Department of Justice Refuses to Change 80-Year-Old ASCAP, BMI Consent Decrees

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The Department of Justice (DOJ) has officially refused to change the roughly 80-year-old ASCAP and BMI consent decrees.

Makan Delrahim, assistant attorney general for the DOJ’s Antitrust Division, commented on the consent decrees during a remote Vanderbilt University Law School speech, entitled “‘And the Beat Goes On’: The Future of the ASCAP/BMI Consent Decrees.” Significantly, the outgoing DOJ professional touched upon many of the same points that the Justice Department outlined in 2016 when announcing the closure of a separate investigation into the ASCAP and BMI consent decrees.

To recap, the DOJ formally opened this latest inquiry into the eight-decade-old regulations, which dictate the pricing and other operational specifics for performance rights organizations (PROs), back in June of 2019.

BMI and ASCAP, longtime critics of the consent decrees, had promptly come out in favor of an investigation and called on the DOJ to replace the measures “with newly formed decrees that would protect all parties.” Other organizations, including the Frontiers of Freedom, Citizen Outreach, and Institute for Liberty, urged the Justice Department to maintain the consent decrees.

By November of 2019, some sources specified that reform talks had reached a standstill, in part because major music publishers were pushing for a “selective withdrawal” that would have allowed them to opt out of any blanket PRO rates – and, in turn, engage in hardball direct-licensing negotiations.

In the aforementioned 2016 statement, the Justice Department indicated: “Although stakeholders on all sides have raised some concerns with the status quo, the [Antitrust] Division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact.” Importantly, Makan Delrahim echoed the sentiment, stating early in his remarks that “many licensees expressed the view that the decrees are largely working.”

And after highlighting the nuances of the consent decrees – assuring instant access to music for licensees, guaranteeing the “same license terms to similarly situated users,” providing five-year membership caps for creators, and more – the outgoing assistant attorney general turned his attention to two topics of “particular disagreement,” partial withdrawal and fractional licensing.

These considerations, and especially the latter, made up the majority of the Justice Department’s 2016 report, including in terms of negotiations and logistical hurdles (“if the licenses were fractional, they would not provide immediate use of covered compositions”) and inconvenience for licensees (“music users seeking to avoid potential infringement liability would need to meticulously track song ownership before playing music”).

But Delrahim briefly acknowledged the 2017 Second Circuit ruling on fractional licensing in his speech and relayed that a partial withdrawal (wherein creators could allow PROs to license their work to certain clients but not others – likely excepting digital streaming services, to bolster rates during negotiations) “would likely require modification of the decrees, or an act of Congress.”

Delrahim then segued into “three essential points that should guide” future efforts to reform the consent decrees. The first concerns the idea that “the ultimate goal [of reform initiatives] should be a market-based solution that ensures songwriters, publishers, and other artists are compensated fully,” including by monitoring the decrees and modifying them to promote competition “where market realities require.”

The second point centers on assuring that songwriters and other rightsholders aren’t “shortchanged” by the consent decrees. “In the future, songwriters and other music creators—most of whom lack the financial resources, clout, and sophistication of larger market players—should not be placed at a competitive disadvantage. Provisions of the decrees that shape the market in ways that benefit entrenched participants, or that result in lower royalties for rightsholders than a free market would, warrant particular scrutiny.”

Lastly, Delrahim said, “Compulsory licensing is not the answer. … Too often, however, it has been creators—songwriters, artists, and other rightsholders—who have received the short end of the stick under compulsory licensing, necessitating reforms like the recent Music Modernization Act, by Congress.”

And like the 2016 DOJ statement, Delrahim indicated that future BMI and ASCAP consent-decree reviews should occur every half decade. “The ASCAP and BMI consent decrees should be reviewed every five years, to assess whether the decrees continue to achieve their objective to protect competition and whether modifications to the decrees are appropriate in light of changes in technology and the music industry,” he said.

In one of the many reactions emailed to Digital Music News, the MIC Coalition said of the Justice Department’s decision, in part:

“The announcement essentially reconfirms the finding of the previous Administration which concluded that the music industry has, ‘developed in the context of, and in reliance on, [the ASCAP and BMI] consent decrees and that they therefore should remain in place.’ We could not agree more with such sentiments. The ASCAP and BMI consent decrees guarantee a competitive and efficient licensing regime that benefits songwriters and music licensees, alike.

“Maintaining this framework will ensure that millions of American businesses can efficiently and fairly pay for the right to play and perform live and recorded music, which is crucial as venues struggle to open their doors again in the wake of the pandemic, and as more Americans access music from an ever-growing array of platforms.”

12 Responses

  1. I wouldn't delete this comment

    Oh did BMI & ASCAP cry over not being able to steal more from musicians?

    Did they sick their digital music news goons to do a bit piece on the DOJ because they wont let them steal more from musicians and creators?

    Why are BMI & ASCAP 6 months behind in payments to artists?

    Funny no mention of their dubious business practices?

    Hey DOJ This rag is complicit in releasing false stories to boost stock prices and hide the failure and crimes of the music monopoly!

    No one from this site is a real musician or in the industry in any formal way! The Music Monopoly plants these people who know nothing about the industry to use this rag to submit false information to the public!

    Many years now I and other musicians have written down in the comments about the fraud going on in streaming we get no sympathies from these shills! They delete these TESTIMONIES instead of investigating them!

    These are OUTRAGEOUS crimes!

    Please DOJ help us were being starved out and AMERICAN MUSIC is being eroded away!!!

  2. Screen shot

    Screen shot and sent to the agent on this case your welcome

      • stop shilling and save yourself

        Your absolutely complicit in fraud tho you will be hearing from attorneys representing rich powerful share holders who want restitution and someone who can go to jail for the higher ups who can afford attorneys

        assisting in insider trading

        this is how the con works say it with me ” abdication of fiduciary responsibility”

        how stupid and arrogant you all are so easily CONNED for a golden handcuffs stipends I bet you barely get paid! Landed right in your lap right the miracle to start a music blog with no music experience ha ha ha tale as old as time

        don’t drop the soap!

        • S. E. Sac

          Zzzz. Coming from someone who obviously knows nothing about the law and everything about dropping soap.

  3. Failed IPO

    Didn’t hypnosis just loose their IPO because of bad evals?

    • Common Sense

      Nae, it’s because they are leveraged to the hilt, with little to no revenue, and an IPO makes zero sense right now.

  4. Angelito

    The U.S. Government is a collection of criminals, pedophiles, and backstabbing liars. America gets the government it deserves—watch the US implode over the next 25 years. One giant welfare state run by Bill Gates, Twitter, Facebook, and Google.

    America voted for this, it will be a pleasure to watch America meltdown with tyranny.

  5. Stan Staples

    BMI is an embarrassment to corporations. They sit at the same uneducated table as the NRA who’s gluttony is $$ and BMI follows the same menu and doesn’t care for the music industry. BMI will fail. Artists are more creative than BMI who isn’t creative. We call on all artists to start steering away from the traditional gutter of BMI music processes. BMI isn’t creative. They rely on OLD laws, not current creative thinking and true honesty. BMI, take note; collapse is just over the hill.