Origins

     In the years following the 1923 negotiation of its first broadcast performance rights license, ASCAP demanded higher and higher copyright fees from stations for airing the music the public expected to hear. As ASCAP controlled the performance rights to virtually all songs being played by U.S. radio stations, broadcasters believed that they had no choice but to pay the rates ASCAP demanded. But in 1939, faced with the onset of yet another price increase, the broadcasting industry rebelled. Sidney M. Kaye, a young CBS copyright attorney, designed the blueprint for a new licensing agency to be called Broadcast Music Incorporated. As presented to key radio executives in Chicago in the autumn of 1939, broadcasters would, under Kaye's plan, pledge sums equal to 50 percent of their 1937 ASCAP copyright payments as seed money to launch the new organization. In exchange for these payments, participating broadcasters received non-dividend-paying BMI stock (most of which they or their successor companies still hold). On 14 October 1939, BMl's charter as a nonprofit venture was filed, and the agency's offices opened in New York on 15 February 1940.

     ASCAP did not take the new effort seriously and soon announced a 10-percent rate increase for 1941 (which would amount to five to ten percent of a station's advertising revenues). In response, 650 broadcasters signed BMI licenses by the end of the year, with only 200 primarily small stations re-signing with ASCAP. Broadcasters who were anxious about what the loss of ASCAP material would do to their program­ ming were encouraged to buy BMI stock by a BMI pamphlet that observed, "The public selects its favorites from the music which it hears and does not miss what it does not hear." On 1 January 1941, the broadcasters' boycott of ASCAP officially began.

     Setting up a new rights agency was one thing; acquiring music for it to license was quite another. BMI began life with only eight songs, all of which had been commissioned specifically for its catalog from non-ASCAP composers. While BMI sought to find and sign nonaffiliated writers, radio stations that had turned in their ASCAP licenses had no music to program except these eight tunes and songs with expired copyrights. American radio thus entered the "Jeanie with the Light Brown Hair" era, so named for an incessantly aired public domain tune by 19th-century composer Stephen Foster.

     As Foster and folk songs filled the ether, BMI looked for new sources of material to license. The popular works of George Gershwin, Cole Porter, Irving Berlin, and scores of others were all ASCAP-licensed. Music from Britain and the rest of Europe could not be used because foreign composers were members of rights organizations that had signed reciprocal agreements with ASCAP. ASCAP had not entered the South American market in any significant way, however; consequently, the music of Latin America soon came to dominate radio program schedules. The sudden and widespread popularity of sambas, tangos, and rumbas during the early 1940s was thus the result of legal necessity rather than of intrinsic musical merit. Faced with a growing competitive threat from BMI, ASCAP agreed to roll back its rates late in 1941, but it was too late to repair the damage.

ASCAP v. BMI

      BMI was now firmly established as a licensing rival. Over the next 15 years, BMI rose to parity with ASCAP principally by signing songwriters that ASCAP had ignored: young mainstream composers rebelling against ASCAP's royalty payout system, which favored more established writers; country-and­ western composers from the hinterlands; and later, rock-and­ roll songsters who combined black blues and white country stylings into a new, rhythmically pulsating phenomenon. Soon, a number of major publishers such as E.B. Marks and M.M. Cole is affiliated with BMI. The organization also advanced seed money to new publishers who agreed to be represented by it. BMI prospered under Kaye, who rose from vice president and general counsel to chairman of the board. He was assisted by Carl Haverlin, a former vice president of the Mutual Broadcasting System who began his BMI career as director of station relations and became its president in 1947.

     ASCAP and its select members counterattacked with charges that BMI and the broadcasters were conspiring to promote musical trash. Broadway legend Oscar Hammerstein charged that "BMI songs have been rammed down the public's ears," and other detractors asserted that BMI stood for "Bad Music, Inc." Nevertheless, buoyed by broadcasters' resentment of past ASCAP arrogance and the growing 1950s appeal of the rock­ -and-roll songwriters whom BMI discovered and nurtured, the new organization came to dominate the radio pop charts.

     In 1959 when the payola scandal (illegal payment for record promotion) was fully disclosed, ASCAP sought to make it a BMI issue by maintaining that RMI-dominated rock-and-roll music would never have become popular without under-the-table bribes. With a few high-profile disk jockey firings and the passage of federal anti-payola legislation, the radio industry weathered the storm and so did BMI. The organization further insulated itself against future attacks on the quality of its catalog by broadening its musical base. Within a few years, BMI had signed affiliation agreements with jazz composers such as Thelonius Monk, folk writers such as Pete Seeger, classical icons such as William Schuman, and Broadway mainstays Sheldon Harnick and Jerry Bock.

BMI Today

    Nevertheless, as a primarily broadcaster-owned-and-directed enterprise, BMI remains vulnerable to the undocumented charge that it is more sympathetic to broadcaster interests than to those of its affiliated composers and publishers. BMl's 2002 rates, however, were very close to those assessed by ASCAP: 1.605 percent of adjusted net revenue for stations billing more than $150,000 and 1.445 percent for stations billing less than that figure. BMI also offers stations both blanket and per-program license options, as does ASCAP, and negotiates with the radio industry through the Radio Music License Committee (RMLC), whose members are appointed by the National Association of Broadcasters (NAB).

Under their BMI license agreements, radio stations periodically fill out BMI logs listing the music played during a given week. Outlets logging at any particular time are selected as part of a sample designed to reflect all sizes, formats, and geographic locales. This sample is then used to project national usage of individual BMI-licensed tunes, with license fee payments accordingly divided among member composers and publishers.