US appellate court upholds fractional licensing

February 2018

Music publishers, broadcasting


Songwriters and music publishers in America have welcomed an appeal court that has dismissed the Department of Justice move to introduce “100% licensing”, confirming the current system that the so called “fractional licensing” system for co-written songs with different publishers (and sometimes multiple collection societies with a ‘fraction’ of the song).

With collaborating writers free to choose from four different societies in the US (BMI, ASCAP, GMR and SESAC) a third party wishing to broadcast or perform that work must still be licensed by ALL relevant  societies, and pay royalties to each, pro-rata according to what percentage it controls. The US Department Of Justice had different ideas, and having reviewed the consent decrees that govern BMI and ASCAP moved to force the two big American collecting societies to operate a so called ‘100% licensing system’ with any society able to offer a ‘100%’ licence,  a one stop shop for customers, provided the licensing PRO then passed on the relevant share(s) to other societies who owned a fraction of the work. 

In September 2016 Judge Louis L Stanton (who oversees the BMI consent decree) ruled that the DoJ had been wrong to infer a 100% licensing obligation ((No. 1:64-cv-03787 (S.D.N.Y. Sept. 16, 2016))


The DoJ then appealed that decision to the Court of Appeals For The Second Circuit. The appeals court has now also sided with BMI, concluding that Stanton’s interpretation of the consent decree was correct, and that the society can continue to operate a fractional licensing system without being in breach of its regulatory order.

BMI President Mike O’Neill said: “This is a massive victory for songwriters, composers, music publishers and the entire industry. We have said from the very beginning that BMI’s consent decree allowed for fractional licensing, and we are incredibly gratified that Judge Stanton and the Second Circuit agreed with our position” adding “We thank all the songwriters, composers, publishers and organisations who supported us throughout this process, which unfortunately, has been a nearly two-year distraction from our original intent which was to update our outdated consent decree and modernise music licensing. We look forward to our continued efforts to protect and grow the value of music”.

ASCAP also welcomed the ruling, with CEO Elizabeth Matthews saying: “The Second Circuit’s ruling today is an important victory for music creators across the country. The court affirms what we have known all along, that the right of public performance allows for the fractional licensing of musical works in our repertories, and the consent decrees do not limit that right”, a sentiment shared by America’s National Music Publishers Association 

Less impressed was the MIC Coalition which represents the technology and broadcasting sectors (the users) who said “Today’s decision by the Court of Appeals For The Second Circuit will have devastating consequences for the future of music licensing” and “If left unchallenged this decision will fundamentally alter decades of business practices while destroying the value of collective licensing and threatening to throw the entire music marketplace into chaos. We urge the Department Of Justice to challenge today’s decision all the way to the Supreme Court, if necessary. We believe that the clear precedent on the scope of the consent decree will prevail”.

United States v. Broadcast Music, Inc.

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