All Over the Map: Publishers, Writers, Small Towns & Apartment Owners Weigh In On Consent Decree Debate

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

While many music rights holders, songwriters and industry trade groups support changes sought by ASCAP and BMI in order to have one simplified decree to cover both performance rights organization for a transitional period culminating with its expiration, a few of the other music industry players with a big stake in the issue of consent decree reform are either silent for now, urging caution, missing in action altogether, saying it’s not the right time for changes, or outright telling the Dept. of Justice to let the decrees stand firm.

That's the gist of some of the comments finally posted on the DOJ website on its review of the consent decrees from the likes of the National Music Publishers Assn., the National Songwriters International Assn., the Songwriters Of North America, and Global Music Rights. SESAC, the fourth U.S. performance rights organization, didn't even file a comment.

As part of its review of perpetual consent decrees -- the ASCAP and BMI ones are nearly 80 years old -- the DOJ called for comments from interested parties and more than 800 commentaries came in by the Aug. 9 deadline. The DOJ posted the redacted comments yesterday.

In their comments, BMI and ASCAP said the consent decrees were outdated, and even stifled innovation and competition. They asked that the two PROs get the same decree -- a "skinny" decree that would eventually be sunsetted after a transition period and would let them license in a free market. They are calling for a decree with four ingredients that provides instant licensing, but with concurrent interim royalty payments until they are determined through negotiations; or two, through rate court; non exclusive licensing so publishers can still do direct licensing; and adjustable licenses. They also asked to be allowed to handle other rights, too. Music licensees can see some of that but are having conniptions at the possibilities that the decrees would eventually be sunsetted and licensing would then take place in a free market.

NON-MUSIC TRADE GROUPS & SMALL TOWNS SOUND OFF

The music users came out in force with an overwhelming presence on the DOJ's commentary page, with hundreds of bars, clubs, concert halls, colleges, symphony orchestras, wineries, convention centers; as well as trade groups like the International Center for Law & Economics, the International Assn. of Venue Managers, International Hotel & Bar, among others; and even local governments like the International Municipal Lawyers Assn., the City of Murfreesboro, Tenn., City of Edmond, Oklahoma, South Washington CountryTelecommunications Commission, the town of Fuquay-Varina, N.C., Miami-Dade County Dept. of Cultural Affairs, the National Assn. of Telecommunications Officers and Advisors, and the Alliance for Community Media, all denouncing any proposed changes to the consent decree.

To hear these music licensees tell it, the country's entire economy could be impacted if the decrees are changed. At the very least, some say they will have to stop playing music if licensing costs more money. For example, two trade groups that collectively filed -- the National Apartment Assn. and the National Multifamily Housing Council -- aren't worrying about economic hardship; they complain that the blanket licenses don't provide a good value already and if the consent decrees are altered and become more expensive, their building owner members won't be able to afford provide music in the common areas of the apartments and housing complexes and would thus deprive 39 million Americans from hearing music.

PUBLISHERS HAVE THEIR SAY

Returning to music industry rights holders and trade groups, while the NMPA had plenty to say about why the decrees should be altered to allow music publishers to selectively withdraw digital public performance rights, as for the proposed changes that ASCAP and BMI want, the NMPA commentary is silent on their proposed changes, saying it is "studying" them and "consulting" with other stakeholders.

"We are aware that ASCAP and BMI have proposed to the DOJ that their consent decrees should be amended in ways that are unrelated to selective withdrawal," the NMPA commentary says. "These comments argue only for selective withdrawal, which is a separate issue that should be considered by the DOJ regardless of what other actions it may take in respect of the ASCAP and BMI consent decrees."

Meanwhile, boutique PRO Global Music Rights, the sole PRO competitor to file a comment, actually is urging the DOJ to leave the decrees the way they are, saying in its comments, "The Decrees' provisions designed to restrain that market power remain vital today. Materially modifying, sunsetting or lifting the existing Decrees would wreak havoc on the marketplace, crushing the nascent competition that has just started to emerge and discouraging further investment in the very competition that the Decrees were meant to promote. If competition is to have a chance to flourish and to someday obviate the need for Division oversight, it is imperative that those competitive protections remain intact at this time."

THEY WRITE THE SONGS... AND COMMENTS

Moving over to the songwriters side of the table, NSAI proposes that the DOJ wait and see how the changes made by the Music Modernization Act in how regulated rates are determined will impact the economics of the licensing market place before moving to determine if any consent decree reforms are necessary.

Finally, SONA urges the DOJ to "proceed with caution," citing the debacle that came out of the last DOJ review of the consent decrees when the agency decided that the PROs have to do 100% licensing favored by music users, instead of fractional licensing preferred by music rights holders. But a ruling by the BMI rate court overturned the DOJ's interpretation. 

"Although the worst potential outcome of the matter was averted, the path leading up to and the process of pursuing the lawsuit against the Department was not an easy one and it left SONA wary about another Department review resulting in further injury to songwriters" according to the SONA comments. "This is all to say that we, understandably, remain uneasy with any Department review.

However, in the end, SONA said it believes "that change is necessary to update the consent decrees." But it implored the DOJ to conduct its review "with a constant eye towards promoting the progress of science and the useful arts by protecting the songwriter community and their livelihoods, and not just the financial interests of music users."

THOSE IN FAVOR...

As for those who enthusiastically support changes to the consent decree, they include songwriters like Jane Wiedlin, Rob Hyman, Rob Thomas, Robert Duncan, Siddhartha Khosia and George Johnson; publishers like peermusic; and the Recording Academy.

While peermusic endorsed the changes that BMI and ASCAP want instilled in a "skinny decree," its main agenda in its comments is to get the DOJ to allow digital withdrawals from the blanket license so it can cut direct deals with the digital service providers. 

"Peermusic views the outcome of the review of the Consent Decrees, and review of the prohibition on selective withdrawal in particular, as critical to its future ability to support and service its songwriters, clients, and the listening public," according to its comments. "As we have noted before, we must protect and preserve what is working for independent publishers in the current PRO licensing system, we must work to fix what is not functioning, and we must modify the system to adapt to a new and rapidly evolving marketplace."

But moving onto the main agenda of its comments, peermusic acknowledges it can engage in direct licensing with music licensees, but "the ultimate say is not ours. While licensees are free to elect to negotiate directly with peermusic to secure public performance rights in our catalogue, the choice remains entirely one-sided as long as we wish to remain a member or affiliate of the PROs. At any point a licensee can opt to withdraw from direct negotiations and seek a license from the PRO, including tactical litigation if the PRO terms do not satisfy the potential licensee." If that happens, it imposes the threat of an artificial ceiling on rates, peermusic said, because the PROs aren't able to achieve free market rates.

While the Society of Composers & Lyricists (SCL) "strongly supports the views presented by ASCAP and BMI in their joint statement on the consent decree," which outlines their vision for a revised transitional consent decree, selective withdrawals from blanket licenses are of particular concern to the organization, in light of its position that the music creators should have the right of exclusive assignment to chose the PRO of  their choice.

"In recent years, certain publishers have taken the position that they are entitled to move these works without the consent of, or consultation with, the actual creator of the work," the SCP comment said. "The single most important factor are the personal relationships music creators develop with their chosen PRO over time and it is unconscionable to allow these relationships to be shown scant regard when the very reason publishers established separate companies within ASCAP and BMI initially was, in fact, to accommodate the choice of the creator... We ask that works may only be removed from a PRO by mutual agreement of both the creator and the publisher."

WHAT THEY SAID

Finally, the Recording Academy endorses practically all the consent decree change proposals put forth by the two PROs because they will benefit the organization's thousands of songwriter members. 

"As the Department considers the efficacy of the consent decrees anew, it should pursue an outcome that provides every songwriter with the opportunity to secure compensation for their work in a fair marketplace," the Academy's comment said.  

"The consent decrees, which were initially put in place to promote competition, now constrain competition," the Academy said. "ASCAP and BMI do not have the ability to experiment and innovate with new kinds of licenses that meet the needs of different customers... Accordingly, the outcome of any review of the consent decrees governing ASCAP and BMI should be less regulation, not more."


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