The music industry has seen a significant surge in revenue due to the rise of streaming, leading to an increase in music licensing fees. This has sparked controversy among businesses and songwriters, with both sides arguing over the fairness and transparency of the system.

Background

The music licensing system has been in place for over a century, with three major Performing Rights Organizations (PROs) - ASCAP, BMI, and SESAC - dominating the industry. These organizations collect fees from businesses that play music in public, such as restaurants, bars, and hotels, and distribute the royalties to songwriters and publishers.

The Issue

With the rise of streaming, the music industry has seen a significant increase in revenue, leading to higher licensing fees for businesses. This has sparked outrage among business owners, who claim that the fees are becoming unsustainable. According to the National Restaurant Association, the average restaurant pays around $4,500 per year in music licensing fees, which is a significant burden for small businesses.

Songwriters, on the other hand, argue that they are not being fairly compensated for their work. Many songwriters claim that they are not receiving the royalties they deserve, and that the current system favors the biggest artists at the expense of middle-tier and emerging songwriters.

The Players

ASCAP, BMI, and SESAC are the three major PROs in the US, representing over 90% of musical compositions. These organizations have seen significant revenue growth in recent years, with ASCAP's revenue jumping to $1.8 billion in 2024 from $935 million in 2010.

Newer PROs, such as Global Music Rights, AllTrack, and Pro Music Rights, have emerged in recent years, offering alternative options for songwriters and publishers. These organizations claim to offer more transparency and fairness in their royalty distribution systems.

The Controversy

The controversy surrounding music licensing fees has sparked heated debate among businesses and songwriters. Some business owners have equated the PROs' efforts to collect fees to a "mob-like shakedown," citing aggressive on-site confrontations and threatening letters.

Songwriters, on the other hand, argue that the current system is opaque and bureaucratic, and that they are not receiving fair compensation for their work. Many songwriters claim that the system favors the biggest artists, and that they are not being fairly represented by the PROs.

The Solution

Technology may hold the key to solving the current issues surrounding music licensing fees. Companies like Audoo, which uses proprietary listening devices to track and log songs played in public venues, are offering alternative solutions for businesses and songwriters.

Audoo's system has shown that what is played in public places does not necessarily mirror what is on popular playlists or radio and streaming platforms. This has led to a more accurate and fair distribution of royalties to songwriters and publishers.

As the music industry continues to evolve, it is clear that the current system is in need of reform. With the rise of streaming and the increasing importance of music in public venues, it is crucial that businesses and songwriters work together to find a fair and transparent solution.

Only time will tell if the music industry can find a solution that benefits both businesses and songwriters. One thing is certain, however: the current system is in need of change.