, and SESAC are the three oldest and largest PROs in the United States. They developed as competitors, performing similar functions in handling licensing and distributing public performance royalties through quarterly royalty checks. They differ in some specifics, such as minimum payments for membership and payout schedules. Artists and publishers generally sign up with one of these organizations rather than all three. Internet radio broadcasters need to deal with all three, so let's look at all of them:
ASCAP (American Society of Composers, Authors, and Publishers)
The American Society of Composers, Authors, and Publishers (ASCAP) was founded by a group of leading composers and other music industry leaders in New York City in 1914. At that time, most music was performed live on pianos using sheet music. ASCAP was designed to collect payments from live music performances and prevent unauthorized performances. As radio grew popular in the 1920s, ASCAP expanded into this new medium, becoming the dominant PRO. Today, ASCAP represents over 900,000 songwriters, composers, and music publishers.
ASCAP charges a $50 application fee, waived for new songwriters but charged to publishers unless they apply as both writers and publishers. There is no recurring membership fee.
ASCAP pays members 88% of collected royalties, splitting payments 50/50 between publishers and songwriters. Writers get paid for performing their songs live. ASCAP distributes royalty payments quarterly, about six to seven months after the quarter when a song was played.
ASCAP offers members additional benefits. These include union membership, discounts on music-related purchases, insurance, and travel discounts, access to music industry events, and other perks.
BMI (Broadcast Music, Inc.)
As radio became more popular during the 1930s and the Great Depression wore on, ASCAP steadily raised the rates it charged for licensing. This prompted a backlash from radio broadcasters, who formed a rival PRO in New York City in 1939, Broadcast Music, Inc. (BMI). BMI offered lower rates than ASCAP and organized a boycott of their competitor, forcing ASCAP to settle for lower rates. BMI became America's largest PRO, representing 1.3 million songwriters today.
Songwriters and composers can join BMI for free. Individual publishers pay an application fee of $150. Publishing companies pay $250.
BMI pays 88% of collected royalties to members. It splits payments 50/50 between publishers and songwriters. BMI distributes royalties quarterly six to eight months after the quarter after a song was played, in February, May, August, and November.
Additional BMI membership benefits include songwriting workshops, access to music events showcasing talent, award shows, discounts on music products and services and events, and other perks.
SESAC (originally the Society of European Stage Authors and Composers)
German immigrant Paul Heinecke founded the Society of European Stage Authors and Composers (SESAC) in New York City in 1930 to help European playwrights and composers collect royalties for American performances of their works. The society began providing radio stations with gospel recordings. In the 1940s, it expanded its mission to include American composers and arrangers, setting the stage for expansion into other musical genres. SESAC moved its headquarters to Nashville in 1964. In 2015, it acquired the Harry Fox Agency, which handles licensing for cover songs, reproductions, and samples, known as mechanical rights licensing. Today SESAC represents over 30,000 members.
SESAC membership is by invitation only. Invitations may be initiated through the meditation of agents, managers, or attorneys. Membership is free.
SESAC pays 88% of collected royalties to members. It splits royalties 50/50 between publishers and songwriters. SESAC pays royalties 90 days after the end of the quarter when the music was played. Members have the option of receiving monthly royalties for radio performances.
Additional SESAC membership benefits include discounts on insurance, travel, online music education courses, music industry magazines, and other perks.
Additional PROs: GMR, AllTrack, and Word Collections
Since the rise of digital music, several newer PROs have emerged. Four of the most prominent are:
- Global Music Rights (GMR)
- Word Collections
Here's a brief rundown on these PROs:
SoundExchange is the only PRO authorized by Congress to manage royalties for digital performances. It represents artists and labels rather than songwriters and publishers. SoundExchange issues licenses to digital platforms such as Pandora and SiriusXM. It collects royalties for non-interactive digital performances, meaning the audience can't choose the song being played, unlike services such as Apple Music and Spotify, offering personalized selections.
SoundExchange differs from ASCAP, BMI, and SESAC because it collects and distributes only digital performance royalties. In contrast, other PROs collect royalties for digital and terrestrial radio and live performances. SoundExchange collects royalties when a recording is digitally transmitted in a public place, like an internet radio station. SoundExchange pays the recording artists and musicians when their songs are played.
As an internet radio station, it's required that you pay public performance fees for musical works as well as digital performance fees for sound recordings. ASCAP, BMI, and SESAC collect the public performance fee portion, and SoundExchange collects the digital public performance fee.
Global Music Rights (GMR)
Global Music Rights (GMR) was founded in Los Angeles in 2013 by music industry giant Irving Azoff as an alternative to traditional PROs. GMR is an invitation-only PRO that offers personalized services to top songwriters, composers, and publishers.
Word Collections was founded in New York City in 2020 by Jeff Price, who had previously founded the digital music royalty collection PRO Audiam. It handles royalty collections for comedians, spoken word performers, songwriters, and music publishers.
Choosing the Right PRO
Songwriters only need to join one PRO. But as an internet broadcaster, you must deal with any PRO representing the music you want to play. You can only play songs listed in catalogs of PROs you're licensed with. This is why Live365 has arranged with the leading PROs and bundles licensing for you. This arrangement allows you to choose whatever songs you want to play. It also saves you time and money, as negotiating licensing with each PRO individually would be cumbersome and costly.
Streamline Your Internet Radio Licensing with Live365
Trying to navigate the maze of performance rights organizations and music licensing can seem daunting when starting your own internet radio station. Fortunately, it can be easy with the right automation tools and resources.
The Live365 broadcasting platform is designed to help you on your journey by providing all the tools you need to run your radio station, including automated internet radio licensing. We've got you covered for all the major PROs in the United States, Canada, and the UK. Fees are built into our affordable pricing, so everything is handled for you. Sign up for our seven-day free trial or contact one of our Product Consultants today.
Disclaimer: This blog post is not intended as legal advice. Please consult qualified professionals if you have specific questions about copyrights and licensing.
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