The Justice Department said there needs to be further review of two music licensing consent decrees that allow music users to secure a blanket license for rights rather than having to negotiate individually for them.
That is according to Justice Antitrust Chief Makan Delrahim in remarks at a Vanderbilt University Law School virtual event, "The Music Industry and Antitrust Law." He said there remain issues that still need to be worked out.
Those include whether performance rights organizations (PROs) should be able to expand the rights they license, and the key issues of fractional vs. full performance licensing and partial withdrawal of rights, the latter which particularly implicates streaming rights since that would allow music performers and publishers to provide blanket licenses for bars or TV shows, but negotiate individually with online streaming services.
Delrahim suggested that the decrees weren't going anywhere anytime soon since he said he thought the decrees should be reviewed every five years "to assess whether the decrees continue to achieve their objective to protect competition and whether modifications to the decrees are appropriate in light of changes in technology and the music industry."
It is a victory for broadcasters, who feared Justice could recommend ending the decrees. Justice could not end the decrees itself, but only makes recommendations to the court that issued them.
Asked why Justice did not move to terminate, as Justice did with the Paramount consent decrees, Delrahim said there was more consensus on eliminating the Paramount decrees. He said they no longer serve their purpose and were prohibiting conduct, like block booking, that no longer really existed. By contrast, he said there were a lot of benefits for the music licensing blanket license. He cited John Bon Jovi's support of the decrees because he said they helped artists make a living. Then there other artists who disagreed.
He also said because of COVID-19 Justice was not able to engage in more granular negations on key issues.
He pointed out that Justice has eliminated over 580 consent decrees, but in this case there was a lot of industry reliance on them.
The ASCAP/BMI decrees were the result of the Justice Department's concerns about the power music licensing organizations had by virtue of controlling those music rights, and were meant to encourage competition.
Justice two years ago launched its latest review of the 75-year-old consent decrees with The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), which collectively handle about 90% of music licensing rights and fees for music on video and audio platforms, including streaming services.
Broadcasters wanted the decrees to remain, arguing that a blanket license regime, rather than one where they would have to identify and get rights to each piece of music they play, is the only workable approach, a point Smith made in his testimony.
BMI and ASCAP wanted the decrees phased out and offered up a way to do so.
The decrees circumscribe how those organizations can provide rights to public performances, but Justice, as it had earlier signaled, was reviewing those agreements to see if they should be maintained as is, terminated or modified as the 1941 decrees have been before, ASCAP most recently in 2001 and BMI in 1994.
The decrees "require ASCAP and BMI to issue licenses covering all works in their repertory [blanket licenses] upon request from music users. If the parties are unable to agree on an appropriate price for a license, the decrees provide for a “rate court” proceeding in front of a U.S. district judge."
The ASCAP decree requires it to “grant to any music user making a written request therefor a non-exclusive license to perform all of the works in the ASCAP repertory...." The BMI decree requires that BMI licenses provide access to those compositions, the right of public performance of which [BMI] has or hereafter shall have the right to license or sublicense.” The 2nd U.S. Circuit Court of Appeals in 2015 ruled, in the Pandora decision that ASCAP is “required to license its entire repertory to all eligible users.”
"The MIC Coalition is extremely pleased with today’s announcement," said the group, whose members include the National Association of Broadcasters and groups representing theater owners, restaurant owners and computer companies. "The announcement essentially reconfirms the finding of the previous Administration which concluded that the music industry has, 'developed in the context of, and in reliance on, [the ASCAP and BMI] consent decrees and that they therefore should remain in place.' We could not agree more with such sentiments. The ASCAP and BMI consent decrees guarantee a competitive and efficient licensing regime that benefits songwriters and music licensees, alike.
"Maintaining this framework will ensure that millions of American businesses can efficiently and fairly pay for the right to play and perform live and recorded music, which is crucial as venues struggle to open their doors again in the wake of the pandemic, and as more Americans access music from an ever-growing array of platforms."
"While we were disappointed that no action was taken, we are encouraged to see how the DOJ’s
approach to these issues has evolved," said ASCAP and BMI in a joint open letter
"We knew that reaching consensus would not be easy. It soon became clear that key industry participants could not agree on how best to move forward. Unfortunately, we also found that some were using this review to advocate for even greater restrictions in our decrees, either for their own benefit or in an effort to regulate the marketplace as a whole through BMI and ASCAP," they wrote.
"The formal close of this review means we can put this matter behind us for the near future and continue to champion the rights of our songwriters, composers and publishers, protect the value of their creative work, and partner with our licensees to help ensure music is delivered to the public."
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