ASCAP versus BMI (versus CBS): Modeling competition between and bundling by performance rights organizations

Bundling has been a long-standing issue in industrial organization. In recent years, bundling has gained renewed controversy as it has been employed by computer software manufacturers. This article examines BMI v. CBS (1979), which dealt with bundling by performance rights organizations (PROs). A model of competition between PROs using blanket licenses is presented. The usage of blanket licenses is shown to generate both higher profits for PROs and higher costs for the users of musical compositions when there are a small number of competing PROs. In addition, the model explains why blanket licenses are observed in unregulated PRO markets.