It has been a cruel summer for music publishing. On June 30, ASCAP and BMI learned that the U.S. Department of Justice not only declined to amend the 75-year-old antitrust consent decrees that the collecting societies say keep them from negotiating effectively in the digital age -- it essentially will further restrict them. Although the Department of Justice hasn't yet published its opinion, it apparently will require ASCAP and BMI -- which collect and distribute royalties to songwriters and publishers when music is performed on radio and TV and in venues -- to offer "100 percent licensing," which means they will have to license all of the rights to any composition in their repertoire. This would break with decades of practice, creating a logistical and legal morass. The decision, which could undermine ASCAP's and BMI's pricing power, has been called music publishing's "Brexit."
"I think I levitated outside of my body when they read their prepared statement," says ASCAP CEO Elizabeth Matthews. "I remember saying to someone, 'I feel like I'm in an episode of Punk'd.' "
Matthews, 48, who started at ASCAP in 2013 as general counsel and rose to CEO in 2015, now has to figure out what the Department of Justice's decision means, as well as how to respond to it. ASCAP, which is 102 years old, took in a record $1.01 billion in 2015, but the organization (as well as rivals BMI and SESAC) has been licensing shares of songs written by its members for decades. Now it may have to license entire songs, and find a way to pay creators who aren't members for the shares that they own. ASCAP also is facing challenges from publishers bringing certain traditional performing-rights-organization services in-house by cutting direct deals with licensees like Pandora, and from other PROs not bound by the consent decree, like SESAC and Global Music Rights, which Irving Azoff founded in 2013 and is run by former ASCAP executive Randy Grimmett.
"There's a lot at stake here -- we have 585,000 members," says Matthews, the mother of two daughters ages 5 and 7, who came to ASCAP from Viacom, where she was executive vp/deputy general counsel of its Media Networks division. "But we've always faced massive regulatory challenges, and challenges related to new technology -- and we've always adapted."
Can you explain, in a nutshell, what 100 percent licensing might mean for the average songwriter?
Songwriting has always been collaborative. If we write a song together, unless there's an agreement to the contrary, either of us can go out and license it and account to the other. You can be a BMI member while I'm an ASCAP member: ASCAP will license the fractional share associated with its members and BMI will do the same. The notion of 100 percent licensing flies in the face of how the market has been operating. This could create circumstances where we won't know who controls these individual shares of works.
What's your next move in the wake of the decision by the Department of Justice?
To very quickly try to assess the impact of the DOJ's decision -- the intended and the unintended consequences -- on our processes, manpower, the legal and legislative implications. I've been in a series of "war rooms" with Venn diagrams and Rubik's Cubes of scenarios, trying to figure out what actions to take that we won't regret. We're facing the unknown.
How do you make decisions in a situation like that?
Are you a Game of Thrones fan? Remember when [Arya Stark fights the Waif] in the dark and wins? Sometimes you're in the dark -- you don't have all of the facts -- and you have to trust your intuition.
What's the atmosphere like in Washington, D.C., in terms of issues important to the music business?
I think we have a lot of support in Congress, but it's an election year, so there are a lot of unknowns. We're participating very heavily in the copyright reform process, and I think it's good for us because it's a chance to educate people on the plight of songwriters.
ASCAP now has three competitors -- BMI, SESAC and Global Music Rights. How do you set yourself apart?
Something I tried to take from Viacom is a focus on research, and in 2015, we really had to focus on points of differentiation. One key differentiator is we're member-owned and -run. Our board has to be composed of 12 publishers and 12 writers, and the chairman has to be a creator: that's [songwriter-singer-actor] Paul Williams. Also, we operate on a not-for-profit basis. I strip out my costs and every remaining dime goes back into the pockets of our members. And we spend a lot of time and energy on advocacy: Protecting copyright is part of our core mission, and the same can't always be said of all our competitors.
You have South Park dolls in your office. What else did you bring over from Viacom?
Love of music. The major cultural difference, which presented some personal challenges, was going from a big public company to a membership organization that has 500 employees.
What do you make of the power struggles going on at Viacom now?
I have love and respect for the company and a ton of friends who work there, and I really hope they can put this distracting drama behind them and get back to making great cultural content. I don't want to read about Sumner Redstone anymore -- I just want my MTV.
It's hard enough to explain ASCAP's function to an adult. Do your kids understand what mommy does?
Every time I went to D.C. they'd think I was having a private meeting with President Barack Obama. I've never met the president, and once they realized that, they couldn't care less.
This article was originally published in the July 30 issue of Billboard.