ASCAP, BMI Propose Interim, Time-Limited Consent Decrees to DOJ

NAB, CTA-backed group pushed back
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As the Justice Department ponders when, how and whether to lift consent decrees on how the major music licensing organizations can collect fees from broadcasters, cable operators and others, the aforementioned organizations have laid out a suggested road map for revision.

Actually it is a plan for new, transitional, decrees on the way to eliminating them entirely. The decrees affect how those organizations collect fees from programmers and distributors for music in their content.

Department of Justice (DOJ) official seal

In a letter to Justice, the heads of ASCAP and BMI jointly outlined the recommendation, which is essentially for an orderly transition to no decrees. "We believe that a free market with less government regulation is hands down the best way for music creators to be rewarded for their hard work and intellectual property," they said about that ultimate goal.

"[W]e’re recommending the DOJ replace the current BMI and ASCAP consent decrees with newly formed decrees that would protect all parties," wrote ASCAP CEO Elizabeth Matthews and BMI CEO Mike O’Neill. "Like all modern consent decrees, they would also include a sunset provision. Those new decrees would contain four key provisions:

"First, allow all music users to still gain automatic access to the BMI and ASCAP repertoires with the immediate right to public performance. However, this right should be contingent upon a fairer, more efficient, less costly and automatic mechanism for the payment of interim fees.

"Second, retain the rate court process for resolution of rate disputes, as recently reformed by the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (MMA).

"Third, BMI and ASCAP will continue to receive non-exclusive U.S. rights from our writers and publishers, which allows licensees, songwriters, composers and publishers to still do direct deals if they so choose.

"Fourth, preserve the current forms of licenses that the industry has grown accustomed to beyond the traditional blanket license, such as the adjustable fee blanket license and the per- program license."

The MIC Coalition, whose members include the National Association of Broadcasters and Consumer Technology Association, was not singing from the same score.

"The ASCAP and BMI consent decrees were originally established to guard against anticompetitive behavior and we have seen no evidence that they have outlived their intended purpose," it said in response to the joint letter. "If anything, they are more critical than ever in an increasingly complex and diverse licensing environment which, without measures that ensure an orderly market, is ripe for abuse."

As to the proposal of modified, sunsetting, decrees on the way to none at all. The MIC folk called them "rash and lopsided" revisions. They have an ally in Sen. Lindsey Graham (R-S.C.), and thanked him and others for their support for"approaching this conversation in a thoughtful and collaborative manner seeking to establish principles for a satisfactory alternative legislative framework before any efforts to terminate the decrees."

According to Justice, which struck the decrees with the organizations back in 1941, the ASCAP decree requires it to “grant to any music user making a written request therefor a non-exclusive license to perform all of the works in the ASCAP repertory . . . The BMI decree requires that BMI licenses provide access to those compositions, the right of public performance of which [BMI] has or hereafter shall have the right to license or sublicense.” The 2nd U.S. Circuit Court of Appeals in 2015 ruled, in the Pandora decision, that ASCAP is “required to license its entire repertory to all eligible users.”

President Donald Trump signaled last October, when signing the Hatch-Goodlatte Music Modernization Act into law (it updated the music licensing framework for the digital age and provided congressional oversight of the Justice consent decree review), that if the DOJ review leads to a decision to eliminate them, he would try to provide notice to Congress, but was giving no guarantees, depending on the circumstances. 

The bill also provided for congressional overnight of the Justice Department review of the long-standing consent decrees. Graham wants to do some of that overseeing.

DOJ antitrust chief Makan Delrahim had signaled almost a year ago that his division was taking a fresh look, and with a fairly critical eye, at the decrees. Justice also reviewed the decrees in 2015, under a previous Administration, but left them in place.

One of the key issues is whether music licensing organizations can collect fees for fractional rights under blanket licenses. The court concluded that the decrees neither required full licensing of musical works nor prevented fractional licensing. Fractional licenses are works with multiple authors using different licensing organizations, so, say, BMI has some fraction, rather than all, of the rights.

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