Justice Department Won’t Update Licensing Rules for Music Publishers
After a long analysis, the Justice Department says it will not update decades-old consent decrees governing two major music-licensing groups, setting up likely legal and legislative battles.
Two performance rights organizations that represent much of the music industry were hoping this week for big changes to legal regulations that specify how they can operate.
After a lengthy review by the U.S. Department of Justice, the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) didn’t get what they were looking for. On Thursday, DOJ announced that it would not update consent decrees that dictate how popular music can be licensed from publishers. The consent decrees have been in place since 1941.
The two groups, which convinced DOJ to review the rules in 2014, have long argued that that the rules haven’t kept up with a quickly changing environment for music publishing, giving digital services like Spotify and Pandora the upper hand in license negotiations.
But during the review process, the DOJ made a new interpretation of the longstanding rules that is likely to negatively impact ASCAP and BMI, which are responsible for collecting and distributing a large chunk of the royalties that composers, songwriters, and music publishers receive. Last year, it was revealed that the DOJ was considering a rule change called “full-works licensing,” or 100 percent licensing, which would allow any song cowriter or rights holder to issue full licenses for songs, without the consent of fellow songwriters or rights holders.
In other words, if Justin Bieber wrote a hit song and one of his collaborators wanted to license it to a political candidate at a cut-rate price, there’s nothing Bieber—or ASCAP or BMI—could do to stop it.
That interpretation of the consent decrees is highly controversial in the music industry, with a coalition of trade groups called Artists Right Watch arguing in a letter to a Justice Department official that the full-work licensing approach would create “serious injustices that will further damage the ability of songwriters and composers to earn a living through our chosen profession.”
Other groups, including the Association of Independent Music Publishers, American Association of Independent Music, and Canadian Music Publishers Association, have also spoken out against full-works licensing.
ASCAP and BMI pledged to fight the new interpretation, saying ASCAP will seek a legislative solution, while BMI takes the issue to court.
“Unlike the DOJ, we believe that our consent decree permits fractional licensing, a practice that encourages competition in our industry and fosters creativity and collaboration among music creators, a factor the DOJ completely dismissed,” BMI President and CEO Mike O’Neill said in a statement. “As a result, we have no recourse other than to fight the DOJ’s interpretation in court. It won’t be easy, and we know it will take time, but we believe that it is the right thing to do and in the best interest of the industry at large.”
Meanwhile, the National Association of Broadcasters praised DOJ’s action. In comments submitted to the agency [PDF] jointly with the Radio and Television music license committees, NAB argued that the current system works and “there is no reason to anticipate the kind of license turmoil” envisioned by the music industry.
“The government’s conclusions reinforce our position that the current music performing rights license system is not ‘broken,’ as some in the music industry have falsely portrayed it. It has functioned well overall,” Television Music License Committee Chairman Charles Sennet said in an NAB statement.