Justice Department Opens Formal Review Of Longstanding Consent Decrees

On Wednesday (June 5), the Justice Department opened a formal review and request for comment of music licensing consent decree rules that have been in place since 1941. The review of the consent decrees that rule music licensing for two of the industry’s dominant performing rights organization powerhouses—ASCAP and BMI—is also part of a broader examining of consent decrees that exist in several industries. ASCAP and BMI license approximately 90 percent of music in the United States.

The consent decrees were put in place to prevent anticompetitive behaviors and determine sensible licensing rates. The ASCAP consent decree was modified in 2001 and the BMI consent decree was modified in 1994. The decrees require ASCAP and BMI to issue licenses covering all works in their repertory upon request from music users. If the parties are unable to agree on an appropriate price for a license, the decrees provide for a “rate court” proceeding in front of a U.S. district judge. Neither decree contains a termination date.

However, the way music is consumed and valued in the marketplace has changed drastically since the consent decrees were established, especially with the domination of music streaming. Many publishers, songwriters and other music industry members have criticized the longstanding decrees, stating that they limit the ability of songwriters and publishers to obtain their own licensing agreements that could result in higher revenues in a free marketplace.

With the opening of the longstanding decrees to review, the Justice Department can now choose to either leave the consent decrees in place, modify the current regulations, or terminate them.

“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,” said Makan Delrahim, Assistant Attorney General for the Antitrust Division. “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.”

“Thanks to the DOJ’s review, we now have the unique opportunity to reimagine the music marketplace in today’s digital age. 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,” said ASCAP Chief Executive Officer Elizabeth Matthews.

“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,” said BMI in a statement.

“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,” said the Nashville Songwriters Association International (NSAI) in a statement. “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.”

“We welcome the Department’s review of the burdensome regulations which have unfairly devalued the work of thousands of songwriters for far too long,” said NMPA’s President/CEO David Israelite. “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.”

The Antitrust Division has posted an invitation for public comment on its website, and has invited publishers, songwriters, licensees and other industry stakeholders to provide comments relevant to whether the ASCAP and BMI decrees should be updated, terminated or remain unchanged. The period for public comment ends July 10, 2019.

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About the Author

Jessica Nicholson serves as the Managing Editor for MusicRow magazine. Her previous music journalism experience includes work with Country Weekly magazine and Contemporary Christian Music (CCM) magazine. She holds a BBA degree in Music Business and Marketing from Belmont University. She welcomes your feedback at jnicholson@musicrow.com.

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