U.S. Dept. of Justice to Review ASCAP and BMI Consent Decrees

The antitrust division of the U.S. Dept. of Justice has opened a review to exam whether its decades-old ASCAP and BMI consent decrees should be amended or, as some publishers hope, sunsetted and eliminated. The consent decrees impose regulations on how the two performing rights societies operate. 

In a notice expected to run in Wednesday’s Wall Street Journal, the DOJ invites interested parties--including songwriters, composers, publishers, licensees and digital service providers--to send commentary on whether the consent decrees meet their goals of protecting competition.

Those comments can be filed electronically at http://www.justice.gov/atr/cases/ascap-bmi-decree-review.html or sent to the attention of the chief of the Litigation III section, Antitrust Division, U.S. Dept. of Justice, 450 5th Street, NW, Suite 4000, Washington DC 20001 by Aug. 6. 

While such reviews can take a year or two, some sources indicate that this might be an expedited review.

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The major publishers and the two PROs have been pushing for amendments to the consent decrees ever since both the ASCAP and BMI rate court judges--in separate litigation regarding what performance royalties rates Pandora should pay--ruled that music publishers cannot partially withdraw digital rights while staying with ASCAP and BMI for all other kinds of licensing. In the last eight months, both judges ruled that the publishers have to be all in or all out of the PROs.

Prior to that ruling, Sony/ATV, Universal Music Publishing Group and BMG—which combined control about 50% of the music publishing market place--had all withdrawn digital rights so that they could license directly the big digital music services like Pandora. But the Judges ruling quashed that type of activity and resulted in the big publishers threatening to pull out if the decrees are not amended to allow partial withdrawals.

Both ASCAP and BMI, saw well as the major publishers immediately opened up a dialog with the DOJ on whether they were willing to entertain discussions about amending or sunsetting the decrees.

Beyond partial withdrawal, publishers, the PROs and the National Music Publishers' Assn. are also likely to ask for other changes. Among the requests that have been filed in separate commentary to the U.S. Copyright Office pending Congressional review and possible revision of overall U.S. copyright law--and are likely to be filed to the DOJ--are requests to eliminate rate court in favor of arbitration, and allowing the PROs to bundle other rights for licensing digital services.

Of course, some industry sources caution that just because the DOJ is reviewing the decrees, doesn't mean it will change them. Moreover in some instances it could even tighten aspects of the decree too, those sources warn.

But in a statement BMI noted that almost all the rights and obligations in BMI’s consent decree were developed in the mid-1960s--before the Internet, satellite radio, and the growth of cable and other modern music delivery platforms.

"The marriage of technology and creativity has helped open up tremendous opportunities for our affiliates through cutting-edge digital platforms," BMI CEO Michael O'Neill said in a statement. "We seek to modernize the decree to enable songwriters and publishers to realize fair market value for their work, to make music licensing more efficient and to streamline the rate-setting process." 

ASCAP noted that since its decree was last reviewed in 2001, new technologies has dramatically transformed the way people listen to music. "But the system for determining how songwriters and composers are compensated has not kept pace, making it increasingly difficult for music creators to earn a living," ASCAP president and chairman Paul Williams said in a statement. "Updating music licensing regulations to reflect the realities of today’s music landscape will preserve the benefits of collective licensing to businesses that license music, give consumers greater access to the music they love and allow the more than 500,000 songwriters, composers and music publishers we represent to be compensated for the true value their music brings to the marketplace."

If each consent decrees ultimately winds-up amended, its likely that both the BMI and ASCAP rate court judges will still have to approve the respective changes for the PRO that they preside over for rate court.