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Judge rejects Department Of Justice conclusion on 100% licensing

By | Published on Monday 19 September 2016

US Department Of Justice

Somewhat quicker than originally anticipated, a US judge has already rejected the much previously reported conclusion of America’s Department Of Justice that collecting society BMI must operate a 100% licensing system.

BMI, like its rival American song rights collecting society ASCAP, is regulated by a consent decree. The DoJ, which oversees the consent decrees, agreed to review the regulations after various music publishers called for changes to be made, arguing that the current regulatory system is outdated in the digital music age. But, after conducting a long review, the DoJ decided not to make any amendments to the consent decrees, and instead proclaimed that under existing rules BMI and ASCAP were obliged to operate a 100% licensing system.

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.

Some licensees argued that this had always been the way it worked, but both societies, as well as most publishers and songwriters, said that the DoJ’s decision was a radical departure from current practice, because so called fractional licensing – where multiple licences are required for co-owned works – was currently the norm. The shift to 100% licensing, therefore, would require a significant overhaul of the collective licensing system, and could impact on the way songwriters collaborate, and the agreements made between different writers when they work together on new songs.

In the wake of the DoJ’s ruling, it was decided that BMI would fight the new interpretation of the consent decrees through the courts, while ASCAP would start lobbying in Congress. A hearing to discuss the former took place on Friday, and in a surprise move the judge, Louis Stanton, having heard arguments from both sides of the debate, reached an immediate judgement, declaring that “nothing in the consent decree gives support to the [Department Of Justice’s] views”.

The ruling doesn’t quite put an end to the debate. For starters, Stanton’s judgement only applies to BMI’s consent decree, and ASCAP will now need to seek its own judicial clarification on the matter. That will go before a different judge who could reach a different conclusion, though that would result in a rather bizarre situation. Meanwhile the DoJ could as yet take last week’s ruling to appeal. Plus, as reported last week, there is the separate legal action being pursued by the Songwriters Of North America organisation, also seeking confirmation that the DoJ got it wrong.

Then, of course, even if both BMI and ASCAP ultimately win the day on 100% licensing, there is still the matter of the various consent decree reforms the music publishers wanted and which the DoJ rejected. ASCAP could well continue with its lobbying efforts in Washington to achieve an overhaul of licensing rules via a change in copyright law.

For now, the US music industry welcomed Friday’s ruling. BMI boss Mike O’Neill said: “As we have said from the very beginning, we believed our consent decree allowed for the decades-long practice of fractional licensing and today we are gratified that Judge Stanton confirmed that belief. Our mission has always been to protect the interests of our songwriters, composers and publishers, and we feel we have done just that. Today’s decision is a victory for the entire music community”.

Meanwhile ASCAP chief Beth Matthews said “this is terrific news for all of us in the songwriting community as we continue to work on modernising the consent decrees to reflect the real world”.

David Israelite of the National Music Publishers Association chipped in: “Thanks to the courage of Mike O’Neill, BMI, and the entire songwriting and music publishing community, the DOJ’s disastrous views on 100% licensing have been rejected by a federal Judge. This is a huge win for songwriters and a huge win for the rule of copyright law”.

And if you were expecting statements from each of the major music publishers too, well, you’re not going to leave this news report disappointed. Here they are, from longest to shortest…

Warner Chappell CEO Jon Platt in a note to his songwriters: “I know that the determination of the Department Of Justice on the issue of 100% licensing of US performance rights in musical compositions has weighed heavily on our minds over the past several months. In July, I wrote to you, promising to keep you up-to-date on everything that happens, as it happens. Today, I am very pleased to inform you of the result of a legal challenge brought by BMI against the DoJ. Just this afternoon, Judge Stanton ruled that the BMI consent decree does not require 100% licensing. As he states: ‘The consent decree neither bars fractional licensing nor requires full-work licensing’. While I’m sure this story will continue to unfold, this is a fantastic result which should give us hope that the status quo for US performance rights licensing will not be upended. This is a big win, not just for BMI, but for all publishers and songwriters. My personal congratulations to the BMI team for this wonderful outcome”.

Sony/ATV CEO Marty Bandier: “We are THRILLED with Judge Stanton’s common sense interpretation of the consent decree which clarifies that BMI is not required to grant 100% licences. His statement that ‘nothing in the consent decree gives support to the division’s views’ could not be clearer. While the DoJ’s interpretation would have upended decades of licensing practices and caused uncertainty and disorder to everyone in the marketplace, Judge Stanton’s ruling is in the public interest and will benefit all interested parties in the music industry, including songwriters, music publishers and licensors. We can now focus once again on working on behalf of our songwriters”.

Universal Music Publishing CEO Jody Gerson: “We are delighted that our songwriters received a great victory today”.