With the invention of radio, a new method of distributing music began to supplement and eventually replace the prevalence of live performance. The American Society of Composers, Authors and Publishers (ASCAP) got busy licensing radio stations as well, winning several legal battles to establish its right to do so.
In the 1920s and 1930s radio burgeoned enormously, as did ASCAPs expectations for license fees, and since it had a monopoly, it could name its price. Radio broadcasters decided to take matters into their own hands, and set up their own licensing operation. BMI (Broadcast Music Inc.) was established in 1939, and signed up its own composers. ASCAPs license agreements were due to expire at the end of 1940, and the big radio networks refused their steep new terms.
On January 1, 1941, ASCAP music went off the air, except on a few independent radio stations that had signed new agreements with ASCAP. By the end of the year, ASCAP had come to an agreement with the networks, and ASCAP music was back on. Composers now sign with ASCAP or BMI. Publishers have differently named entities so that their composers can sign with either of the two licensing societies. A third society, SESAC, founded in 1930, also licenses music and collects and distributes royalties.
Intellectual Property: Whose Song is it Anyway?
by Heidi Waleson