Department of Justice to review ASCAP and BMI consent decrees

July 2014

Music publishing


In the U.S. the Department of Justice is conducting a review of the consent decrees governing the nation’s largest performance rights organisations (American Society of Composers, Authors and Publishers and Broadcast Music Inc.) which many see as a critical development amid the ongoing debate over copyright reform.

ASCAP last had its consent decree, which governs how the collection society collects and distributes royalties, updated in 2001, while BMI’s has not been updated since the 1994 – and boy oh boy, has technology moved on since then! Both songwriters and publishing companies have suggested that the consent decrees need serious revision, with some even arguing they should be abolished – and ASCAP have already publicised some suggested changes. But the push for updates grew louder earlier this year when a federal rate court gave an unfavorable ruling to ASCAP in its royalty rate dispute with Pandora. Review of the consent decrees will trigger a 60-day public comment period, which is sure to draw in stakeholders ranging from songwriters and publishing companies, to broadcasters and record labels.

With a music licensing system is decades old it will be scrutinised against the technology revolution and the pay that smartphones and internet technology have radically altered the business. Now, songwriters and others are much more reliant upon digital streaming services like Pandora, Spotify and Apple’s Beats Music the review may result in the changing or scrapping agreements it reached with the two music licensing giants to “freshen them up for the Internet age”

In fact the antitrust settlements date back to 1941 and the U.S federal government has mandated that the country’s two biggest performing-rights organization, ASCAP and BMI, to license their members’ work to anyone willing to pay the rates set by federal judges in “rate court,” run through the U.S. District Court for the Southern District of New York. But more recently some companies such as Apple have opted to make direct deals with rights holders instead, and indeed the current system has been criticised as it has increasingly vexed both rights holders and licensees, with rate-court proceedings costing millions for each side and often dragging on for years.

“We want to be guided by rules written for today’s environment, not a world of three networks, vinyl LPs or 8-track tapes,” said BMI’s chief executive, Michael O’Neill, in a statement and indeed it seems that ASCAP and BMI would prefer that the Justice Department eradicate the consent decrees altogether. Reports say they will ask the government to streamline the rate-setting process, limiting it to a 90-day arbitration period instead of allowing full-blown trials, and will push for the ability to license its members’ catalogues to some music users and not others.

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