The Second Circuit Court of Appeals ruled this week that the ASCAP and BMI antitrust consent decrees do not prohibit “fractional licensing” of songs. Fractional licensing means that if there are non-ASCAP or non-BMI songwriters who have partial rights in a particular song, ASCAP and BMI can license only the fraction of the song attributable to the ASCAP or BMI songwriters.  The other fractional interests of the song would have to be licensed elsewhere (for example, from SESAC or GMR).

Particularly with the recent advent of Global Music Rights (GMR), music licensees (such as broadcasters, websites, restaurants, bars, retail establishments, fitness clubs, and etc.) are concerned that the ruling could lead to additional performance rights licensing organizations (“PROs”), and in turn higher collective licensing fees (and exposure to potential copyright infringement claims to the extent such additional licenses are not secured).

It’s too early to tell what the practical effect of this ruling may be in the music licensing marketplace.