DMX Cases Force ASCAP and BMI to Adjust Rates to Account for DMX’s Direct Licenses with Composers and Publishers

DMX, Inc. (DMX) provides background/foreground music to thousands of locations, such as retail stores, hotels, shopping centers, restaurants and other places open to the public.  This is not music transmitted over the radio, television or other public broadcast, but is a music service provided by DMX either by satellite or an on-location proprietary device.  DMX is a prominent provider for these services.  The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) are performing rights organizations.  Most domestic copyrighted music in the U.S. is licensed through either ASCAP or BMI.  Both ASCAP and BMI are subject to consent decrees to prevent them from unlawfully monopolizing performing rights licensing.

In 2006, DMX introduced a direct licensing program to contract directly with individual composers and their publishers, bypassing ASCAP and BMI.  DMX sought to “break through the powerful status quo and pioneer a new licensing paradigm.”  (Opinion pdf page 13).  DMX requested licenses from both ASCAP and BMI that “carved-out,” or excluded, the direct license fees paid by DMX.  In separate cases with different judges, the district court sided with DMX and adopted DMX’s fee proposal.  Both ASCAP and BMI appealed.  Their cases were combined at the appellate level and the Second Circuit affirmed the district court opinions adopting DMX’s fee proposal.

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