There’s been a lot of news recently about legal efforts underway in the U.S. Senate and House to create a law that eliminates the legal loophole that allows terrestrial radio stations to avoid paying royalties to artists and labels. If an effort like this can make it onto the congressional agenda, it’s time to close one of the biggest royalty loopholes that affects composers today – the inability of ASCAP, BMI and SESAC to collect performance royalties for composers, songwriters and publishers on massively profitable public performances of music in films shown in movie theaters in the U.S. The silence from ASCAP and the other PROs on this issue is deafening, and perhaps we should consider why those we pay to negotiate and collect our royalties through performance license fees seem to be afraid to take on one of the most profitable public performances of music in America.
Before the 1940s, ASCAP actually collected license fees from movie theaters in the form of a “seat tax”, but according to the book “Pennies from Heaven” by Russell and David Sanjek, tried to triple the seat tax on movie theaters in the 1940s. The movie theaters, most owned by movie companies at the time, predictably fought back and argued that they shouldn’t have to pay a performance royalty to composers they had already paid to score their films. The theaters were victorious in court, and the result of ASCAP’s money grab was a financially disastrous legal loophole allowing “free music” to the movie theaters in the U.S., completely out of step with most other developed countries where movie theaters must pay performance license fees like any other broadcaster that publicly performs music.
Most recently in 2000, ASCAP, in their “Amended Final Judgment 2” deal with the U.S. Department of Justice (the deal that allowed ASCAP to virtually eliminate the independent board candidate process by increasing the number of required petition signatures from 25 to over 1,330 among other draconian actions) agreed to not collect performance license fees from movie theaters (other than the music playing in the lobby) – in fact, it was the first item in the agreement.
We all must ask ASCAP and the other PROs: what could possibly be the justification for agreement to this outrageous prohibition on performance royalties, especially since the basis it was argued for (movie theaters owned by movie companies) no longer exists?
Why aren’t ASCAP’s highly-paid lobbying folks in Washington working on this issue?
In fact, I haven’t heard word one about the issue of movie theater royalties from anybody at ASCAP, BMI or SESAC in years, despite the massive losses to composers and songwriters. Why the performing rights organizations seem to be content to leave potentially millions of dollars of royalties on the table is a question composers need an answer to.
In this era, composers simply cannot afford to let such a massive “free music” legal precedent stand – if other entities that produce content and publicly perform it, like FOX, are able to successfully take advantage of this now-established legal precedent, the losses to composers and songwriters could escalate massively.