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US tech and media giants back Department Of Justice on 100% licensing

By | Published on Thursday 1 June 2017


So consent decrees, 100% licensing, DoJ rulings – you remember all that right?

The US Department Of Justice last year declared that – by its reading of the so called consent decrees that regulate American performing rights organisations BMI and ASCAP – the two PROs are obliged to offer so called 100% licences. Which would mean a licensee with a BMI licence could make use of a song even if BMI only controlled 15% of said song. Under the current ‘fractional licensing’ system the licensee would also need licences from whichever societies or publishers controlled the other 85%.

BMI, ASCAP and the US songwriting community hit out at that DoJ declaration, which would require a major change in how collective licensing works and performing right royalties flow Stateside. BMI took the matter to the court that oversees its consent decree where judge Louis L Stanton immediately sided with the songwriters.

The DoJ is now appealing that decision. And this week it emerged that a consortium of music users – including broadcasters and tech giants – is formally backing the government department’s appeal, saying that allowing BMI and ASCAP to operate a fractional licensing system would have “devastating real-world consequences” on some licensees. Even though that’s the system BMI and ASCAP have always operated to date, without too much devastation.

The companies and organisations which signed the recent amicus brief backing the DoJ’s appeal say that fractional licensing could result in higher royalty payments for licensees and a greater risk of music users being liable for copyright infringement. Though given BMI and ASCAP are actually arguing for the status quo, you might wonder why the sudden panic.

But licensees might say that as more songwriters pull out of BMI and ASCAP and license their performing rights via other societies such as SESAC and GMR – and any other licensing organisations that may or may not emerge in the future – the licensing of song rights becomes more tricky and more bureaucratic, especially for smaller licensees. And especially where there is no one stop publicly accessible database that tells you which songs you can use if you have licences from just some of the American PROs.

And, according to the amicus brief, “users that cannot control the music they perform, such as restaurants, bars, radio and television stations and cable/internet-delivered program services (which transmit syndicated programming and other programs/movies often decades old), [are] particularly vulnerable to inflated fee demands by hold-out co-owners of split works” under a fractional licensing system.

BMI continues to fight the DoJ on this point. When the government department filed paperwork in relation to its appeal last month, the society’s CEO Mike O’Neill said: “While we are not surprised the DOJ chose to pursue its appeal, we still hope for the opportunity to sit down with the new administration and educate it about the chaos that would result in the marketplace if the DOJ’s interpretation of BMI’s consent decree were implemented”.

He went on: “The DOJ’s 100% licensing position, an entirely new interpretation never raised by the department before, unfairly advantages music users at the expense of the American songwriter and upends a longstanding industry practice that has worked effectively for decades. We believe Judge Stanton’s decision is correct and look forward to vigorously defending our position in the Court Of Appeals for the Second Circuit”.