Performing rights organizations (PROS) are businesses designed to represent songwriters and publishers and their right to be compensated for having their music performed in public. The four US PROS are listed below, however only three of them deal with public locations, ASCAP, BMI and SESAC. When any public establishment such as restaurants, bars, public venues, plays music or hosts Karaoke or hires a band or musical performer for the entertainment of patrons or spectators the artists whose music is being played are entitled to compensation. Owners of establishments playing the music are responsible even if they are hiring others to come in and play the music. Bands, Disc Jockeys and Karaoke Jockeys cannot be members of, nor pay fees to Performing Rights Organizations unless, in the rare occasion, that they are also the producer and promoter of an event. The full responsibility of compliance with the PROS rests firmly on the establishment in which the performances take place. There are few exceptions to the need for businesses to be licensed. They cannot put this burden on the DJ or KJ as there is no program in place or contractual arrangement that allows such licensing responsibility transfer.
The establishment reaps the benefits of the music being played, thus they are responsible for the fees. Fees are based on the type of music being played, how it is performed and the capacity of the facility where it is being played. Contracts have to be based on the facility and its size and all fees must come from the facility and match to entity listed on contracts.
Karaoke is like any other “cover” song –you need a “mechanical” & “synchronization” license from each musical composition’s publisher(s) to record it, (the manufacturers) and a performance license from the performing rights societies to perform it (the venues). The manufacturers of Karaoke music must obtain a mechanical license from the publishers of the original music and synchronization licenses (normally associated with using songs in movies, videos, television programs etc.), which must be negotiated with the copyright owners and/or copyright administrators (usually publishers). Synchronization licenses are not always possible to obtain–some copyright owners do not want their works used in the context of karaoke. This is why some very popular songs are not available on karaoke; some copyright owners sacrifice royalties in the interest of good taste.
The Harry Fox Agency represents music publishers for compulsory mechanical licenses, but NOT for Karaoke. Once a song has been published, the publisher no longer has any choice about whether to license it for some other performer to “cover” it, it’s compulsory, and the royalty rate paid to the publishers by the cover artist for units sold is set by Congress.
Then there is SoundExchange who collects royalties for Digital Public Performance of music. Prior to the Digital Performance in Sound Recordings Act of 1995 (“DPRA”), recording artists and sound recording copyright owners in the U.S. did not have a performance right in any medium (unlike many other nations around the world). The DPRA also created a statutory license for subscription-based, non-interactive digital audio transmissions. In 1998, Congress passed the Digital Millennium Copyright Act (“DMCA”), which expanded the statutory license to include nonsubscription, non-interactive digital audio transmissions. As a result of this forward step, copyright law now requires digital radio services to pay for the public performance of the music and spoken-word content they use. SoundExchange is the sole entity entrusted by the Copyright Royalty Board (which is appointed by the U.S. Library of Congress) with administering statutory license fees paid by non-interactive digital radio services. The statutory licenses relevant to digital music services can be found in sections 112 and 114 of the Copyright Act, 17 U.S.C. §§ 112 and 114. Chapter 37 of the Code of Federal Regulations defines the rates and terms applicable to the statutory licenses for digital music services which includes webcasting (Internet Radio). – See more at: www.soundexchange.com
PERFORMING RIGHTS ORGANIZATIONS:
ASCAP – the American Society of Composers, Authors and Publishers (ASCAP) is a membership association of more than 410,000 U.S. composers, songwriters, lyricists, and music publishers of every kind of music. About 50% of US Market Share*. –See Frequently Asked Questions for more information: www.ascap.com
BMI – Broadcast Music, Inc. (BMI) collects license fees on behalf of songwriters, composers and music publishers and distributes them as royalties to those members whose works have been performed. About 45% of US Market Share* See Frequently Asked Questions for more information: www.bmi.com
SESAC, Inc. – a performing rights organization with headquarters in Nashville and offices in New York, Los Angeles, Atlanta, Miami and London. About 5% of US Market Share.* *. –See Frequently Asked Questions for more information: www.sesac.com
SoundExchange – is a US public performance organization (PRO) who collects royalties for DIGITAL PUBLIC PERFORMANCE of sound recordings stipulated by the Digital Performance Right in Sound Recording Act of 1995 and Digital Millennium Copyright Act of 1998. This includes fees paid by music service providers (MSPs) to stream music over satellite (SiriusXM), internet (Pandora, Spotify, iTunes Radio, Rdio, Rhapsody), cable (Music Choice, Verve) and other digital means as stipulated by law. These fees are paid to SoundExchange for a digital statutory license, under sections 112 and 114 of the Copyright Act, to stream sound recordings. The license fees paid to SoundExchange are passed on to copyright owners in the sound recording (master) — RECORD LABEL (50%), FEATURED ARTIST (45%), and NON-FEATURED ARTISTS (i.e. background vocalist, session musicians, etc.) (5%) — as digital statutory royalties for sound recordings.
Note: SoundExchange was created in 2000 as an unincorporated division of the RIAA. In September 2003, SoundExchange was spun off as an independent and non-profit organization.
Disclaimer: Please note that this article does not constitute legal advice, and should not be relied on, since each state has different laws and all of the above information is based on research of publicly posted information from various sources. While I feel that the information is accurate, you should always consult an attorney in your own jurisdiction concerning any operations in which you might be involved. This article is based on operations in the USA only although these organizations have worldwide reach.
Until next time, Alan
Alan Dodson conducts specialized workshops & training covering sales, marketing, social media and Master of Ceremonies and does one on one consulting with his company Top Gun Systems and has recently released My Party Charger for events. His goal is helping event professionals excel in their local markets. He has been a sales specialist, mobile DJ, entertainer and event professional for over 38 years. He owns a 30 year running bridal show and Mr. Picture Booth Manufacturing in Bristol, Tennessee and is the Entertainment Director for Concierge Weddings & Events.
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