Some Economic Issues in Licensing of Music Performance Rights: Controversies in Recent ASCAP-BMI Litigation

Abstract

Composers of music for prerecorded television shows receive their compensation in two parts: They are paid when their music is recorded on the sound track, and they are paid again-when the show is broadcast-by one of the large music performing rights collectives, which sell blanket licenses to broadcasters. It has been asserted that the performing rights collectives cannot exercise market power against broadcasters because of this two-part nature of the total compensation of the composers. This article examines this assertion with a simple economic model, and finds it only partly true. The public goods advantages of blanket licenses are also discussed, and some historical evidence is presented.