DOJ Review of ASCAP, BMI Consent Decrees Not Seen Guaranteed Win for Songwriters, Publishers
Songwriters and music publishers shouldn’t get too excited about the Department of Justice Antitrust Division’s review of existing consent decrees for performing rights organizations (PROs) American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Media Inc. (BMI), said songwriters advocates in interviews. The consent decrees bar PROs from refusing a license to any organization that requests one, leading to rate negotiations. If DOJ decides to do away with consent decrees, hardly guaranteed, small and independent songwriters and publishers could be left with even less negotiating power, said Casey Rae, Future of Music Coalition interim executive director. Broadcasters warned that the DOJ review could increase the bargaining power of PROs.
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DOJ’s announcement of the review (http://1.usa.gov/1l5Yck4) came on the eve of the Copyright Office’s first music licensing study roundtable (http://1.usa.gov/Rox0S9), which began Wednesday. DOJ seeks comment on its consent decree review until Aug. 6. The House Judiciary IP Subcommittee also announced a hearing on music licensing under Title 17 or compulsory licensing to be held at 10 a.m. in 2141 Rayburn June 10 (http://1.usa.gov/Rox0S9).
Pandora’s previous victories over ASCAP in rate disputes (CD March 17 p11; Sept 19 p20) could have prompted DOJ to review consent decrees, said music industry attorney Chris Castle in a blog post (http://bit.ly/1p7jmPD). Judge Denise Cote of U.S. District Court in New York upheld Pandora’s right to perform all compositions in the ASCAP repertory last year, Pandora has said. “This is the first step in restoring sanity to music licensing,” wrote Castle. Pandora paid 49 percent of its revenue in 2013, or about $313 million, to record companies and 4 percent to publishers. Publishers have sought to negotiate directly with Pandora, leading the music service to claim that such a move would result in higher rates and violate the consent decrees. Pandora didn’t comment.
Since ASCAP’s last consent decree review in 2001, “new technologies have dramatically transformed the way people listen to music,” said ASCAP President Paul Williams, applauding DOJ’s decision in a news release. “Updating music licensing regulations to reflect the realities of today’s music landscape will preserve the benefits of collective licensing to businesses that license music,” he said. “The marriage of technology and creativity has helped open up tremendous opportunities for our affiliates through cutting-edge digital platforms,” said BMI CEO Michael O'Neill in a statement. BMI seeks to “modernize the decree to enable songwriters and publishers to realize fair market value for their work, to make music licensing more efficient and to streamline the rate-setting process,” he said. “Roughly two-thirds of a songwriter’s income is heavily regulated by law or through outdated government oversight,” said a National Music Publishers’ Association spokeswoman by email.
"Broadcasters should be very wary of this proceeding generally,” said Kevin Goldberg, Fletcher Heald copyright attorney. Goldberg cited questions for stakeholders from DOJ’s release: “How easy or difficult is it to acquire in a useful format the contents of ASCAP’s or BMI’s repertory? How, if at all, does the current degree of repertory transparency impact competition? Are modifications of the transparency requirements in the Consent Decrees warranted, and if so, why?” The consent decrees notwithstanding, “ASCAP and BMI hold an inordinate amount of power over broadcasters who really have to sign the agreements put in front of them, under the terms contained and subject to the interpretations of those terms by the PROs,” he said. The broadcasting industry collectively has “leverage” on PROs, but “individual broadcasters simply don’t and suffer as a result,” he said.
It’s “virtually impossible for anyone to really determine what organization a copyright holder belongs to,” said President Bud Walters of the Cromwell Group, a radio broadcasting company. “ASCAP, BMI, and SESAC do not make that information easily available and in truth, no one can actually determine who holds what copyright.”
The DOJ review is “huge news,” but it “might be a ‘careful what you wish for’ moment for songwriters, as the consent decrees are also what keep the big publishers honest in terms of how deals are structured,” said the Future of Music Coalition’s Rae. Consent decrees “allow music services, like the growing Internet radio sector to efficiently license catalog, which ultimately generates royalties for music writers,” he said. “DOJ should also keep in mind why those consent decrees were put into place to begin with: to ensure that the little guy -- including independent publishers and songwriters, along with the radio platforms that bring music to the masses -- don’t get edged out,” said Rae.
"We don’t know what the price of the song is,” because “consent decrees and compulsory licensing are distorting the price of the song,” said David Lowery, a songwriter and business lecturer at the University of Georgia, whose blog advocates for “Artists Rights in the Digital Age” (http://bit.ly/1mTHUse). Because “broadcasters have grown more comfortable” with the present licensing system, DOJ’s decision is “more of a victory for songwriters and music publishers,” said Lowery in an interview. He cautioned that the “devil’s in the details.”