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American music industry and its B2B customers clash in BMI/ASCAP consent decree review

By | Published on Monday 12 August 2019

US Department Of Justice

The deadline for submissions to the US Department Of Justice’s latest review of the consent decrees that regulate collecting societies BMI and ASCAP passed on Friday, with both music users and music makers submitting their views on the best way forward.

The consent decrees, of course, are the agreements BMI and ASCAP reached with the DoJ decades ago to overcome the competition law concerns that are always raised when large groups of copyright owners decide to license collectively.

Although other collecting societies representing music makers elsewhere in the world are often subject to some sort of regulation, the BMI and ASCAP consent decrees are particularly severe. And despite the fact that the American societies representing the performing rights of songwriters are much less powerful than their European counterparts, having no exclusive rights over their members’ works.

The American music community has been calling for the consent decrees to be rewritten or abandoned entirely for years. Though when the DoJ last reviewed the regulations just a few years back, it decided to keep everything in place as it is. However, the government department announced a new review earlier this year.

BMI and ASCAP’s position is that the consent decrees should be rewritten for now, though with the insertion of a sunset clause, meaning that DoJ regulation of their respective operations could be phased out entirely in the future. But plenty of music users have been busy telling the DoJ in recent weeks why that is a terrible idea, insisting that the consent decrees are as important today as they ever were.

Also supporting that position were a bunch of organisations that usually lobby against government regulation, campaigning – as they do – for an ever freer free market. But the BMI and ASCAP consent decrees are required, those free market lobby groups argued, because the market for music licences is “inherently anti-competitive” and therefore “traditional free market principles do not necessarily translate”.

As the deadline for submissions passed on Friday, the MIC Coalition – another lobbying group that brings together broadcasters, tech giants and the hospitality sectors – also, unsurprisingly, spoke out in favour of keeping the current consent decrees in place.

It said in a statement: “It is no surprise that businesses around the country have let the Justice Department know – clearly and plainly – that the ASCAP and BMI consent decrees are as important today as ever and should be preserved without modification”.

“The music marketplace has been built around these consent decrees”, it went on, “and if they are terminated or sunset without first establishing a new legal framework to protect these businesses and other licensees, chaos will result”.

The DoJ regulations, it went on, have resulted in a marketplace “where music is valued, creators are compensated, innovation flourishes and consumers enjoy greater choice in music enjoyment than ever before – and ASCAP and BMI are bringing in record revenues”.

“The message from hundreds of businesses to the Justice Department is clear”, it concluded, “without these decrees, the music marketplace would be thrown into chaos and music across the country would be silenced”.

BMI, ASCAP and the music community obviously do not agree. The former dealt with the argument that removing the decrees would create chaos in its submission to the DoJ. It wrote that it “strongly disagrees with the assertion by some music users that their businesses are reliant on the decree and that they would be unable to survive in its absence”.

“The core elements of BMI’s decree that users claim to rely on”, it went on, “such as the automatic licence and rate court provisions, were not incorporated into the decree until 1994. Traditional industries such as radio and television were able to licence BMI’s works for decades prior to the additions of these provisions”.

“These and other provisions of the decree are not necessary for the industry’s survival”, the BMI submission added. “Legacy users have shown that they were able to grow and thrive absent these provisions. New, innovative media services should be able to do the same”.

That said, the collecting society noted that it would nevertheless support maintaining a revised decree in the short-term, complete with sunset clause, so to help transition the industry over to any future system where the DoJ didn’t intervene at all.

ASCAP also reconfirmed its commitment to that strategy on Friday, with its CEO Elizabeth Matthews telling reporters: “The way music is made and consumed has changed dramatically since the ASCAP and BMI consent decrees were implemented nearly eight decades ago. The time has come to modernise these decrees so we can move toward a more innovative, flexible, and competitive marketplace that is fair to both music creators and licensees”.

It remains to be seen which way the DoJ swings this time round.