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Free-market campaign groups insist BMI/ASCAP consent decrees should stay in place

By | Published on Thursday 8 August 2019

US Department Of Justice

A dozen free-market-focused lobbying groups in the US have urged the Department Of Justice to keep in place the consent decrees that regulate American collecting societies BMI and ASCAP. The regulations are required, the groups say, to address anti-trust concerns caused by an “inherently anti-competitive” music licensing market.

Collective licensing – where rightsholders pool their copyrights and appoint central organisations to license on their behalf – always creates competition law concerns. Which means collecting societies are often regulated in one way or another, either via copyright or competition law. Quite how that works varies greatly around the world.

BMI and ASCAP, which license the performing rights of American songwriters and music publishers, are probably the most regulated via the consent decrees – agreements the two societies reached with the US Department Of Justice decades ago. This is slightly ironic, given that the US societies are much less powerful than their European counterparts, in that BMI and ASCAP don’t have exclusive control over their members’ music.

For its part, the music industry has long argued that the consent decrees are out of date and should be significantly revised. However, the last time the DoJ reviewed the BMI/ASCAP regulations, just a few years ago, it concluded that the consent decrees were just fine thank you very much, and should be kept in place without any changes whatsoever.

Another review is now underway, with tomorrow the deadline for interested parties to submit their opinions. Ahead of the latest review BMI and ASCAP said in a joint statement earlier this year that the DoJ should “replace the current BMI and ASCAP consent decrees with newly formed decrees that would protect all parties”. And those new decrees should include “a sunset provision” that could ultimately end DoJ regulation of collective licensing entirely.

However, the new letter signed by lobbying groups like Frontiers Of Freedom, Citizen Outreach and Institute For Liberty argues that – while those organisations would support the revising or removal of similar DoJ decrees regulating other industries – “the ASCAP and BMI consent decrees remain extremely relevant to a functioning marketplace”.

Of course, there is another irony here, in that the organisations signing this letter generally lobby for less government regulation and an unhindered free market. Yet, from a music community perspective, in this letter they are calling for consent decrees that constitute severe government regulation of the songwriter’s free market.

But, the letter argues, the market for music licences is “inherently anti-competitive” and therefore “traditional free market principles do not necessarily translate”. What’s more, “millions of businesses across the country rely on the efficiencies and anti-competitive protections that these decrees provide”.

For music users, the real quandary is that collective licensing and the blanket licences collecting societies can provide are really helpful. In the US said music users could go and do direct deals with the music publishers instead of getting licences from BMI and ASCAP, but they don’t want to. However, at the same time, they don’t like the increased negotiating power that comes with one organisation controlling a massive catalogue of music. Therefore they need regulation to reduce that negotiating power, or at least to stop any abuse of it.

Collective licensing makes sense for the music industry too, and especially for smaller rightsholders and self-published songwriters. And if that process has to be regulated to an extent, maybe that’s a necessary evil. But, the music community would argue, those regulations should provide more flexibility for rightsholders, and not force songwriters and publishers to continue licensing their music at rates that seem significantly below market value.

Responding to the submission to the consent decree review by Frontiers Of Freedom et al, a spokesperson for BMI told Law360: “As we shared in our recent open letter to the industry, we believe a gradual and thoughtful transition to a free market, that encourages competition, is the best solution for music creators and licensees alike. We look forward to working with all parties to try and find common ground and solutions that ultimately benefit the industry at large”.

After tomorrow’s deadline for submissions, it will be interesting to see if the DoJ takes a different line on consent decree reform this time compared to 2016. In the meantime, earlier this year the government agency published a list of the key questions it seeks to answer, which you can read here.

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