Music Industry

Published on August 18th, 2016 | by Amber Healy

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Very Little Consent over Decree Ruling

The dust has started to settle since the US Department of Justice announced, for certain, it would not be making any adjustments to the decades-old consent decrees that govern song licensing. The bottom line? It’s still ugly.

As The Hill, a Capitol Hill-based newspaper, writes, “Congress has always intended that the default rule be 100% licensing,” meaning all songs whose publishing and play rights were owned by either ASCAP or BMI would be available for playing in a public setting under a blanket agreement. “There is substantial evidence that (this) is how the industry has been operating to date. In response to BMI’s misleading statements to (one of the judges) on this topic in a pre-motion letter, DoJ found it necessary to file its own pre-motion letter that thoroughly destroyed BMI’s arguments. The DoJ used BMI’s own statements and case law to show that BMI and ASCAP are currently required to license full compositions. The DoJ also stated that neither BMI nor ASCAP could demonstrate a reason to modify the consent decrees to allow fractional licensing.”

Why would the two performance rights organizations (PROs) want anything other than 100% licensing? It would allow them to charge more, or withhold from a blanket licensing agreement, songs currently at the top of any music chart, something they can’t currently do under 100% licensing, for example. There are also aspects of the longstanding consent decrees that result in streaming services paying less for the use of songs than BMI and ASCAP think they should.

But, as the Daily Caller points out, it’s not as the PROs are whollly innocent here.

“ASCAP was fined in recent years for consent decree violations involving abuses of their market power precisely in regard to licenses to the new digital competitors, seeking to deny the competitors blanket licenses for all of their songs. If the consent decree controls were loosened as ASCAP asked, they would be able to raise market prices to consumers, as well as to companies using music in their businesses.”

 

The article goes on to note that higher prices ASCAP and BMI would be able to charge under fractional licensing “would not compensate for any new costs in music production, but would rather just pad the monopoly profits of ASCAP, BMI and the big label companies behind them. That is why after investigating the matter for two years, Justice has now decided to leave the decrees in place unchanged.”  That’s good for music consumers and users, because things have been working just fine for the 75 years the current consent decree has been in use.

Or, as David Lowery, a musician and artist advocate, writes for Hypebot, it’s time for songwriters to “embrace the chaos. The DoJ really thinks that BMI and ASCAP have always performed (sic) 100% licensing. Even though they seem to contradict that by offering the PROs one year to comply with 100% licensing. … The new rule will force hundreds of thousands of songs, if not millions of songs, to be dropped from the BMI and ASCAP catalogues. Especially hip hop songs and songs with samples because of private co-administration contracts. Radio stations, television stations, bars, restaurants, malls, football stadiums, cable networks, interactive and non-interactive services will either have to drop the songs, buy direct license for these songs, or buy licenses from an alphabet soup of new PROs that will appear on the scene with none of them subject to consent decrees.”

The National Music Publishers Association has weighed in as well, calling DoJ’s decision a “disastrous blow to songwriters.”

Blaming the outcome on “career lawyers who were never elected nor confirmed to their positions, led by a lawyer who previously represented Google,” DoJ’s decision implies that “songwriters should have even fewer rights, less control over their intellectual property and be treated more unfairly than they already are,” the group says. “The decision represents a misunderstanding of copyright law and directly violates the legal guidance given by the Register of Copyright. The defiance displayed by these career antitrust lawyers in ignoring the legal opinion of the Register of Copyright is shocking.”

Over at Lexology.com, a post written by attorneys at Akerman LLPs suggest that while it’s not surprising BMI and ASCAP immediately submitted paperwork challenging DoJ’s decision, there are two interesting points to their challenge: The first is the division of challenges, with BMI taking litigation and ASCAP focusing on legislation, and BMI looking for permission to challenge DoJ’s “interpretation of the decrees to require only ‘full work’ or ‘100%’ licensing, and thereby prohibit BMI’s (and ASCAP’s) longstanding practice of licensing ‘fractional’ interests in works that are co-owned with other, non-BMI-affiliated rights holders…. This comports with the longstanding common law principle that an owner of any portion of a copyrighted work may issue a non-exclusive license for the use of the entire work, subject to the duty to account to his or her co-owners.”

DoJ has strongly disagreed with the complaints and arguments raised by BMI and ASCAP, saying its thorough review of consent decrees, two years in the making, revealed that any modifications would result in “considerable disruptions in the music licensing industry, while the concerns BMI and others have described with preserving full-work licensing are overstated.”

Still, it’s possible BMI and ASCAP could benefit from the status quo with consent decrees. As the Music Business Journal states, the shift to 100% licensing “may give PROs even more power to license works that they do not have full control over, and perhaps allow them more leverage to exercise a broader administration of rights. Additionally, 100% licensing will allow for any party with a claim to a song to administer that song’s rights by licensing or removing a song from a blanket public performance license. The impact on mega hits is a big concern: more than 90% of last year’s top 100 songs had multiple songwriters. Now, the presence of just one songwriter belonging to ASCAP or BMI could allow for the full blanket licensing of the work by a music user, even if other writers had withdrawn their rights.”

*Editor’s Note: This page has been edited to correct an error: Only ASCAP has faced fines relating to consent decrees in recent years. 




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I write about music policy and lawsuits because they're endlessly fascinating.


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