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Coalition of US music licensees call on Department Of Justice to appeal court ruling on 100% licensing

By | Published on Wednesday 21 September 2016

MIC Coalition

No surprises here really, but the MIC Coalition, which unites trade bodies representing tech firms, broadcasters, bars, restaurants and hotels – ie users of music – has criticised last week’s court ruling on the consent decree that regulates US collecting society BMI, calling on the Department Of Justice to appeal the decision.

As much previously reported, having conducted a review of the consent decrees that regulate both BMI and its rival collecting society ASCAP, in August the DoJ declared that the two societies were obliged to run a so called ‘100% licensing’ system (aka ‘full work licensing’), rather than the ‘fractional licensing’ system that they currently operate.

That would mean that where a song is co-owned by an ASCAP member and a BMI member, a licensee could make use of that song with either an ASCAP licence or a BMI licence, whereas previously a licence would be required from both. The licensee would then pay one society any royalties that are due, and it would be for the PRO to ensure that both rights owners got paid their respective share of that money.

The DoJ’s ruling on 100% licensing didn’t involve a change to the consent decrees, the agency merely interpreted what was already written, and some licensees argued that 100% licensing had always been the norm with collective licensing Stateside. But the music industry disagreed, arguing that the DoJ’s decision would require a significant overhaul of the collective licensing system, and would also have a negative impact on the collaborative songwriting process, making songwriters in different societies nervous of collaborating.

ASCAP pledged to lobby against the ruling in Congress, while BMI took the matter to court. And somewhat quicker than anticipated, a judge ruled in BMI’s favour last week, basically overturning the DoJ’s decision.

Responding to that judgement, the MIC Coalition said yesterday: “Judge [Louis] Stanton’s abrupt judgment hurts music lovers across America. By overturning the DoJ’s correct and necessary affirmation that the BMI consent decree requires full-work licensing, this ruling undermines the decades old efficiencies provided by the BMI licence, ignores the consent decree’s explicit requirement – affirmed by the Supreme Court – that it indemnify the public performance of works in the BMI repertoire, and turns a blind eye to BMI’s own contracts and statements that make unambiguously clear they have, and continue to, recognise the consent decree’s longstanding requirement to license works in their entirety”.

“All of this while robbing both the Justice Department and interested parties of their due process” it went on. “Since this declaratory ruling was issued off-the-cuff at a pre-motion conference. If left to stand, this decision eviscerates the entire purpose of the BMI blanket licence, hurting every restaurant, bar, hotel, winery, local broadcaster, digital music service, retailer and other venue that plays music”.

Framing their argument in competition law terms, the Coalition went on: “This judgment does nothing short of create the exact kind of anti-competitive music marketplace our antitrust laws guard against, causing immeasurable harm to these local establishments and services, their many millions of customers, and to the songwriters and musicians to whom their royalty dollars are paid”.

Concluding, the MIC statement stated that: “The mission of the [DoJ’s] Antitrust Division is to promote economic competition. The DoJ staff took this important responsibility seriously, and should vigorously defend their work of more than two years to fully investigate, listen to all parties, and then take appropriate action under the antitrust laws. We urge DoJ to expeditiously appeal”.

A spokesperson for the DoJ has said that the department is currently reviewing last week’s court ruling before deciding its next move. So we’ll just have to wait and see whether an appeal will indeed follow.