US Congress expresses "concerns" about distribution of music licensing royalties

A letter from the The House Judiciary Committee, a body made up of US congress members, has sent a letter to the Copyright Office requesting a review on performing rights organisations (PROs) and how they distribute royalties.

In the letter, obtained by Billboard, two major issues were raised. The first regards a lack of transparency from PROs about how they distribute royalties, potentially leading to unequal "discrepancies".

“It is difficult to assess how efficiently PROs are distributing general licensing revenue based on publicly available data”, write the congress members. “For example, it is difficult to determine how accurately lesser known and independent artists as well as smaller publishers are being compensated compared to widely popular artists and major publishers”.

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To that end, the letter calls on the Copyright Office to examine “how the various PROs currently gather information from live music venues, music services, and other general licensees about public performance” in order to ascertain whether there are "any gaps or discrepancies" in "royalty distribution" and "what technological and business practices exist or could be developed to improve the current system”.

These specific recommendations are not new. Both The National Music Publishers’ Association as well as several individual musicians have frequently raised similar concerns over the years.

The second issue raised in the letter surrounds the “proliferation” of PROs. While other countries usually have one not-for-profit PRO representing the performing rights of songwriters and music publishers, the US have several. ASCAP and BMI (which recently switched from being a non-profit to a for-profit last year) are the big two societies, however, more recently, smaller privately-owned companies have been coming on the scene, such as SESAC, Global Music Rights and AllTracks.

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The emergence of more PROs increases the risk of copyright infringement claims and expensive litigation, as well as raising licensing costs.

“Licensees [like bars, restaurants and small businesses] have reported receiving demands for royalties from new entities claiming to represent songwriters… Licensees are concerned that the proliferation of PROs represents an ever-present danger of infringement allegations and potential litigation risk from new and unknown sources,” the letter states.

The Congress members request that the Office “examine the increased costs and burdens imposed on licensees for paying an ever-increasing number of PROs, factors that may be contributing to the proliferation of new PROs, and recommendations on how to improve clarity and certainty for licensees”.

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Although the Copyright Office cannot make any immediate or direct changes to the way that PROs work, the letter was written with the intention of drawing attention to the issues and potentially lay the groundwork for a future draft bill.

The Copyright Office has responded to Billboard's requests for comments saying that it had “received the letter” and is “reviewing it.”

Meena Sears is Mixmag's Digital Intern, follow her on Instagram