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DMX Can Obtain Its Music Through Direct Licenses
After performing-rights organizations ASCAP and BMI lost royalty rate challenges against background music provider DMX Inc. in 2010, they turned to a pair of former U.S. solicitors general to handle their appeals: Gibson, Dunn & Crutcher's Theodore Olson for ASCAP and Wilmer, Cutler, Pickering, Hale and Dorr's Seth Waxman for BMI.
But all that appellate firepower wasn't enough to turn their fortunes around. DMX and its own big-gun litigator, Weil, Gotshal & Manges partner R. Bruce Rich, persuaded the U.S. Court of Appeals for the Second Circuit to affirm the lower court decisions in the consolidated appeal, which stemmed from separate suits filed by ASCAP and BMI in 2006. Broadcast Music Inc. v. DMX Inc., 10-3429.
DMX had adopted a direct licensing plan, and negotiated with musicians and publishers rather than paying for a blanket license from ASCAP or BMI. DMX's licensing pool grew to include more than 850 individual companies, led in size by Sony. Modeling their rate structures after agreements with DMX rival background music company Muzak, ASCAP proposed a royalty rate of $49 per customer location and BMI offered $36 per location.
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