Dept. of Justice's New Decision Could Wreak Havoc on International Rights: Op-Ed

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“When it needs fixing… don’t break it further.” Gadi Oron, the Director General of CISAC, laments the global implications of a new decision.

The August 4th decision by the United States Department of Justice (DoJ) not to modernize the consent decrees that govern performing rights societies ASCAP and BMI, and its plans to force a "full-work” licensing model into the market, are the equivalent of an earthquake for the global music community, and most of all for songwriters. It opens a new era full of uncertainty for the music industry.

CISAC, which regroups 239 societies from 123 countries, including ASCAP, BMI, SESAC and AMRA in the United States, has been monitoring the evolution of the licensing ecosystem in the US with much concern. Because of the size of the US market and its influence in the world, any changes in the way our US members operate has consequences for sister societies, songwriters and music publishers worldwide.

We had high hopes that the DoJ would have taken these factors into account and come up with solutions to ensure a better, more efficient licensing system in the US in its two-year review of the ASCAP and BMI consent decrees. Yet for some reason the much-needed reform of the US licensing landscape took a wrong turn at the expense of creators, music publishers and their societies.

The DoJ's statement and its decision to leave the ASCAP and BMI consent decrees unchanged simply means ignoring market realities. Dating back to the 1940s, these decrees desperately need a fresh look to allow ASCAP and BMI, as well as their affiliated creators and publishers, to offer licensing solutions that correspond to today’s needs and the rapidly evolving digital marketplace. Failure to update the consent decrees could force rights holders to withdraw rights in order to license them outside of the collective management network, consequently throwing the whole system that has supported songwriters for decades into disarray. This is not only dangerous for the effective functioning of the licensing market, but also unfair to songwriters.

Rather than reforming and modernizing the consent decrees, the DoJ has chosen to interpret them in a manner that forces a “full work” licensing scheme, thus bringing to an end the system of fractional licensing that worked for the music community and for licensees for years. The wisdom in doing so is hard to understand from both a market as well as legal point of view.

“Full-work” licensing would see rights holders having their rights licensed by entities that were not mandated by them and that they are not affiliated to. It could also see competing societies (either subject to the consent decrees or not) having their rights licensed by rivals. That in itself raises numerous legal issues and is unprecedented in developed and western music markets. From a business standpoint, this approach would likely put pressure on royalty rates and impose further confusion and complexity in a market occupied by multiple licensing entities. This is not the approach that one would expect to find in the world’s largest music industry.

It is clear that the DoJ's decisions have been made without taking the interests of creators, neither American nor international, into account. It is also clear that they were made with total disregard for the international framework, where fractional licensing is practiced, even if its less of a factor because many countries only have one performance rights organization representing songwriters in their territory. International copyright laws grant songwriters exclusive rights, giving them the power to decide who will license their rights in each territory and it is these rights that underpin the landscape in which authors' societies operate. The international system of collective management of rights, which is based on reciprocal representation agreements and founded on the freedom of choice of the rights holder, would be negatively affected by such level of government intervention, at a time when it needs support more than ever.

Undoubtedly, the US has the right to organize its market the way it sees fit. But taking a system which already requires improvements and further tampering with it in a manner that is so far removed from market realities, international practices and the needs of rights holders makes little sense. It singles out the US, but for all the wrong reasons.

Our member societies accept that they are often in a monopolistic position in their respective countries and, because of this, they also understand the scrutiny that comes with this status. However in western economies we rarely see such overwhelming control of collective management organizations by the government. In the land of the free market economy, music is regulated like no other good or service and to the detriment of songwriters. It is as if songwriters were a major threat to... well, to who exactly?

It is not very difficult to figure out who will be the beneficiaries of the DoJ’s approach and, in particular, the “full-work” licensing scheme. As if paying songwriters their fair share was unbearable for big media and tech companies, the DoJ came to their rescue by tilting the balance even more in their favor.

It is very clear that the decisions taken by the DoJ after more than two years of review will create a major imbalance that will certainly not be in favor of songwriters and publishers. This is why, on behalf of four million creators represented by CISAC’s members around the world, we fully back and support the undertaking by ASCAP and BMI to join forces against the decisions, to pursue a legislative solution and challenge the DoJ's decision in Federal Court. These are extreme, time-consuming and expensive steps that could have been avoided. Yet drastic times call for drastic measures. We do hope that these measures will eventually open the door to a fruitful and fair discussion on the state of the US licensing market and the solutions that we can find, collectively, to make it more efficient and fairer for all stakeholders. 

Gadi Oron is the Director General of the International Confederation of Societies of Authors and Composers (CISAC), a Paris-based organization that regroups 239 rights societies from 123 countries, including ASCAP, BMI, SESAC and AMRA in the United States.