DMX Defeats ASCAP in Major Music Licensing Proceeding

Film Music Magazine • January 11, 2011

Background music company DMX has defeated ASCAP in a critical music licensing proceeding that saw a federal judge end more than four years of litigation by adopting DMX’s fee proposal in its entirety. The decision may fuel expanded direct licensing efforts by background music companies and other music users.

Federal district judge Denise Cote handed down her decision in December, which follows DMX’s victory over BMI in a similar proceeding five months ago. At the heart of the license fee issue was determination of rates for music performing rights license fees and DMX’s position that its establishment of direct licenses with more than 850 music publishers represented appropriate market rates for music performance rights. DMX has been aggressively direct licensing music performance rights, and says that its music direct licensing continues to grow.

Bruce Rich, head of Weil, Gotshal & Manges’ IP & Media practice who represents DMX, said, “The ASCAP court’s decision, coming on the heels of a similar ruling earlier relating to fees payable by DMX to BMI, affirms the meaningful role that reviewing courts can play in attempting to ensure that the fees charged to users by these performing rights organizations do not exceed competitive levels. The unique aspect of this particular set of cases was DMX’s ability to provide robust evidence as to the actual marketplace rates for music performance rights when licensed in individual transactions with music publishers competing for DMX’s business – rates that proved to be significantly lower than the fee levels sought by ASCAP and BMI under their prevailing blanket license fee structures.”

According to a DMX press release, Judge Cote’s decision provides DMX with an adjustable fee blanket license that affords DMX credit for the performances of music for which DMX has secured the right of public performance directly from ASCAP-member music publishers. Under Judge Cote’s decision, DMX will pay ASCAP approximately $8 million over the term of the license, before any direct license credits. ASCAP’s principal proposal called for DMX to pay approximately $25 million and, according to DMX, did not afford DMX any meaningful credit for what the court described as DMX’s “robust direct license program.” In rejecting ASCAP’s proposal as unreasonable, the court described ASCAP’s principal proposal as “extraordinarily aggressive” and noted that ‘”[a] global economic decline of historic proportions is not a reliable basis from which to construct an increase in a licensing rate.’”

DMX’s General Counsel, Christopher Harrison said, “DMX is gratified by the Court’s further validation of DMX’s direct licensing initiative, which presents an opportunity for the publishers – and the writers they represent – to receive greater royalties through DMX’s increased use of their musical compositions. With Judge Cote’s decision, DMX’s direct license is now an even more attractive alternative to music publishers looking to increase their revenues.”

A report in American Lawyer Daily says Judge Cote was surprised at ASCAP’s strategy in the proceedings, quoting Judge Cote as telling ASCAP’s attorneys, “I just find ASCAP’s litigation strategy interesting. It’s like you have abandoned the field. You chose not to play on the field…..But I don’t know why you would make that choice, why ASCAP would make that choice, and particularly because BMI didn’t. Admittedly, I don’t need to understand why parties make their litigation choices That’s not my role. But nonetheless, it’s hard not to wonder, just as a human being. And I don’t know if it’s because ASCAP prides itself on being more aggressive than BMI or what it is, but to just not engage…and not present an alternative for a direct licensing program and the pricing of a blanket license in that context, I just find interesting.”

In a brief statement published after Judge Cote’s decision was announced ASCAP said, “ASCAP is certainly disappointed in this decision and we are examining our options.”


By Greg on January 20th, 2011 at 10:28 am

Free DMX and pay up big corporate pigs

By michael emmer on July 13th, 2014 at 8:03 am

ASCAP definitely got what it deserves; they are a greedy, and heretofore monopolistic, thugish organization that forced many young musicians out of small venues playing music where the restaurant owners could not afford the ASCAP extortion money

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