Copyright owners of musical compositions can sell or license their work for uses that further a narrative (like a stage musical, opera, or ballet). This dramatic use of music is referred to as the “Grand Rights” in the composition, or, as the Copyright Act refers to it, the “Dramatico-Musical Rights,” and these rights are licensed to theatre producers.
Songwriters reserve their “music publishing rights” from Grand Rights licenses. Music Publishing rights include:
- Mechanical rights: the right to have the musical composition embedded in a sound recording
- Synchronization rights: the right to have the musical licensed for use in an audio-visual work
- Print rights: the right to sell printed versions of the composition
Music publishing also includes the right to license the separate non-dramatic, non-narrative performances of a musical composition (like in a concert, cabaret, or club, or on the radio, internet, or TV), where the song’s performance does not include any narrative elements. These non-dramatic performance rights in a song are called "small rights."
In order to license their small rights, the copyright owner (or their music publisher) can register the work with a Performing Rights Organization (a “PRO”).
PROs include ASCAP, BMI, and SESAC, which together represent almost all popular music available in the US. PROs negotiate non-exclusive licenses for the nondramatic performances of music on radio, TV, nightclubs, arenas, bars, halls, stores, and any place else where songs can be publicly performed in a non-narrative context. They generally negotiate blanket licenses with performance venues (including both live venues and broadcast media), so that the venues can present performances of anything from that particular PRO's catalogue. The PROs then collect the money and, using their own mathematical formula to apportion revenues, they allocate it and pay the appropriate songwriters and music publishers.
Foreign PROs routinely collect performance license money from movie theatres in foreign territories, a portion of which eventually makes its way back home. But movie theatres in the U.S. do not require a performance license, as a result of a judicial consent decree issued in 1948. Also exempted from the need to obtain a small rights license are small bars and restaurants that play TV shows and radio programs that were originally aired for the public -- as long as the establishment doesn’t rebroadcast it, charge admission, or fail to meet some of the other requirements of the Fairness in Music Licensing Act of 1998.
Music publishing income earned by the composer and lyricist of a stage musical (including their “small rights” licensing revenue) is payable only to the songwriters and to their music publisher. It is not included within the “subsidiary rights revenues” that are shared with anyone else, including the stage producer or even the librettist.