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ASAE interim report on music licensing.

One year has passed since ASCAP and BMI began asking associations to sign music licenses. ASCAP (American Society of Composers, Authors, and Publishers) and BMI (Broadcast Music Incorporated) are New York City-based performing rights organizations that hold rights assigned by composers and publishers to copyrighted music. Associations have been asked by ASCAP and BMI to sign blanket license agreements on forms negotiated in 1990 with the Music licensing Task Force, of which ASAE was a member. Associations could use the forms in connection with the use of copyrighted music at association-sponsored events.

ASAE participated in the Music Licensing Task Force in 1990 in an effort to ensure that the association community would receive the best possible terms from ASCAP and BMI for copyrighted music used by associations. Legal experts advised ASAE in 1990, and they continue to advise the association now, that present law requires those responsible for some uses of copyrighted music at association-sponsored events to pay the owners of the music for those uses.

During the first year of ASCAP'S and BMI'S solicitation of music licenses in the association community, the leadership of ASAE has heard from a great many members about concerns with that solicitation. You have called and written to ASAE officers, directors, and staff members; you have spoken out at ASAE meetings and those of our allied societies; you have communicated with ASCAP and BMI, and shared that communication with us. To put it simply, ASCAP'S and BMI'S activities in connection with its blanket license agreements in the association community are regarded as extremely disappointing.

In response, ASAE'S leadership, under Chairman of the Board Gene N. Fondren, CAE, is doing everything it can to explore the problems and to develop solutions. You will be hearing more in the coming months about ASAE'S music licensing initiatives, which are a consistent agenda item for both the ASAE Board of Directors and the Executive Committee.

At this time, I want to share with you the "ASAE Interim Report on Music licensing." it summarizes the most common concerns you have expressed about ASCAP'S and BMI'S activities. Those concerns have been conveyed to the performing rights organizations and are being taken up with government officials. You have our assurance that they will be pursued vigorously on your behalf

In recent years the two major performing rights organizations in the United States-ASCAP and BMI-have begun separate campaigns to require trade associations, professional societies, and other nonprofit organizations to sign license agreements for copyrighted music used at association-sponsored events.

ASCAP and BMI assert that they hold assigned rights from music composers and publishers for the live or recorded public performance of much of the music that is legally protected by copyright. ASCAP and BMI each has a separate repertory of music and has preferred to license or sell that repertory to certain users, including associations, on a blanket basis-the user licenses or purchases ASCAP'S or BMI'S entire repertory for use during a specified time period.

In mid-1990, ASCAP and BMI began negotiating with interests in the meeting planning industry to create standardized blanket license agreement forms that would apply to performance of copyrighted music used at conventions, seminars, meetings, trade shows, and other events sponsored by associations. The Music Licensing Task Force was assembled to represent the meeting planning industry; ASAE was one of the members of the task force. ASAE wanted to ensure that associations would receive the best possible terms from ASCAP and BMI. Legal experts advised that those responsible for some uses of copyrighted music at association-sponsored events must pay the owners of the music for those uses.

Negotiations with the performing rights organizations continued throughout late 1990. By early 1991, the task force had negotiated blanket license agreement forms with ASCAP and BMI, which then proceeded to offer the agreement forms to associations.

ASAE'S more than 20,000 members are executives in more than 9,000 associations, all of which typically sponsor events such as conventions, seminars, meetings, or trade shows at which music could possibly be used. Based upon communication from its members during the past year, ASAE is in a position to provide a catalog of concerns that have been raised in the association community regarding ASCAP'S and BMI'S activities in the area of music licensing.

This report addresses the ASCAP and BMI activities in three areas: implementation practices, program structure, and blanket license agreements.

Implementation practices

1. Harassment and intimidation. ASCAP'S and BMI'S first-year campaigns to enlist associations as signatories of their blanket license agreement forms have been campaigns of relentless harassment and intimidation. This is contrary to the explicit understanding reached at the conclusion of ASCAP'S and BMI'S negotiations with the Music Licensing Task Force, in which ASCAP and BMI each agreed to engage in education rather than in the threats, coercion, and bullying that instead routinely have occurred. Following initial announcements, letters, and releases that were primarily educational in nature and that were concurred in, and in some cases initiated by, ASAE, ASCAP and BMI quickly lapsed into programs to force associations to sign the blanket license agreements. Mass mailings by ASCAP and BMI stated in effect that associations must be using copyrighted music in ASCAP'S and BMI'S repertories; and thus the associations have no alternative but to sign the licenses or face draconian legal penalties, which in fact are rarely ultimately imposed. Telephone inquiries to all levels of ASCA-P and BMI personnel have often received rude and curt responses, generally conveying the message, You must sign, or else

Inadequate attention is paid in all ASCAP and BMI communication to the exceptions, alternatives, and gray areas take for example, the home-style receiving apparatus" exemption; uses by agricultural, fraternal, or religious organizations; and so forth). BMI'S telemarketing personnel, who apparently work on a commission basis, are frequently ill-informed about licensing, unwilling to discuss alternatives to the BMI form, and generally intimidating in their attitude. (One example: "We know you are playing music at your meetings; you are in violation of the law; unless you sign our contract immediately, we plan to prosecute you.") ASAE has asked that all harassment and intimidation by ASCAP and BMI end at once.

2. Refusal to clarify or amend the form. ASCAP and BMI apparently have equivalent inflexible policies against providing any written clarifications or making any amendments to the forms of their blanket license agreements for music at association-sponsored events. The performing rights organizations cite antitrust consent decree language prohibiting discrimination in rates or terms among similar users. That, however, would certainly not prevent ASCAP and BMI from issuing written definitions of unclear words or phrases, from amending nonessential terms such as by including a limitation on recourse through indemnification, or from providing other written clarifications or amendments to the form in specific appropriate instances when requested by associations. ASAE is seeking this change in practice from ASCAP and BMI.

3. Unwillingness to license others. Association-sponsored events are virtually always planned and conducted with a primarily educational purpose and atmosphere. For all but a few portions of most association events, music is a quite incidental and often quite unimportant aspect (in contrast to the situation of electronic entertainment media, bars and restaurants, and other users). It is therefore often most appropriate and convenient that some party other than the association, which party may already have responsibility for other aspects of music played or performed at association events, have responsibility as well for copyright licensing when necessary. Hotels and convention centers, event production firms, talent agencies, trade show exhibitors, caterers, audiovisual companies, performers, and others who assist the association community are generally willing and able to fulfill this function; many of them already deal with ASCAP and BMI in other capacities. ASCAP'S and BMI'S inflexibility in refusing to license these parties for their music performed or played at association-sponsored events is a very serious problem that ASAE has demanded the performing rights organizations address satisfactorily.

Program structure

1. Misuse of dominant market power. ASCAP and BMI declare themselves to be the largest assignees of performance rights for copyrighted music in the United States. Together they enjoy a virtual stranglehold on the availability of those rights, with their joint market share apparently approaching 100 percent. Legal, economic, and moral principles require that neither organization individually, nor both together, misuse their dominant market power. Arbitrary selection of what entities or types of entities will be licensed, failure to disclose the music repertories that are licensed, exacting unreasonably high license fees and imposition of burdensome administrative obligations, unwillingness to issue single-program licenses for music used at association-sponsored events, and other such practices, which are maintained concurrently by both ASCAP and BMI, are improper in these circumstances. ASAE has requested that they be discontinued.

2. Arbitrary targeting of the association community. It was long assumed that copyrighted music played or performed at events sponsored by associations was either not subject to license at all or was covered by license agreements with ASCAP and BMI obtained by suppliers or others who assist the association community. ASCAP and BMI took no steps to change this assumption for many years. In the mid-1980s, ASCAP and BMI decided coincidentally to increase their markets by targeting the association community for music licensing in connection with the primarily educational events sponsored by associations. Instead of arranging this through hotels and convention centers, event production firms, talent agencies, trade show exhibitors, caterers, audiovisual companies, performers, and others who assist the association community-many of which are already experienced in dealing with hospitality and entertainment matters in general and with ASCAP and BMI in particular, and all of which are equally responsible under the law for copyright royalties-an appeal was made directly to associations. These strategy decisions by ASCAP and BMI were counterproductive; ASAE has suggested that they be reversed.

3. Duplicative charges for music at hotels. ASCAP and BMI have long negotiated and promulgated successive music licensing blanket agreement forms for use by the hotel industry. Most major hotels are thought to be signatories. The unequivocal terms of the current versions of the hotel industry blanket license agreements of both ASCAP and BMI provide that all music performed or played on the hotel premises is licensed through that agreement except for music used at "industrial trade shows, expositions, and business presentations." ASCAP'S and BMI'S standardized hotel industry blanket license forms are equivalent in this respect. Associations that sponsor events using ASCAP or BMI music at hotels who have signed the hotel industry agreements, unless the events are "industrial trade shows, expositions, or business presentations," are clearly not required by law to license that music usage from ASCAP or BMI. To do so results in duplicative payments to ASCAP and BMI and unjust enrichment of the performing rights organizations. And yet ASCAP'S and BMI'S blanket license forms for associations both purport to require a licensing agreement and royalty payments for that usage. BMI'S question-and-answer document even addresses this issue in detail and declares, quite inaccurately, that the hotcl industry blanket license agreements do not relieve associations of their music licensing obligations in any respect. ASAE has asked that the ASCAP and BMI blanket license agreement forms, and any ASCAP or BMI materials describing or discussing them, be changed at once to make clear that the association signatory is not responsible for a licensing agreement or royalty payments for use of ASCAP or BMI music where that use is already covered by another ASCAP or BMI blanket license agreement, respectively, including but not limited to music used at association-sponsored events held in Ascap-licensed or BMI-licensed hotels other than "industrial trade shows, expositions, or business presentations."

4. Failure to disclose reportory. Neither ASCAP nor BMI publishes or otherwise provides access to the repertory of copyrighted music for which each claims to hold assigned performance rights. Membership lists are available in some circumstances. And, in part by virtue o consent decree language, specific songs can be checked to determine if they are part of ASCAP'S or BMI'S repertory in some circumstances. There are two unfair and self-serving results of this policy. First, it permits ASCAP and BMI representatives to make expansive, and quite possibly inaccurate, claims about the music for which each organization holds performance rights, with no ability for association users in any systematic or effective way to verify the size and quality of the repertory. In short, ASCAP and BMI insist that users buy "a pig in a poke." Second, and of even greater concern, the policy prevents association users of music to plan in any effective way to avoid use of ASCAP or BMI music and thereby preclude the need for an ASCAP or BMI license. There is no valid reason why the organizations cannot publish their repertories, whether through hard-copy periodicals or via computer data base systems (which are now as ubiquitous as pay telephones). ASAE has asked both ASCAP and BMI to make arrangements to do that immediately.

The blanket license agreements

1. Rates and rate structure. Experience and inquiry by ASAE since promulgation by ASCAP and BMI of their blanket license agreement forms suggest that the rates are exorbitantly high and that the rate structures are extremely unworkable. Cable television programmers pay a few cents for each viewer's yearlong access to each music repertory. By comparison, the ASCAP and BMI rates for association-sponsored events are many times higher. Moreover, the rate structure established in the forms is excessively complex and administratively cumbersome. Associations, like other blanket license users of the ASCAP or BMI repertories, should be able to pay a modest, fixed annual fee without the inconvenience of frequent counting, calculating, reporting, and remitting. Prior to negotiating the current form, a similar one was negotiated by ASCAP with the National Association of Exposition Managers, Indianapolis. It exempted all trade show exhibitor personnel-who hardly attend exhibits to enjoy the music-from royalty computations. ASCAP'S current blanket licenses include all exhibitor personnel; BMI'S licenses include half of all exhibitor personnel. ASAE has asked that this be changed. Finally, the current $150 minimum payment required by BMI is unfair to the small and infrequent user of the BMI music repertory. n considering the limited and qualified credit feature, this is a penalty not a purchase, a liability not a license. It too needs to be changed.

2. Absence of single-event form. Unlike the situation in other industries or fields where both blanket licensing and program licensing by ASCAP and BMI are used, and where the latter is sometimes legally compelled, the association community has been offered no alternative for a single-event license. An association is told that it must sign a multiple-year, automatically renewing contract with ASCAP or BMI even for one convention, seminar, meeting, or trade show. Because of the unavailability of the ASCAP or BMI repertories, one is effectively compelled to sign licenses with both organizations (giving each an unwarranted benefit from the other's repertory). Although the rates vary somewhat according to the size and frequency of instances in which copyrighted music is used, there is no simple approach for the association that desires to play one song at one event and has no intention of ever using the ASCAP or BMI repertory again. A single-event alternative should be developed.

3. "Hair trigger" license obligation. ASCAP and BMI each requires a blanket license agreement by an association upon the performing of the first bar of the first song used at an association-sponsored event. Rates are based upon daily attendance and anticipate access to the entire ASCAP or BMI repertory. In fact, music is only rarely played or performed all day long at any typical association event because the events are primarily educational. Snippets of music may be used to introduce a particular educational speaker or presentation or to begin an awards or commemorative ceremony; more extended use may occur as background during a reception or dinner; there may even be a few hours of music for dancing after a closing banquet or in a talent show. But most uses are isolated, incidental, infrequent, incomplete, and very brief. To demand a multiyear contract obligation for such inconsequential use of ASCAP or BMI music is unfair and oppressive. ASAE has made clear to ASCAP and BMI that there should be some amnesty period (for example, one half hour) for each association-sponsored event before the ASCAP or BMI license obligation, as well as any royalty payment obligation, is even triggered.

4. Reports. ASCAP requires associations to file reports within 30 days after each event using ASCAP music occurs; for an association conducting more than four events each year, quarterly reports are required (it is not clear whether a report is due to ASCAP if there are no events in a quarter using ASCAP music). BMI requires associations to file a single-event report if the association holds only one event each year using BMI music; otherwise quarterly reports are required for events held in each quarter. These reporting obligations are unduly burdensome. Associations, by virtue of their nonprofit corporate status and federal income tax-exempt status, are not in the business of hospitality or entertainment, where such reporting obligations might be considered reasonable. ASAE has asked that simple, universal annual report forms be developed and promulgated by ASCAP and BMI.

Conclusion

This ASAE Interim Report on Music Licensing" outlines the concerns of the association community with ASCAP'S and BMI'S activities in connection with music licensing and with the ASCAP and BMI blanket license agreements. ASAE has requested that ASCAP and BMI commit to take steps to correct those activities. Any further developments will be reported to ASAE'S membership.
COPYRIGHT 1992 American Society of Association Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:American Society of Association Executives
Author:Taylor, R. William
Publication:Association Management
Date:Mar 1, 1992
Words:2922
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