Updated: BMI Prevails Over Department of Justice In 100% Licensing Dispute

BMI Beats DOJ.
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A rate court judge has just ruled in favor of BMI in its dispute over 100% licensing with the DOJ.  So what does that mean?

Update 1 (6:30 pm PT/9:30 pm ET Friday): David Israelite, CEO of the National Music Publishers’ Association (NMPA), has just offered comment to Digital Music News.  

In a Friday decision, federal judge Judge Louis Stanton issued an order rejecting a recent US Department of Justice (DOJ) interpretation of a consent decree applying to both BMI and ASCAP.  Critically, the DOJ had ordered that BMI, as well as fellow performance rights organization ASCAP, enable 100% licensing of all works within one year.

Under the DOJ’s mandate, a writer with a minority ownership level could approval licenses for the entire ownership group, and effectively set the rate for everyone.  Exactly how that would play out in practice is confusing, though PROs have been fighting the mandate vociferously across a number of channels.

Stanton’s decision now states the opposite, ruling that BMI is free to engage in the fractional licensing of musical works.   Effectively, that means that licensors like Spotify will still have to license portions of a song, even if those rights are controlled by different PROs.

So, huge win for BMI and ASCAP, not such a great outcome for players like Spotify, Apple Music, TIDAL, and radio services, among others on the licensing side.  Digital services have long complained that copyright is an impenetrable thicket of complicated and sometimes contradictory rules, with massive damages and risks involved.  Indeed, that has helped to explain a major cooling for digital music startups over the past decade, a situation perhaps intensified by financial problems at Spotify, TIDAL, and other troubled digital music services.

BMI quickly cheering the victory, which could cool the matter for good.  “As we have said from the very beginning, we believed our consent decree allowed for the decades-long practice of fractional licensing and today we are gratified that Judge Stanton confirmed that belief. Our mission has always been to protect the interests of our songwriters, composers and publishers, and we feel we have done just that. Today’s decision is a victory for the entire music community,” BMI President & CEO Mike O’Neill stated immediately after the decision.

Update: NMPA President & CEO David Israelite has just weighed in on the decision. “Thanks to the courage of Mike O’Neill, BMI, and the entire songwriting and music publishing community, the DOJ’s disastrous views on 100% licensing have been rejected by a federal judge,” Israelite emailed DMN.  “This is a huge win for songwriters and a huge win for the rule of copyright law.”

The decision immediately followed oral arguments heard today from both parties, with Judge Stanton’s ruling now the controlling interpretation of the BMI consent decree. It’s unclear if the DOJ will strike back, or let the court finalize the issue.  

Both BMI and ASCAP have been subject to controlling DOJ consent decrees since 1941.  The decrees were initiated to prevent predatory, favorited, or collusive licensing of music, though both BMI and ASCAP argue that the rules are wildly outdated.

A copy of this decision can be found here.


2 Responses

  1. Anonymous

    I understand the rationale behind 100% licensing. Not all of the music out there is 100% covered by ASCAP, BMI, SESAC and GMR. A lot of times, publisher information for certain shares of songs is unknown. So I can see how service would want to reduce their liability as much as possible, so they can use songs in which all the PRO shares don’t quite add up to 100%, without fear that some unknown publisher would come out of the woodwork and sue for infringement of performance rights.

    That said, the execution of the DOJ decision was terrible. They were suggesting that if there were contractual obligations that prevented a PRO from licensing works that don’t add up to 100%, such works had to be removed from the catalog. It would’ve been needlessly chaotic for publishers and songwriters, and actually increase liability for the services, since they would have no idea what songs covered under the licenses or not. To that extent, I’m glad the DOJ decision was overturned.

    That said, I do think that if a service has licenses with all 4 US PROs, they should be able to use any song those 4 PROs represent in whole or in part, pay royalties to each PRO for their respective share, and be protected from liability to the extent that the shares of all 4 PROs don’t add up to 100%. Perhaps make it a condition that a service only gets this protection if they finalize their agreements with ASCAP and BMI, and not when they’re operating on a consent decree basis. That would give the services some incentive to not rely on a consent decree indefinitely.

    • Exactly.

      The whole system is a mess and both sides are to blame. Digital services lobby to make music cheaper and less complex. The PRO’s want it to be as complicated and opaque as possible in order to hold onto their power. Unfortunately there seems to be no long-term feasible solution in sight

      Rights holders just want to get paid.