by Dr. David C Lowery

DOJ 100% Licensing Rule: An UnFair Tax on Hip Hop and Works With Samples?

 

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Let’s look at the implications of the  DOJ 100% rule for the writers of the 5th most popular Hip Hop Song in the US this week.

These are the four samples in For Free, by DJ Khaled featuring Drake.    Each of those sampled songs also has multiple writers.  Consequently the list of writers for the composite work is quite long.  In this case there are 13 Songwriters, 4 BMI publishers and at least 3 non BMI publishers.    6 writers use ASCAP to license performing rights.  6 writers use BMI and one writer is Canadian so they use SOCAN.   As is always the case with works composed of samples,  these writers have a co-writer agreement to spell out ownership percentages and then an agreement that specifies each party will license and collect it’s own fractional share.    “You do your business and collect your money, I do my business and collect my money”

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This is how the “Tax” comes in.   The DOJ 100% licensing rule says fractional licensing is “illegal” under the BMI/ASCAP consent decrees so two things could happen.

  1. All thirteen writers and 7 publishers must throw out the old agreement and come together and negotiate a new co-writer agreement that allows either BMI/ASCAP to license this song in full, and either pay writers directly or pass it through to the other PRO.  That’s 20 entities that may all have to agree on this final document.  What if one ASCAP writer will only accept payment from ASCAP  another ASCAP writer is cool with being paid from BMI to limit overhead deductions.    Imagine if each of these parties are represented by a lawyer?  What are the legal fees?  $20,000k?  This is the first tax on hip hop.
  2. If the 20 parties can’t agree?  Or what if one of the authors is deceased?  Maybe the heir can’t be found or the estate is unsophisticated and says “no re-negotiation?”  Then the work violates the DOJ rule and  can no longer be part of the ASCAP and BMI repertoires.  This song becomes “stranded.”  It will not be possible to perform this song in the US. No ASCAP or BMI royalties.  That’s the second tax on hip hop.

Further I worry that because Hip Hop uses so many samples and co-writer deals that require fractional licensing that music users (radio stations, tv etc) begin to avoid the entire genre because they aren’t sure which tracks are “stranded” and hence unplayable in the US.

Maybe that’s a third tax on  hip hop.