DofJ’s decisions on music licensing upset everyone

August 2016

Music publishing


In a major setback to music publishers, the Justice Department decided this week it will not alter a decades-old system that requires royalty collection societies ASCAP and BMI to license songs to everyone at a fixed rate.  The Justice Department dealt another potential blow to the music industry by calling for so-called “100% licensing.” In cases involving songs with multiple songwriters. This would require ASCAP and BMI to provide a license for the whole song, and then apportion revenues amongst the different writers.
The heads of two of the world’s biggest publishing companies have now both said that they aren’t happy with the recent ruling. Universal Music Publishing Group CEO Jody Gerson and Warner/Chappell boss Jon Platt want publishers to be allowed to negotiate digital rights outside of blanket licenses offered by Collection Societies joining Sony/ATV boss Martin Bandier in declaring the position taken by the DofJ is deeply disappointing, and a threat to the livelihood of songwriters. The DofJ confirmed existing consent decrees – effectively a blanket licence – tat have governed ASCAP and BMI since 1941 and leaving them intact will mean publishers remain unable to partially withdraw their repertoire from the PROs in order to negotiate more lucrative direct deals with digital platforms.
Sony/ATV chairman/CEO Martin Bandier has led the protests from publishers and performance rights organisations over the US Department Of Justice’s decision to not amend the consent decrees affecting PROs, while introducing a controversial new “100% licensing” scheme.
“We are incredibly disappointed by the unjust way the Department has decided to interpret the consent decrees,” said Bandier, adding “Its decision is going to cause a tremendous amount of uncertainty and chaos in a market place that has worked well for years and will adversely impact everyone in the licensing process, including PROs, licensees, music publishers and, most of all, songwriters who can ill afford to hire lawyers to figure out their rights under this inexplicable ruling. The decision raises more questions than answers.”


And both BMI and ASCAP voiced their displeasure with the DofJ: after the decision, ASCAP and BMI issued a joint statement saying: “ASCAP and BMI met yesterday with the Antitrust Division of the Department of Justice and heard its proposal regarding our respective consent decrees. We are both evaluating the information presented and informed the DoJ we will respond to its proposal in the near term.”
In a statement, ASCAP CEO Beth Matthews, said that the 100% licensing rule would end “the long-standing industry practice of fractional share licensing.” She added, “Unfortunately, the DoJ indicated that because of the complexities of the transition to this 100% licensing requirement, it will not consider the updates we requested to our consent decrees at this time but, instead, may revisit those issues after a transition period.”
The DoJ is said to be giving ASCAP and BMI one year to prepare for the shift to 100 percent licensing. If ASCAP and BMI choose not to adopt 100 percent licensing, the DoJ could file suit against them on antitrust grounds — the reason for the consent decrees initially — leaving a court to decide whether the PROs were in violation.
Jay Rosenthal, the former general counsel for the National Music Publishers Association and now a partner at law firm Mitchell Silberberg & Knupp, told Music Week that the main music publishers “will most likely withdraw [their repertoire] and they have been considering and planning for this for quite some time.”
And the Independent Music Publishers Forum (IMPF) which counts more than 50 rights-holders as members, including Bucks Music Group, Reservoir/Reverb Music, Sugarmusic, Budde Music, SONGS Music Publishing, Wixen Music Publishing, ABKCO, Bicycle Music Company and Downtown Music Publishing said in a statement this week: “How is it possible that the U.S. Department of Justice made a decision to not only leave the outdated consent decrees as they are, despite all the meetings, entreaties and ideas of the last two years, but added to its’ interpretation of those decrees in a clearly punitive and devastating move for small and indie music publishers and their songwriters?”
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