On January 15th, the Department of Justice announced it has ended its two-year review of the 80-year old consent decrees that govern the operation of the largest music performing rights organizations in the United States: ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music, Inc.). The DOJ decided not to take any action to modify or terminate the decrees, but left open the possibility of changes in the future. The DOJ’s underlying philosophy is that market-based solutions are preferable to legally mandated decrees in this area of the music business.
ASCAP and BMI provide licenses to businesses that publicly perform music which is owned by their songwriter and publisher members, including to bars, restaurants, radio and television stations, internet programmers and streaming platforms. ASCAP and BMI provide catalog-wide and per-program licenses so the users do not have to sign a license agreement with each songwriter and publisher whose music they wish to perform. One of reasons the DOJ decided to maintain the current consent decrees is so the owners and users of music performance rights would not have to enter into potentially costly and lengthy renegotiations.
The ASCAP and BMI consent decrees were originally signed in 1941 and were products of lawsuits brought by the United States government against those organizations under Section 1 of the Sherman Act, 15 U.S.C. § 1, to address competitive concerns arising from the market power each organization acquired through the pooling of public performance rights held by their member songwriters and music publishers. The essence of the consent decrees is to encourage competition between ASCAP and BMI, and their respective members, to license copyrighted music to users.
The decrees only govern ASCAP and BMI, which together represent approximately 90% of songwriters and music publishers in the U.S. They do not affect any other performing rights organizations in the U.S., such as SESAC (formerly Society of European Stage Authors and Composers) or GMR (Global Music Rights).
Since 1941, the DOJ has periodically reviewed the operation and effectiveness of the consent decrees, most recently in 2014 – 2015. The ASCAP consent decree was last amended in 2001 and the BMI consent decree was last amended in 1994. Two years ago, the DOJ announced that it would conduct another review of the consent decrees to determine if they still serve their intended purpose.
As part of its recent review, the DOJ invited interested persons and entities, including songwriters, music publishers, licensees and other industry stakeholders, to provide the DOJ with information or comments relevant to whether the consent decrees continue to protect competition. Some critics argued the decrees fail to reflect the way Americans consume music today and some asserted the decrees discourage innovation by locking in existing practices and licensing terms. Many stakeholders expressed the view that the competitive concerns existing when the original decree were entered into are still in existence today. Other respondents commented favorably or unfavorably on ASCAP and BMI licensing only the portions of songs they represent (as opposed to the entire songs) and the ability of songwriters to limit ASCAP’s or BMI’s authority to grant licenses to certain types of users.
Although the DOJ recognized that changes in the music marketplace require them to continue to monitor the decrees and modify them if market realities require, the DOJ left the terms unaltered based on its review. The DOJ representative stated that “A properly functioning market is the best method for determining the rates that properly reflect supply, demand and each party’s relative contribution to the music exosphere.”
The DOJ announcement was made by Makan Delrahim, the outgoing Assistant Attorney General to the Antitrust Division, who stepped down from his position four days after the announcement.