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Six members of Congress sign letter welcoming Department Of Justice’s ruling on consent decrees

By | Published on Tuesday 9 August 2016

US Department Of Justice

As US collecting society ASCAP prepares a lobbying push in Washington in the wake of last week’s Department Of Justice ruling on the consent decrees that regulate collective licensing Stateside, six members of the House Of Representatives have already come out against the music industry in this debate.

As much previously reported, the big music publishers in the US wanted the rules that govern collecting societies ASCAP and BMI to be revised, not least to allow partial withdrawal, so that rights owners could force digital services into direct deals while still licensing bars, venues and radio stations through the collective licensing system.

But the DoJ, which oversees the consent decrees, concluded that no such revisions were required and, not only that, but that current consent decree rules obligate ASCAP and BMI to operate a 100% licensing system. This means that, where a song is co-owned and represented by multiple societies (because the writers are members of different performing rights organisations), any one society should be able to provide a full licence for that work.

The DoJ and lobbyists for various groups of music licensees insist that 100% licensing has always been the default rule under the consent decrees. But the music industry strongly disagrees, insisting that this interpretation requires a significant overhaul of how the US collecting societies work. As far as they are concerned, as it currently stands, anyone wanting to use a song repped by multiple societies needs a separate licence from each PRO, a process sometimes called ‘fractional licensing’.

Last week, after the DoJ formally confirmed the conclusions of its consent decree review, ASCAP and BMI announced a joint effort to fight back against 100% licensing, while also continuing to push for other reforms. BMI will lead the fight back through the courts, while ASCAP intends to seek support in Congress, noting the DoJ’s own comments that an overhaul of copyright law might be a better way of addressing issues with music licensing, rather than just meddling with old anti-trust agreements.

But as those new lobbying efforts get underway, six members of the House Of Representatives – three Republican, three Democrat – yesterday published an open letter to the boss of the Department Of Justice, Loretta Lynch, welcoming last week’s conclusions over consent decree reform and 100% licensing.

The letter is signed by Republicans Jim Sensenbrenner, Blake Farenthold and Dave Trott, and Democrats Suzan DelBene, Gene Green and Jared Polis, and begins: “Assessing potential harm to competition arising from coordinated behaviour of competitors is the responsibility of the [DoJ’s] Antitrust Division and we commend you for your diligence in this thorough review”.

They go on: “Last week’s announcement upholding the decrees with no modification is appropriate at this time. Further, we support the Department’s clarification that under the decrees, ASCAP and BMI must use ‘100% licensing’ and that this obligation has always been inherent in the consent decrees”.

“We commend the Department’s efforts to guarantee the fair and efficient licensing of public performance rights for musical works”, they add. “Preserving the decrees as currently written will protect licensees acting in good faith, ensure that music is performed legally, and see that creators are compensated for their work”.

And finally, expanding on the 100% licensing point, they said: “Moreover, we commend your staff for reaffirming that the consent decrees require ASCAP and BMI to license all of the works in their repertory. So-called ‘fractional licensing’ would hamstring the music marketplace. It is our understanding that the current blanket licenses allow for the ‘100% licensing’ of a work by any one partial owner of the work. Were the Department to propose modifying the consent decrees to allow fractional licensing, it would paralyse the market for licensed music”.

One of the side debates going on here is whether or not forcing 100% licensing onto BMI and ASCAP is retaining the status quo or instigating a radical overhaul. The six representatives – and others who support the DoJ’s position – insist that ‘fractional licensing’ would be the innovation. Whereas the music industry insists that – even if the consent decrees have always in theory enforced 100% licensing – which the music publishers deny anyway – but even if they had, that’s not the way the societies have operated to date, so the enforcement of 100% licensing will require a significant change.

Either way, it will be interesting to see how ASCAP fairs as it steps up its efforts in Washington. The music industry often faces strong competition in political circles from lobbyists representing the big broadcasters and big tech, especially in the US. And it often struggles to compete with those lobbies, especially where the issue being lobbied on is specifically about music rights, rather than wider copyright issues, where the music industry can lobby in unison with Hollywood and the big TV producers.

Of course, the US music publishers always have the nuclear option, which is to bail on collective licensing entirely. Sony/ATV boss Marty Bandier once suggested this was an option that could be considered when discussing the need for partial withdrawal, before the whole 100% licensing thing was even on the table.

Blowing up the collective licensing system would raise all sorts of challenges within the music industry itself – regarding songwriter contracts, reciprocal agreements with collecting societies worldwide and quite how you’d license small-time business customers directly – and the introduction of 100% licensing would reduce the impact of just a small number of publishers pulling from the American societies.

Though plenty of the licensees lobbying against consent decree reform benefit from collective licensing too, so the mere threat of blowing up the whole system might strengthen the music industry’s hand. Though it would a dangerous bluff to play, and it’s obviously not something BMI or ASCAP themselves would advocate.

But desperate times sometimes call for desperate methods. Though in the interim, perhaps ASCAP can just find six members of Congress to pen an open letter supporting their side of the argument.