US Dept. of Justice Reviewing ASCAP & BMI Consent Decrees

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Exterior of the Robert F. Kennedy Department of Justice Building in Washington, DC.

The U.S. Department of Justice announced on Wednesday (June 5) it has opened a review of the consent decrees with the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI) and will try to determine whether they should be maintained in their current form, modified or terminated. Those decrees have governed how the two performance rights organizations operate for more than 75 years.

Even though the music publishing industry has long maintained that the consent decrees are no longer relevant to the modern day music industry and the Trump administration has indicated it was willing to review the decrees, the radio industry and other music licensees have been urging the DOJ to slow down any review for the last year.

"The ASCAP and BMI decrees have been in existence in some form for over seventy-five years and have effectively regulated how musicians are compensated for the public performance of their musical creations," Makan Delrahim, assistant attorney general for the antitrust division, said in a statement. "There have been many changes in the music industry during this time, and the needs of music creators and music users have continued to evolve. It is important for the Division to reassess periodically whether these decrees continue to serve the American consumer and whether they should be changed to achieve greater efficiency and enhance competition in light of innovations in the industry."  

As part of its review, the DOJ is seeking public comments and interested parties will have until July 10, 2019, to respond with their opinions and any information relevant to determine if the consent decrees continue to protect competition.

Both BMI and ASCAP welcomed the move on the part of the DOJ.

"Thanks to the DOJ's review, we now have the unique opportunity to reimagine the music marketplace in today's digital age," ASCAP CEO Elizabeth Matthews said in a statement. "A more flexible framework with less government regulation will allow us to compete in a free market, which we believe is the best way for our music creators to be rewarded for the value of their music. A free market would level the playing field, encourage competition and allow us to innovate on behalf of music creators and licensees alike, while ensuring fair compensation for songwriters." 

BMI added, "The DOJ's long-anticipated review of the BMI and ASCAP consent decrees and call for public comment represent an opportunity to do what BMI has been advocating for years – modernize music licensing. BMI and ASCAP have already issued an open letter in which we share a proposed solution for the industry that will benefit music creators and licensees alike. We look forward to working with the DOJ, licensees and our other music partners to help ensure a smooth process that safeguards a vibrant future for music."

The National Music Publishers Assn. also applauded the move. "We welcome the Department's review of the burdensome regulations which have unfairly devalued the work of thousands of songwriters for far too long," NMPA president David Israelite said in a statement. "While the Music Modernization Act included necessary improvements to the ASCAP and BMI consent decrees, there is much more that must be done to modernize the licensing system. We look forward to contributing to this examination and our hope is that DOJ thoughtfully deliberates and that this process produces a better, fairer climate for people to create the music that so many businesses need to be successful."

And the Recording Academy also weighed in. “On behalf of all the music creators hindered by decades old consent decrees, the Recording Academy supports the DOJ and Makan Delrahim for initiating this review," the Academy's chief industry, government and member relations officer Daryl Friedman said in a statement. "In April, Delrahim joined the Academy during GRAMMYs on the Hill to discuss the changes in the music ecosystem, and we look forward to continuing that conversation with the DOJ to ensure a future with more equity for our songwriter members.”

The Nashville Songwriters Association International issued a statment, saying, "Today’s announcement by the U.S. Department of Justice calling for a review the ASCAP and BMI consent decrees comes on the heels of very important positive changes already made in the way ASCAP and BMI’s songwriter performance royalties are determined.  Those changes, adopted as part of the Music Modernization Act (MMA), will likely result in ASCAP and BMI rate courts setting rates that more closely approximate fair market value. We hope all stakeholders will draw lessons from working together to pass the MMA and participate in a deliberate and thorough exercise of examining the decrees while working toward consensus solutions. The goal should be fairly compensating songwriters and developing a vibrant music marketplace for all interested parties."

On the flipside of the issue, the MIC coalition issued a comment saying that the consent decrees shouldn’t be changed at all. “Less than three years ago, the Department of Justice completed a multi-review of the ASCAP and BMI consent decrees, concluding that they should not be altered,” according to a statement by the group whose members are trade groups of various music licensees like the National Association of Broadcasters (NAB), Digital Media Association, the National Restaurant Association and the National Retail Federations. "The MIC Coalition was formed to preserve the fundamental guidelines contained in the decrees, which are vitally important to millions of businesses and their consumers across the country. The MIC Coalition looks forward to highlighting the critical role the consent decrees continue to play in the proper functioning of the music licensing marketplace. Throughout their successful history, the decrees have helped mitigate anti-competitive behavior, while also ensuring songwriters and creators get paid when their music is played in the millions of American venues. The modification, elimination or even the possible sunset of the decrees at the present time would lead to chaos for the entire marketplace.”

Meanwhile, NAB, a member of the MIC Coalition issued its own statement also urging that the consent decrees stay in place. "Broadcasters welcome the opportunity to participate in the Justice Department’s review of the music antitrust consent decrees, and appreciate that the tone of DOJ’s inquiry recognizes the ongoing importance of this antitrust framework," the NAB statement said. "For decades, these BMI and ASCAP antitrust consent decrees have ensured a fair and efficient licensing of musical works to local radio and TV stations. The decrees benefit songwriters, broadcasters, music licensees, and music listeners. Absent broader legislative reforms, their preservation is essential to a fully functional music marketplace."

In spurring interested parties such as songwriters, publishers, music licensees, and other industry stakeholders to comment, the DOJ outlined issues, questions and topics it is seeking information on. 

- Do the Consent Decrees continue to serve important competitive purposes today? Why or why not? Are there provisions that are no longer necessary to protect competition? Which ones and why? Are there provisions that are ineffective in protecting competition? Which ones and why?

- What, if any, modifications to the Consent Decrees would enhance competition and efficiency?

- Would termination of the Consent Decrees serve the public interest? If so, should termination be immediate or should there instead be a sunset period? What, if any, modifications to the Consent Decrees would provide an efficient transitionary period before any decree termination?

- Do differences between the two Consent Decrees adversely affect competition? How?

- Are there differences between ASCAP/BMI and PROs that are not subject to the Consent Decrees that adversely affect competition?

- Are existing antitrust statutes and applicable caselaw sufficient to protect competition in the absence of the Consent Decrees?

Interested parties looking for more information, can go here.