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BMI and ASCAP outline wish list as yet another consent decree review begins

By | Published on Friday 1 March 2019

US Congress

American collecting societies BMI and ASCAP have published a wish list as the US Department Of Justice prepares to once again consider the so called consent decrees that regulate the two performing rights organisations.

Although completely ending the DoJ’s direct regulation of the two music rights bodies is apparently on the agenda, BMI and ASCAP instead recommend drafting an all-new fit-for-purpose consent decree for the near future, which may include a sunset clause allowing an alternative approach to be adopted down the line.

When the US music community was lobbying hard for the “once in a generation” copyright reforms contained in last year’s Music Modernization Act, at a session during MIDEM we identified five ways in which the American copyright system is weird from a European perspective.

The MMA actually only addresses three of these peculiarities: the lack of a mechanical rights society, the rate courts and royalty board, and the always confusing pre-1972 thing. That AM/FM radio stations pay no royalties to the record industry and the draconian consent decrees that regulate BMI and ASCAP were not part of the reforms. But the latter could now be addressed anyway. And lobbying on the former also continues.

Collective licensing – where large groups of rights owners license their repertoires together – causes monopoly concerns all over the world. Some copyright systems embrace and/or force a monopoly. Others regulate collective licensing in one way or another to overcome any competition law issues.

In the US, some of that regulation comes from these consent decrees and they include some of the most severe regulation in the world. Even though there are four societies representing the performing rights of songs in America (ie smaller organisations SESAC and GMR in addition to BMI and ASCAP), whereas is many countries there is just one. Plus the US societies, unlike their counterparts in much of the rest of the world, don’t enjoy any exclusive rights. There is nothing to stop a rights owner and licensee negotiating a deal that cuts the society out.

The consent decrees are also very old and the music industry has long argued that they are no longer fit for purpose. But when the DoJ last reviewed them in 2016 it concluded that the regulatory documents were all good as they are. However, it seems that the government agency is now planning another review, with the Wall Street Journal reporting earlier this week that a public consultation is about to begin.

With that in mind, yesterday the bosses of BMI and ASCAP – Mike O’Neill and Elizabeth Matthews respectively – published an open letter presented their united position on consent decree reform. Welcoming that another review is now on the agenda, they write: “The DOJ’s attention to this matter represents a clear opportunity to do what BMI and ASCAP have been trying to do for years – modernise music licensing to better reflect the transformative changes in the industry”.

“It’s why”, they go on, “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”.

But, they add, the consent decrees have been in place for nearly 80 years and just abandoning them overnight could cause chaos, which no one wants. Which is why the two societies are “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”.

O’Neill and Matthews have four key priorities for any new consent decrees. First, they think all music users that need to exploit the performing rights in songs should still be able to automatically access a society licence, but with “a fairer, more efficient, less costly and automatic mechanism for the payment of interim fees”. Secondly, the rate courts that oversee the two societies’ licensing deals should remain, but with the existing reforms contained in the aforementioned MMA, which the music industry hopes will result in those courts generally setting higher rates.

Thirdly, BMI and ASCAP members should still be able to do their own deals outside the collective licensing system. And finally, the new consent decrees should “preserve the current forms of licences that the industry has grown accustomed to beyond the traditional blanket license, such as the adjustable fee blanket license and the per-programme license”. So, basically, business of usual, but without all the annoying bits of the current consent decrees.

Last time the DoJ reviewed its regulation of BMI and ASCAP, not only did it decide not to change anything, it made a statement about so called 100% licensing that sent everyone in the music publishing sector into a frenzy until the rate courts eventually overturned said statement. Under pressure from music users, the DoJ had declared that, where a BMI or ASCAP member only controls part of a song copyright, a BMI or ASCAP licence should nevertheless allow a licensee to use the song without securing any licences from the other co-owners.

Aware that any new review could result in other changes or clarifications that go against the music industry’s wishes, O’Neill and Matthews added: “As we’ve seen over the years, some organisations 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”.

Applying compulsory licensing to the BMI and ASCAP repertoires would, they reckon, “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”.

So, the message is, don’t go reviewing the consent decrees in a way that would increase the regulation. Or question the relevancy of collective licensing and collecting societies entirely.

“A vibrant PRO system is important to maintain the balance of the industry”, they insist. “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”.

So, there you go, BMI and ASCAP’s position is known. If a full-on consent decree review is now imminent, we look forward to seeing what wish lists the broadcasters, tech firms and live sector come forward with.