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DMX Wins Battle over ASCAP for Direct Music Licensing

By Allison Frankel
December 28, 2010

Last July, Muzak competitor DMX and its Weil, Gotshal & Manges lawyers won a licensing fee ruling against Broadcast Music Inc. that had the potential to revolutionize the background music industry. See, Broadcast Music Inc. v. DMX Inc., 08 Civ. 216(LLS) (2010). Now the revolution continues: U.S. District Judge Denise Cote of the Southern District of New York has ruled that DMX must pay the American Society of Composers, Authors and Publishers (ASCAP) a fee of only $13.74 to license ASCAP music in each of the 95,000 stores, restaurants and other locations that DMX supplies with background music. ASCAP wanted DMX to pay almost $50 per location. In re Application of THP Capstar Acquisition Corp., 09 Civ. 7069(DLC).

Playing a New Tune

Why are the two licensing rulings a game-changer? Because DMX innovated a new business model in the background music industry. Instead of licensing music only through ASCAP and BMI ' as the rest of the industry does ' DMX reached out to hundreds of companies in the recording business, eventually establishing a licensing pool that now includes about 850 individual companies, including Sony. The company then asserted that the blanket licensing fees it pays to BMI and ASCAP should be reduced to reflect what it's already paying their songwriter and recording artist members through the fees DMX pays through the licensing pool.

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