Universal Music, Sony/ATV Want Consent Decree Modifications; CTIA, Netflix Disagree
The more than 230 comments filed by organizations and individuals to the Justice Department consent decree review continued to fall along the dividing line between those who pay for music and those who create and publish music (CD Aug 7 p9; Aug 6 p7; Aug 4 p12). Many songwriters and music publishers believe the consent decrees unfairly compensate for their works, but music service providers think the decrees ward off the potential for market control via performing rights organizations (PROs) and publishers. The comments, which were due Aug. 6, were posted Wednesday (http://1.usa.gov/1mNNU5Q). DOJ’s Antitrust Division is reviewing the existing consent decrees for PROs American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI) (CD June 5 p9).
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"Everyone from taverns to online music services to radio broadcasters to TV stations to online video services filed” comments, said Jodie Griffin, Public Knowledge (PK) senior staff attorney, by email. The comments emphasize “how many companies depend on the current consent decrees, and how many consumers would be impacted if licensing suddenly got much more complicated,” she said. PK said the decrees help ward off the “anticompetitive” tendencies of PROs, in comments (http://1.usa.gov/1mNJaNy) (CD Aug 11 p15). Griffin noted that the comments from some small publishers showed concern about “letting the largest publishers negotiate their rights directly” and how that could “hurt the smaller publishers’ leverage.”
Sony/ATV Music agreed with ASCAP’s and BMI’s calls for “expedited arbitration” to resolve licensing disputes, but said the PROs should not be allowed to license rights for musical compositions beyond public performance rights (http://1.usa.gov/VpODmg). There isn’t a “market failure” for PROs to “overcome and hence no consumer benefit” in their operating outside of public performance rights, it said. The decrees should allow copyright owners to “limit the scope” of the rights they grant to the PROs, and the PROs should treat those licenses on a “nondiscriminatory basis,” it said. Sony/ATV said it agreed with the National Music Publishers’ Association’s (http://1.usa.gov/1vNOEBE) call for a periodic review of consent decrees, saying such reviews should take place every five years with public participation. Copyright holders should be “free to choose to individually negotiate deals with particular music uses, rather than being compelled to participate in the blanket licenses for all purposes,” said the Universal Music Publishing Group (http://1.usa.gov/1vO06x8).
The decrees provide an “important check on ASCAP’s and BMI’s abuse of their collective market power,” said CTIA (http://1.usa.gov/1uUaNKp). The Society of European Stage Authors and Composers isn’t governed under the existing decrees, but should be “subjected to effective regulation under a consent decree comparable” to the present decrees, it said. Direct licensing by PROs shouldn’t replace the decrees due to the “high market concentration of the major music publishers and the lack of competition among them,” it said. Apple and Google are among CTIA’s supplier general members (http://bit.ly/XkJLAV).
Consent decrees are “just as critical today to constrain the market power of ASCAP and BMI as they were when they were enacted,” said Netflix (http://1.usa.gov/1uTEI5a). PRO publishing members Sony/ATV and Universal Music control about 50 percent of the publishing market, it said. Without the consent decrees, the PROs and publishers would be able to “combine their enormous market power with the threat of crippling copyright infringement liability to extort supra-competitive rates from licensees,” it said. Content distribution technologies “may be new,” but the content itself “remains essentially the same,” it said, countering the argument by PROs that the decrees are antiquated.
Netflix’s comments didn’t surprise Dina LaPolt of LaPolt Law, an IP and entertainment firm, she said: “Any company that has to pay for content is most concerned about getting the rights to music for cheap -- they do not care if the songwriters who create the content are well paid.” LaPolt advanced her comments to us last week (http://1.usa.gov/1rbUQkY). Comments by the Society of Composers, Authors and Music Publishers of Canada (SOCAN) (http://1.usa.gov/1t3UpGL) illustrated the “disconnect between the constraints on ASCAP and BMI compared to the way foreign PROs operate,” she said. DOJ’s review has “significant implications” internationally, said SOCAN. The review “stands to impact significantly the ability of ASCAP and BMI to operate efficiently and, in the process, generate reasonable compensation for the use of the world’s repertoire of music,” it said.