With two trial court victories for DMX a significant change is brewing in the music industry
In response to: DMX Wins Landmark Decision against ASCAP and BMI
Earlier this week, DMX won a massive court battle against ASCAP and BMI signaling a significant turn for the music industry. In order to understand the impact of this court ruling let me first explain who DMX is.
DMX began in 1971, as a music service to license and program original artist music. DMX’s primary focus was custom music programs for businesses. In the 80s, the company began providing services to international airlines, as well as residential and cable television systems.
In 2012 Mood Media bought the company for $86.1 million. You should also know that Mood Media was bought the year before by Fluid Music based in Canada for $200 million (changing the name to Mood Media). The “new” Mood Media went on to round out their portfolio by acquiring Muzak for $345 million, positioning themselves as the largest in-store media specialist company in the world.
So the largest in-store media company in the world wins two court cases against the two largest performing rights organizations in the world, ASCAP and BMI? Why is this massive?
As stated in the press release the ruling resets fee structures and limits market power long held by ASCAP and BMI. It set a precedent allowing performing artists and composers to negotiate and license their music directly with commercial music providers such as Mood Media and in our case, Tribe of Noise.
One of the biggest hurdles facing the music industry is the segrated markets and the collective performing rights organizations (PRO’s) managing those regions. Billions of dollars are collected by PRO’s like ASCAP, BMI, PRS, GEMA, SACEM and hundred of other smaller entities. However it’s the management of this money that really stifles artists because their cut is generally not enough to sustain their work.
In the Netherlands, where Tribe of Noise is based, our infrastructure is already set up so that we are executing “all rights included” music services together with (in-store) media companies as an alternative to performing rights organizations. Essentially this ruling in DMX’s favor is a giant step forward in closing the gap between how licensing structures are regulated, aligning the U.S. and European regions more closely. In other words, there are now more opportunities for artists to showcase their music globally with less interference from dubious middle men.
If in-store media companies can pay-out the musicians directly without having to deal with performing rights organizations, the fees for the customers can come down (or more services could be offered for the same price) while the pay-out to the participating musicians will go up. Shorten the value chain, use technology for improved efficiency & transparancy and pay-for-play to the rightful owner(s) of the songs involved.
While respected industry experts can’t stop nagging these days about piracy and the lack of successful digital business models making up for the losses at major record labels, the music licensing business IS the #1 revenue generator in the industry. In fact the fastest growing product that Mood Media offers is royalty free music. It seems obvious to me that this is where the industry’s efforts should be focused instead of trying to reinvent the wheel.
To give you an idea how big this industry is. In The Netherlands (Europe) the local BUMA/STEMRA and SENA together collect roughly $125 million a year for in-store media royalties.
As with anything involving change, the implementation will likely be slow – there will undoubtedly be roadblocks along the way. Many businesses in need for media don’t know there is an alternative and last but not least: ASCAP and BMI are huge performing rights organizations but they are US based. Meaning, every single European country has its own ASCAP/BMI who will argue that the legislation doesn’t apply. It will be interesting to see how this is challenged on a global scale and what countries may be next in line.
This victory for DMX is not only significant for the music industry but it also aligns with my vision for Tribe of Noise and what we have been doing to facilitate artists through all rights included music. The best news is, direct licensing deals to (global) businesses in other industries like mobile, television and cloud services are just a matter of time.