VOL.

1 ISSUE 4 Journal of Legal Research and Juridical Sciences ISSN (O): 2583-0066

COLLECTIVE MANAGEMENT ORGANIZATIONS IN THE UNITED STATES OF

AMERICA

Rishija Tripathi*

ABSTRACT

A singer, author, producer, composer, etc. creates a work, communicates it to the public,
exercises their rights. Now, are they also going to go around and fight the people who infringe
their rights? Are they supposed to put a hold on their creativity and intellect and manage the
rights they own in their copyrighted works? The answer is no. The world today which consumes
so much creative work cannot afford such intellectuals to stop utilizing their minds in making
more of such works. Thus, comes into the scenario the role of what we call the Collective
Management Organizations. This article aims at discussing the functioning of the Collective
Societies in reference to the United States of America which is said to have the most developed
copyright law in the world. The article starts with a small introduction describing what a
performance rights organizations and copyright collectives are, what status do they hold legally
in the United States, what role does the government have in their status, etc. The author then
discusses some features of such societies and how the extant societies comply with them.
Finally, at the end of this article, some of the famous organizations have been discussed briefly.

Keywords: License, Monopoly, Royalty, Tariff, Performing Rights, etc.

INTRODUCTION

Performance rights organizations, or PROs, are organizations in the United States that act as
intermediaries between copyright holders and performers of works such as music. Artists'
rights organizations, for example, license and collects royalty for the reproduction of works
such as paintings by living or recently dead artists whose work has not yet reached the public
domain. In the United States, Performance Rights Organizations guarantee that rights holders
receive their fair portion of public performance royalties by providing licenses to various firms
and institutions and tracking where and how frequently their affiliates' music is performed in
public settings. Copyright collectives are registered corporations in the United States that

*
BA LLB, THIRD YEAR, KIIT SCHOOL OF LAW, BHUBANESWAR, ODISHA.

www.jlrjs.com 533
VOL. 1 ISSUE 4 Journal of Legal Research and Juridical Sciences ISSN (O): 2583-0066

operate as representatives for the copyright holders. The government neither accords collective
management companies monopoly status nor has specific legislation governing collective
administration of copyright. In the public performance of music compositions in the United
States, there are three copyright collective management organizations that compete with each
other to prevent monopolization of any single organization, offering additional alternatives for
copyright owners and consumers.

COLLECTIVE MANAGEMENT ORGANIZATIONS IN THE UNITED STATES

Collective Management Organizations can be classified as a not-for-profit organization owned

by its members, a for-profit organization owned by music users, or a for-profit organization
privately owned by shareholders. The United States, where antitrust law applies, is an outlier,
having all three:1 American Society of Composers, Authors, and Publishers (ASCAP) is a
"voluntary association" of its members. Broadcast Music Inc. (BMI) was established as an
alternative to ASCAP by the National Association of Broadcasters. The Society of European
Stage Authors and Composers (SESAC) is a for-profit organization that is now managed by
BlackRock, the world's largest asset management firm. In the United States, copyright holders
are allowed to select the Collective Management Organization that they believe is most
efficient or aligned with their personal values or requirements. However, for this flexibility to
be successful, Collective Management Organizations must publicly disclose information about
their operations in such a way that meaningful comparisons can be made. The crucial point
here is that non-members should have access to this information. Otherwise, potential members
will be unable to evaluate the benefits of several Collective Management Organizations,
impeding effective competition. A composer, for example, would be interested in the
Collective Management Organizations’ membership thresholds, detailed distribution policies,
or social advantages. The same information is also useful for academics since it gives the detail
needed to compare Collective Management Organizations. An author can only be a member of
one Performance Rights Organization since the extant Performance Rights Organizations in
the US have different tariff and royalty payment methods because they compete in the market.
American Society of Composers, Authors, and Publishers (ASCAP), Society of European
Stage Authors and Composers (SESAC), Broadcast Music Inc. (BMI), Harry Fox Agency
(HFA) and Sound Exchange are the five largest Performance Rights Organizations in the

1
Achille Forler, COLLECTIVE MANAGEMENT ORGANIZATIONS 101, TUNECORE ( Mar. 24, 2022, 7:36
PM), https://www.tunecore.in/guides/collective-management-organizations-101

www.jlrjs.com 534
VOL. 1 ISSUE 4 Journal of Legal Research and Juridical Sciences ISSN (O): 2583-0066

United States. The performance rights group's website contains a memorandum, articles of
incorporation, and pricing policy. In United States, all Collective Management Organizations
have made their membership data public, either as complete lists or as a searchable repertoire
database pertaining to the specific work.2 Knowledge about the governing members
controlling the functioning of the Collective Management Organizations may assist rights
holder members guarantee decision making occurs in a representative, responsible way. With
the exception of SESAC, all Collective Management Organizations in the United States have
disclosed information about their governing or executive boards.3 The appointment of the CEO
is mentioned in SESAC's 'news' section, but not in an immediately accessible area.

S. 370.5 (c) of the Code of Federal Regulations requires Collective Management Organizations
collecting and distributing for statutorily licensed sound recordings in the United States to
disclose their annual income report. Sound Exchange complies, whereas HFA willingly does
so. ASCAP and BMI occasionally upload their reports with a few years missing, however
SESAC's report appears to be missing, probably owing to the private incorporated corporation
status.In the United States, some of the existing Collective Management Organizations includes
the American Society of Composers, Authors, and Publishers (ASCAP): It is a philanthropic
performance-rights organization in the United States which safeguards the copyright of musical
work owners who are the members of the organization using due process of monitoring and
paying for publically performed music either through broadcasting or live. It collects license
payments from the people who consume the work of their members and those payments are
given back to the members as a form of royalty. Long story short, the working of ASCAP is a
kind of a pact wherein in the case of a musical work neither the consumer is required to
reimburse the owner of the copyright himself nor does the producer need to go after the radio
stations for using their songs. The organization has relationships whether direct or indirect with
similar organization in more than 30 countries and when any of the associated foreign copyright
society gets information about unauthorized use of copyrighted works, royalty due to the owner
is collected and transmitted to the organization through which the owner of the work is
represented.4

2
Maggie Huang, Arpita Sengupta, Paavni Anand, Comparative Transparency Review of Collective Management
Organisations in India, United Kingdom and the United States, THE CENTRE FOR INTERNET & SOCIETY
(Mar. 25, 2022, 7.46 PM), https://cis-india.org/a2k/blogs/comparative-transparency-review-of-collective-
management-organisations-in-india-uk-usa
3
Daniel J. Gervais, Collective Management of Copyright and Neighboring Rights in Canada: An International
Perspective, 1 Canadian Journal of Law and Technology. 21, 31-32 (2002),
https://scholarship.law.vanderbilt.edu/faculty-publications/852/
4
ASCAP, https://www.ascap.com/about-us (last visited Mar. 25, 2022).

www.jlrjs.com 535
VOL. 1 ISSUE 4 Journal of Legal Research and Juridical Sciences ISSN (O): 2583-0066

BROADCAST MUSIC, INC. (BMI):

This is an American performance rights organization. It collects blanket licensing payments

from companies that utilize music, allowing them to use a song in the organization’s catalogue
of more than 18 million works.5 Royalty is given on a quarterly basis in the form of money to
the writers, composers and publishers of the song.

SOCIETY OF EUROPEAN STAGE AUTHORS AND COMPOSERS (SESAC):

SESAC was created in 1930, making it United States’ second-oldest performance-rights

organization. SESAC's database includes 30,000 composers and over 1 million works.6 It was
established by Paul Heinecke, an immigrant from Germany in New York. Its basic aim was to
give the European sage authors and composers representation by providing them with royalties
for the use of their works.

SOUND EXCHANGE:

This is a company that is not commercially motivated and manages the rights of its members
collectively. The United States Congress has designated it as the exclusive body responsible
for collecting and distributing royalties for digitally performed recordings of sound. It makes
good the loss due to non-collaborative usage of recordings to the artists as well as the majority
rights holders. Sound Exchange is a champion organization in the field of licensing of musical
work and is governed by a board comprising of the creator, their representatives and the rights
owner of the recordings.7 The royalty paid by the organization exceeds 6 billion dollars as of
2020.

HARRY FOX AGENCY (HFA):

In the United States, the HFA is a supplier of rights management as well as a collector and
distributor of mechanical licensing payments on behalf of music publishers. HFA has
approximately 48,0008 music publishing clients and issues the most licenses for physical and
digital music formats. The National Music Publishers Association established it in 1927. In

5
BMI, https://www.bmi.com/about (last visited Mar. 26, 2022).
6
SESAC, https://www.sesac.com/our-history (last visited, Mar. 26, 2022).
7
Ben Sisario, Rise of SoundExchange Shows the Growth of Digital Radio Royalties, NEW YORK TIMES ( Mar.
26, 2022, 9:04 PM), https://www.nytimes.com/2015/08/05/business/media/rise-of-soundexchange-shows-the-
growth-of-digital-radio-royalties.html?_r=0
8
Arnold, M.E., A Matter of (Anti) Trust: The Harry Fox Agency, the Performance Rights Societies, and Antitrust
Litigation, 81 TEMP. L. REV 1169 (2008).

www.jlrjs.com 536
VOL. 1 ISSUE 4 Journal of Legal Research and Juridical Sciences ISSN (O): 2583-0066

2015, the agency was sold to SESAC9, which was then purchased by The Blackstone Group
in 2017. The Copyright Act of the United States only interprets performing rights society as
an “association, corporation, or other entity that licenses the public performance of
nondramatic musical works on behalf of copyright owners of such works.” The US situation is
somewhat different from that of other countries. Controlled mostly under antitrust
(competition) law judicial, several collective management organizations compete in the same
area of licensing, namely, the public performance of music.

9
Ed Christman, SESAC Buys the Harry Fox Agency, BILLBOARD (Mar. 27, 2022, 3:17 PM),
https://www.billboard.com/music/music-news/sesac-buys-the-harry-fox-agency-6620210/

www.jlrjs.com 537