US DOJ rejects proposals to modify ASCAP and BMI's consent decree and confirms '100% licensing"'

US DOJ rejects proposals to modify ASCAP and BMI's consent decree and confirms '100% licensing

In a massive blow to songwriters, publishers and performance rights organisations, the US Department of Justice has decided not to alter the consent decrees ruling rights societies ASCAP and BMI, but in addition, despite vehement opposition, it decided to implement what is known as “100% licensing,” a scheme which allows a right holders to license full works even thought they only own a fraction of the rights.

On August 4, the DoJ issued a statement in which it announced its conclusions to a two-year review of the antitrust consent decrees binding ASCAP and BMI (the two other PROs, SESAC and GMR, are not bonded by a consent decree).

In a 22-page document explained that "no modifications [to the consent decrees] are warranted at this time.” The DoJ confirmed that the consent decrees are also preventing PRO members to “partially withdraw” rights, for example to make direct deals with digital services. Writes the DoJ: "The Division believes that seeking modifications to the consent decrees – to permit partial withdrawal or in other ways  suggested by some in the industry – during this uncertain period could complicate the industry’s  move to a shared approach with full clarity for all industry participants as to the rights conveyed  by the PROs’ licenses. For this reason as well, the Division has determined that it would not be in the public interest to modify the consent decrees at this time, but remains open to considering  these modifications at a later date.”  

And it confirmed that the consent decrees "require each organisation to offer 'full-work' licenses that convey to radio stations, television stations, bars, restaurants, digital music services, and other music users the right to publicly perform, without risk of copyright infringement, all works in ASCAP’s and BMI’s repertories."

The DoJ, however, admitted also that if the consent decrees "remain vital to an industry that has grown up in reliance on them,” they are "inherently limited in scope, and a more comprehensive legislative solution may be possible and preferable.” The DoJ recognises "the incongruity in the oversight over the licensing of performance rights and other copyrights in compositions and sound recordings and believes that the protections provided by the consent decrees could be addressed through a legislative solution that brings performance rights licensing under a similar regulatory umbrella as other rights. The [antitrust] Division encourages the development of a comprehensive legislative solution that ensures a competitive marketplace and obviates the need for continued Division oversight of the PROs."

This could open the door to a legislative overhaul of the copyright legislation applicable to PROs and publishers, and if Congress follows suit, it could be part of the package the the House of Representatives’ Committee on the Judiciary could propose in the coming months.

Reacting to the decision, David Israelite, President & CEO of the National Music Publishers’ Association NMPA said in a statement that the DoJ "has dealt a massive blow to America's songwriters.” He added, "After a two year review of the consent decrees that govern ASCAP and BMI, career lawyers who were never elected nor confirmed to their positions, led by a lawyer who previously represented Google, determined that songwriters should have even fewer rights, less control over their intellectual property and be treated more unfairly than they already are. The Department ignored the voices of copyright experts, members of Congress and thousands of songwriters and delivered a huge gift to tech companies who already benefit from egregiously low rates.”

On the issue of “full-work licensing” that the DoJ is pushing for, Israelite said that the decision is "both unprecedented and disastrous to the songwriting community. 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.”

Moving forward, Israelite believes that the decision could be reversed through "the legal process, conversations with those in Congress who understand copyright law, and ultimately the voices of those most affected, the creators themselves, we can find a path forward.”

Martin Bandier, Chairman and CEO of Sony/ATV Music Publishing, said in a statement that he was "extremely disappointed by the DOJ’s decision to issue a misguided and unprecedented interpretation of the consent decrees that is contrary to how they have worked and how the business has operated over many decades.” For Bandier, the DoJ’s decision on 100% licensing “not only does it contradict the views of the US Copyright Office and the entire music industry, but it will bring significant uncertainty and disorder to a marketplace that has worked well for years, while leaving everybody in the licensing process, including songwriters, to try to figure out how 100% licensing might work. Instead of modernising the consent decrees, this decision has created a host of problems that will now have to be addressed by the courts and must be addressed by Congress as well.”

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