Business News Labels & Publishers Legal Top Stories

Alternative views from within the music industry feature among 877 submissions to the BMI/ASCAP consent decree review

By | Published on Thursday 12 September 2019

US Department Of Justice

The US Department Of Justice has published all 877 submissions to its review of the consent decrees that regulate American collecting societies BMI and ASCAP. The vast majority are from users of music who urge the DoJ to keep the current consent decrees in place. Though the interesting stuff is in submissions from within the music community, in particular those from the Society Of Composers & Lyricists and boutique collecting society GMR.

The consent decrees exist to overcome the competition law concerns of collective licensing where you have single organisations representing huge catalogues of music.

Collecting societies are regulated to some extent in most countries, although BMI and ASCAP are arguably subject to the most draconian regulations. And that’s despite the fact that the US societies are less powerful than their counterparts elsewhere in the world. Partly because in many other countries there is a single society representing the performing rights in songs, whereas in the US there are several. And partly because the US song right societies, unlike elsewhere, don’t have any exclusive rights to license their members’ works.

BMI and ASCAP – and their songwriter and music publisher members – have long argued that the consent decrees are out-dated, unfairly restrict the songs business in the US, and result in publishers and songwriters being routinely paid below market rates when their songs are used. But when the DoJ last reviewed the consent decrees just a few years ago, it concluded that they should stay in place unchanged. The music community is now hoping that the outcome of this latest review will be very different.

Perhaps unsurprisingly, organisations representing users of music – including broadcasters, venues, bars, restaurants and tech firms – are adamant that the consent decrees should stay in place. The MIC Coalition is an organisation that brings all of those sectors together and it has been leading a Keep The Decrees campaign.

As the DoJ published all of the submissions it had received as part of the latest review, the MIC Coalition said: “In these comments, a growing chorus of voices – representing the interests of millions – shared the same simple but forceful message: the ASCAP and BMI consent decrees are just as important today as ever and the Justice Department should stand on the side of competition by preserving the decrees in their current form”.

More than 760 of the 877 submissions called for the consent decrees to remain, although that maths is misleading.

Some sectors encouraged individual businesses to make separate submissions, albeit using a template – so if you go through the submissions in alphabetical order, the first ten are identical. Some arts centres also had multiple staff members submit separate (though often identical) statements. Meanwhile, on the songwriter side, there is a single submission for BMI members and another for ASCAP members, each signed by thousands of writers. So if you count signatories not submissions, you see a different story.

In terms of the content of those submissions, most are predictable. We already knew that BMI and ASCAP were proposing that their current consent decrees be replaced with a much simpler list of rules that would also include a sunset clause, so that ultimately direct DoJ regulation could cease. The submissions from both BMI and ASCAP outline the arguments for a simpler and ultimately temporary regulatory system, as well as running through the ways in which the proposed simpler consent decree would still regulate the market.

The argument on the other side is that any major change to the licensing of performing rights in the US would lead to chaos.

One of the commonly used template submissions states: “While far from perfect, ASCAP and BMI provide an efficient way for [businesses] to play music while ensuring we compensate the songwriters and copyright holders who create it. Their blanket licences, made possible by the decrees, underpin the music licensing system. Terminating or sunsetting the decrees would lead to chaos for the entire marketplace, jeopardising the licensing system as we know it”.

However, while most submissions repeat the same old arguments, from one side or another, some do provide interesting alternative perspectives, or raise issues not previously discussed as part of the consent decree conversation.

One of the more interesting submissions comes from BMI and ASCAP competitor Global Music Rights, the boutique collecting society launched by music industry veteran Irving Azoff in 2013 which now represents about 80 premiere league songwriters.

GMR is in an interesting position in this conversation. To an extent, one of the reasons for having a small society that competes with BMI and ASCAP is to allow songwriters to license the performing rights in their songs outside the regulatory regime that restricts the big two.

Since its launch GMR has been fighting efforts by the US radio industry to force it to accept some sort of mediation process for setting royalty rates, a process that would mirror to an extent the rate courts that intervene on BMI and ASCAP licences. The longer established smaller US collecting society SESAC – although not subject to a consent decree – does have mediation agreements with both the radio and TV sectors.

So, GMR is no fan of the idea that collecting societies by default should be artificially constrained when negotiating licences with users. But at the same time, in its submission to the DoJ, it argues in favour of keeping the current BMI and ASCAP consent decrees.

This is because, as GMR points out, the consent decrees are not just about stopping the big collecting societies from unfairly exploiting the large catalogues of songs they represent in an anti-competitive way. They are also there to encourage more competition in terms of recruiting members in the song licensing domain, so that there is more choice for songwriters, and therefore a commercial incentive for societies to provide ever better services to their members.

In the words of GMR’s submission: “While much of the discussion surrounding the decrees focuses on their protection for licensees and the ‘rate court’ provisions, it is important to recognise that the decrees were also designed to protect songwriters. Specifically, the decrees were intended to (i) facilitate songwriter freedom of choice by allowing songwriters to choose a new [society] without penalty, and (ii) thereby promote competition among [societies] and facilitate new entry”.

GMR argues that its entry into the song licensing domain is helping to bring about competition in the marketplace in line with what the DoJ has always said it would like to see. And while BMI and ASCAP still remain incredibly dominant, SESAC and GMR do both represent some significant songwriters. Meanwhile, more recently we have seen start-ups enter the market seeking to offer an alternative performing rights licensing solution for grassroots talent.

But, GMR then adds, without the consent decrees BMI and ASCAP would be able to use their market dominance to hinder these smaller and newer players as they seek to sign up more writers and repertoire to take to the licensing marketplace.

Also referencing its ongoing legal battle with the radio industry and its Radio Music License Committee, GMR goes on: “[We] – and any new [society] – are faced with a daunting challenge of competing with entrenched and giant [societies] and simultaneously negotiating against a cartel of buyers willing to threaten a boycott of valuable music in order to break GMR’s spirit. But GMR entered the industry to provide an alternative for songwriters and will not go down without a fight”.

However, it adds, the BMI and ASCAP consent decrees “are critical at this juncture to nurture emerging competition and foster conditions which encourage new entry. Thus, we respectfully suggest that the [DoJ] give competition the air it needs to breathe and that it should not take any action to materially modify, sunset or lift the decrees at this time”.

The other interesting submission among the pile of 877 comes from the Society Of Composers & Lyricists, which basically endorses BMI and ASCAP’s position on consent decree reform, but then raises another issue. While competition in the US collective licensing domain means songwriters have a choice – and an increasingly diverse choice – of societies to work with, that choice should always be made by the writer and not any publishers they do deals with, says SCL.

It states in its submission: “From the respective inceptions of ASCAP and BMI, their writer members and affiliates have been entitled to determine the initial registration of their work(s) with the society where they hold membership or affiliation, but in recent years, certain publishers have taken the position that they are entitled to move these works without the consent of, or consultation with, the actual creator of the work”.

Noting that this wouldn’t be possible in other countries, because of the way song rights are managed elsewhere in the world, the letter goes on: “This is particularly problematic on several levels, not the least of which is transparency. Moreover, it’s completely out of step with the rest of the world, where a music creator’s exclusive right of assignment to his/her chosen [society] is sacrosanct”.

“In other words”, it adds, “foreign composers and songwriters are afforded an absolute protection not currently available to their American counterparts, which in turn means the foreign societies offer a distinct advantage to their membership, an advantage we’d like to see codified in any revision of the consent decrees”.

The submission then clarifies: “To be clear, SCL understands that there are often business opportunities presented to publishers to transfer or even directly license works, that may also advantage the music creator and our request should not be construed, in any way, as a means to restrict such opportunities. We ask that works may only be removed from a [society] by mutual agreement of both the creator and the publisher”.

So, plenty of paperwork for DoJ officials to work their way through. It remains to be seen if they give any quality time to considering the regulations that aim to benefit songwriters as well as those that favour the music industry’s licensees.