Broadcast Music, Inc. v. DMX Inc.
683 F.3d 32
| 2d Cir. | 2012Background
- Antitrust consent decrees governed ASCAP and BMI licensing; DMX sought BG/FG music licenses under AFJ2 and BMI Decree rate courts.
- DMX operates BG/FG music service with off-premise and on-premise delivery, relying on direct licenses with many publishers.
- ASCAP and BMI proposed rate structures and benchmarks; DMX advocated direct-license-based benchmarks reflecting market conditions.
- Rate courts conducted bench trials; district court adopted DMX’s benchmarks and rejected Muzak-based benchmarks as non-competitive.
- Courts held direct licenses may be incorporated into rate-setting to reflect market competition and to avoid double-payment for the same works.
- Final judgments affirmed the district courts’ decisions to set DMX’s rates using DMX’s direct-license-reflective benchmarks.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AFJ2 permits a blanket license with an adjustable carve-out. | ASCAP says carve-out conflicts with AFJ2. | AFJ2 permits blanket license with carve-out. | AFJ2 permits; rate court upheld carve-out structure. |
| Whether Muzak benchmarks reflect a competitive market for setting rates. | ASCAP/BMI rely on Muzak benchmarks. | Muzak benchmarks do not reflect competitive market conditions. | District court properly rejected Muzak benchmarks. |
| Whether rate courts may incorporate direct licenses to DMX’s direct-licensing program. | DMX direct licenses should be reflected in rates. | Benchmarks should not ignore direct licenses; arguable emphasis varies by party. | Rate courts may incorporate direct licenses; DMX benchmarks reasonable. |
Key Cases Cited
- United States v. ASCAP, 627 F.3d 64 (2d Cir. 2010) (realistic rate determined in light of PRO market power)
- Music Choice, 426 F.3d 91 (2d Cir. 2005) (benchmarks in rate-setting; competitive-market consideration)
- Showtime The Movie Channel, Inc., 912 F.2d 563 (2d Cir. 1990) (freedom to use benchmark agreements in rate courts; competition focus)
- United States v. BMI, 275 F.3d 168 (2d Cir. 2001) (antitrust consent decree context; benchmark/value considerations)
- K-91, Inc. v. Gershwin Pub. Corp., 372 F.2d 1 (9th Cir. 1967) (market-power restraints and licensing structure considerations)