The PRO business is booming! But could it become a victim of its own success?
For the 75 years after the 1939 founding of BMI, the U.S. had three organizations that collected public performance royalties for songs on behalf of composers and publishers: ASCAP, SESAC and BMI. And for much of that time — from the 1950s, when ASCAP and BMI expanded into all genres, to 1993, when a group of investors purchased SESAC — the competition might best be described as gentlemanly. ASCAP and BMI became the Coke and Pepsi of PROs, licensing similar rights, for different songs, to similar bars, restaurants, concert venues and television and radio stations. The privately owned SESAC was less aggressive than it is now.
Some licensees want to set the clock back to that simpler time. They may have inspired members of Congress to ask the Copyright Office to look into the subject, which resulted in a Notice of Inquiry and then a flood of comments. (Billboard has a guide here.) To understand why, and what this means, it helps to realize how much U.S. performance rights licensing has changed in the last decade.
In 2013, Irving Azoff, ever the disruptor, founded GMR, which like SESAC — owned by the investment group Blackstone since 2017 — signs big songwriters with big advances. Unlike ASCAP and BMI, which are more constrained by antitrust consent decrees and allow all songwriters to join, GMR and SESAC are free to cherry-pick from the most popular. (All four have big writers; GMR and SESAC just don’t have small ones.) With fewer writers, they are thought to bring in more money per performance of a song. They are also thought to be wildly profitable: A recent deal for a stake in GMR valued the company at $3.3 billion. Any business that good attracts competition, and two new PROs have emerged over the last five years: AllTrack, founded by former SESAC board member Hayden Bower; and the Florida-based PRO Music Rights.
Things got complicated. Venues that had once received three bills for their use of music were suddenly getting five or six. Most knew they needed rights from what we might call the big four — and let’s pause for a moment to consider just how weird it is that the U.S. now has more established PROs than major labels — but some weren’t sure if they needed the rights controlled by AllTrack and PRO Music Rights. Costs went up — with the possibility of future increases — and let’s not kid ourselves that this is the real issue here.
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Both the Notice of Inquiry and the responses to it are fascinating because, as several executives pointed out to me, this isn’t an issue that the Copyright Office — or even government regulation in general — seems especially well-suited to solve. The Copyright Office administers and consults on intellectual property law, and licensees presumably see the NOI as an opening move in a push for legislation that could constrain PROs — or even empower a government body to set royalty rates, as one does for mechanical rights. That would be a disaster for publishers and songwriters, which get their only negotiating power from performing rights. And licensees have much more lobbying power than the music business, simply because every Congressional district has bars and restaurants, while the music business is relatively concentrated in a few cities.
What, exactly, is the problem here? Look at the NOI, which sets out two very different issues: “The number of PROs in the United States has expanded in recent years, potentially undermining licensing efficiencies” and “PROs do not all disclose comprehensive information concerning the works that are covered by their licenses, and their royalty distribution practices and policies.” The only thing these issues have in common is that neither of them is really a matter for copyright law.
The idea that there are too many PROs is odd because for years the issue was that ASCAP and BMI had too much market power — hence the antitrust consent decrees. In legal terms, this is known as trying to have it both ways. Competition is a good thing, as long as it’s fair. If it’s not, that’s a matter for competition law — which traditionally champions competition! — not copyright.
One of the real issues behind the NOI is that it can be hard to tell which PRO controls what rights. This can be complicated, though, and the issues often have less to do with concealing information than with presenting it in an accessible way. AllTrack, which is focused on the independent market, allows potential licensees to search a database of songs to which it controls rights, but that requires looking up specific compositions. The site displays far more prominently some of the artists who play songs to which AllTrack owns at least some rights, including Billy Ray Cyrus, Elle King and No Doubt. In smaller type, underneath, it says that “The artists above are examples, but not an all inclusive list, of performers of AllTrack music” — and in most, but not all, cases it doesn’t control rights to all these artists’ songs, let alone their rights as songwriters. Billboard readers understand this, but it might drive the average bar owner to drink.
PRO Music Rights is even more controversial. It seems to focus on serving smaller songwriters in the so-called long tail, and it says it controls rights to more than 2 million works, including songs performed by A$AP Rocky, Wiz Khalifa and others. It is unclear how popular many of those songs are, though, and both the ASCAP and BMI responses to the NOI challenge its business practices more directly than those of AllTrack. In its filing, ASCAP says that in 2018 it discovered millions of songs registered by PRO Music Rights “that were apparently either computer-generated sounds or merely random titles” and BMI’s response points out that Spotify in a court filing accused PRO Music Rights founder Jake Noch of flooding its platform with AI music, although the case in question subsequently settled. (PRO Music Rights filed its own response to the NOI that accuses the established PROs of engaging in “anti-competitive practices.”)
The other side of transparency is that it’s not always clear how some PROs distribute some of the money they collect. But it seems hard to believe that licensees really worry about this — most just want to pay less — and that issue is really between PROs and creators and publishers. (Alas, Billboard advertisers seldom ask about the compensation of the publication’s witty and dashing “Follow the Money” columnist.) The best way to address this — maybe the only way to address it in a lasting way — could be a competitive market. Big songwriters who think that the big PROs don’t serve them well can sign with SESAC or GMR, although not all of them do. Why shouldn’t smaller ones have more options as well?
Like every other issue in the music business, this is ultimately about money — rightsholders want to charge more and licensees want to pay less. That’s business. And it seems best to keep it as business, without getting the government involved.
