The DOJ’s Consent Decrees Might Get Lifted After 78 Years — Here’s a Statement from the CEOs of ASCAP and BMI

The U.S. Department of Justice is seriously considering the removal of 1941-dated performance royalty consent decrees.

That’s music — and money — to the ears of mega-PROs ASCAP and BMI, who have spent most of their lives under the restrictive decrees.  But the decrees, which were imposed in 1941 to prevent anti-competitive gouging and unfair business practices, are deeply ingrained in the businesses of both PROs and the publishers and songwriters they represent.

Which means removing them might be seriously complicated.

Of course, not one active executive of either ASCAP or BMI has been working without the decrees in place.  Conversely, both organizations have been complaining about the decrees for decades, arguing that the outdated measures are unnecessary and artificially devalue publishing assets.

Now, it looks like the DOJ is very seriously considering the removal of the age-old statutes.  Which brings up a brand-new problem: what if ASCAP and BMI actually get what they’ve been wishing for?

Here’s an open letter from the Elizabeth Matthews, CEO of ASCAP, and Mike O’Neill, CEO of BMI, discussing this very real possibility.

With the U.S. Department of Justice (DOJ) evaluating the future of the BMI and ASCAP consent decrees, there has been much discussion and concern throughout the industry about the potential long-term impact. This is not surprising, since modifying or sunsetting the decrees would have far-reaching implications for the entire music business. Given that BMI and ASCAP are at the core of this issue, we feel it is important to share our perspective on how potential changes to our decrees could benefit all involved – if done right.

The DOJ’s attention to this matter represents a clear opportunity to do what BMI and ASCAP have been trying to do for years – modernize music licensing to better reflect the transformative changes in the industry. It’s why when we first heard about the possibility of the DOJ sunsetting the consent decrees, it came as welcome news.

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. A free market would create a more productive, efficient and level playing field for everyone involved. Competition is a good thing.

We also know that change is hard. The BMI and ASCAP consent decrees have been in place for nearly 80 years, and suddenly getting rid of them would provoke drastic changes to the current system that would cause chaos in the marketplace. We’d venture to say all sides agree on this.

So, in order to provide an orderly transition, we’re recommending the DOJ replace the current BMI and ASCAP consent decrees with newly formed decrees that would protect all parties. 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.

But a word of caution. As we’ve seen over the years, some organizations will try to use this moment and BMI’s and ASCAP’s consent decrees to serve their own interests at the expense of the songwriter. Old and new issues could come into play, such as 100% licensing, or, even more concerning, a push in Congress by music users to create a compulsory licensing model.

Compulsory licensing would take us backwards, not forward, creating a system in which the government – not the market – would determine the value of songwriters’ work. It could also have dire consequences for other creative industries.
In fact, we see no scenario in which more government regulation of this industry would benefit anyone.

It’s important to remind everyone that protections exist today, in the form of antitrust laws, that would continue to exist in a post-decree world and govern current parties as well as any future market entrants. We don’t need to create or rewrite legislation to accomplish what antitrust laws already effectively oversee. PROs and licensees all have the same goal of keeping music flowing to the public.

Ultimately, a vibrant PRO system is important to maintain the balance of the industry. With more music being used than ever before, it is critical to safeguard the value of the performing right and grow the income stream it generates for creators. BMI and ASCAP operate on a non-profit-making basis, returning nearly 90 cents of every dollar in licensing fees to our songwriters, composers and music publishers, and we do this in the most efficient and effective way possible. Simply put, BMI and ASCAP offer an essential layer of protection for creators, from helping them through the early stages of their careers, to tracking and paying on performances across all mediums, and advocating for their rights on Capitol Hill. All of this helps keep the music flowing and enables licensees to play the world’s best music today, as well as the hits that will be created in the future.

We don’t have to look far back to see just how much we can accomplish when the industry comes together and puts music first. The MMA was signed into law because creators and licensees found common ground and solutions that supported the greater good of the industry. That greater good is reflected in the four provisions we are recommending to the DOJ that don’t necessarily benefit BMI and ASCAP, but stand to benefit the industry at large. It is that same spirit of compromise which will allow both our licensees and the music creators we represent to thrive in this new era.

2 Responses

  1. Avatar
    Anonymous

    Simple: no one buys your shit like they continue too lol

  2. Avatar
    Jody Dunitz

    Abolishing the Consent Decrees: Questionable Assumptions; Ignoble Intentions:

    1) In their joint statement, ASCAP and BMI continue to beat the “free market” drum – removal of the decrees will lead to higher song rates and “competition.”

    But, how will rates increase? The labels take 65+% of all
    Spotify revenue. The publishers did a happy dance
    last year because they got their miserable 10.5% rate
    increased to 15% — by the 2022! How does a “free
    market” increase the pot that already gives labels 65%?
    There is never a discussion by NMPA or others that address
    the 2-track negotiation that allows the labels to grab the Spotify pot before the publishers get to the table.

    And, the labels get ever richer: https://mashable.com/article/major-music-labels-19-million-per-day-streaming/#0Hqp1EHasiqO

    2) Remember “fractional” vs 100% licenses? ASCAP and BMI got
    very agitated a couple of years ago when the DOJ considered
    whether the Consent Decrees required 100% licenses – to the PROs’ distinct chagrin. The PROs won a reprieve against the change – preserving their right to force users to get 2 licenses for every song, if the co-writers of the song happen to be members of different PROs (which is almost always true these days).

    So, if there’s no Consent Decree, there’s no overlord who can force this question again.

    That begs the real question: why does the U.S. (unique in the world) support 2 separate PROs who do exactly the same thing and pay the exact same rate to its members? With “fractional” licensing, each PRO does get its own commission; so that’s nice. This duplicative bureaucracy is uneconomical and wasteful. How does it serve writers?

    3) And, for a real payoff to the PROs, without a pesky Consent
    Decree, the major publishers (who control the PROs) are free to pursue the holy grail of “direct licensing.” The publishers would be free to withdraw just parts of their catalog (you know, the most revenue-rich parts) and “direct license” those songs to the streaming services. In doing so, the publishers could do what the labels now do – and what the PROs are not allowed to do – seek from Spotify, et.al., cash guarantees, upfront advances, flat payments, equity shares (!), and other goodies that will never trickle down to songwriters – just like they are deprived from artists.

    So, in abolishing the Consent Decrees, doesn’t anyone ask: What’s In It For The Writers??