By Stephanie K. Mann, J.D.
The Justice Department formally announces long-anticipated review of its consent decrees with ASCAP and BMI. Concerns have been raised that termination could lead to industry disruption.
The Justice Department has announced that it has opened a review of its consent decrees with the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), the two largest performing rights organizations in the country, as part of its ongoing review of legacy antitrust judgments. The decrees govern the process by which the organizations license rights to publicly perform musical works. According to the agency’s press release, the purpose of the review is to determine whether the decrees should be maintained in their current form, modified, or terminated. All public comments on the review must be submitted by July 10 (U.S. v. American Society of Composers, Authors and Publishers, Civil No. 41-1395; U.S. v. Broadcast Music, Inc., Civil No. 64-Civ-3787).
First entered into in 1941, the decrees require ASCAP and BMI to issue licenses covering all works in their repertory upon request from music users. If the parties are unable to agree upon an appropriate price for a license, the decrees provide for a "rate court" proceeding in front of a U.S. district judge. According to Makan Delrahim, Assistant Attorney General for the Antitrust Division, the need to review these consent decrees has arisen due to the changing nature of the music industry.
ASCAP response. In the wake of the announcement, ASCAP released a statement commending the review. According to the organization, the review will allow a more flexible framework to be created, one best suited to the digital age of the music marketplace.
"A more flexible framework with less government regulation will allow us to compete in a free market, which we believe is the best way for our music creators to be rewarded for the value of their music," said ASCAP CEO Elizabeth Matthews. "A free market would level the playing field, encourage competition and allow us to innovate on behalf of music creators and licensees alike, while ensuring fair compensation for songwriters."
Proposed changes. ASCAP and BMI recognize that changing the consent decrees will provoke drastic changes to the current system. In an effort to provide for an orderly transition, the organizations earlier this year proposed a new plan intended to protect all parties. The new decrees would contain the following provisions:
- 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.
- Retain the rate court process for resolution of rate disputes, as recently reformed by the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (MMA).
- 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.
- 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 consent decrees would be subject to sunset provisions like all modern consent decrees.
The non-profit organizations cautioned that some organizations will take this opportunity to attempt to serve their interests at the expense of the songwriter. Issues could come into play such as 100 percent licensing or a push in Congress by music users to create a compulsory licensing model. However, ASCAP and BMI state their belief that more government regulation could have dire consequences for other creative industries.
Concerns over industry disruption. Senator Lindsey Graham (R., S.C.), chairman of the Senate Judiciary Committee, is among the federal lawmakers who have reportedly expressed concerns about terminating the existing consent decrees without an adequate plan in place. Last October, then-Senator Orrin Hatch (R., Utah) sought assurances from Delrahim at an antitrust oversight hearing that the Justice Department would not terminate these consent decrees before a framework for governing the market could be established. Delrahim had said that he understood the disruption that this could cause and that he would consider the senator’s concerns.
Companies: American Society of Composers, Authors and Publishers; Broadcast Music, Inc.
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