Delrahim, PROs Critical of Consent Decrees; NAB Wants to Keep Them

The antitrust chief said the market has changed since the 80-year-old decrees were enacted, saying they're among the oldest under DOJ’s purview, and for decades similar decrees have included automatic sunset provisions. Performance rights organizations BMI and ASCAP proposed changes they characterized as a step toward eventually phasing them out, while groups that license music argued they should remain. “These decrees have been worked through line by line over the course of 80 years, with the parties and courts developing understandings and interpretations of nearly every word,” said NAB CEO Gordon Smith. “Changing or eliminating sections or paragraphs or sentences … or even words in the decrees can have harmful and unintended consequences."

The accords no longer reflect the current, highly competitive state of the industry, said ASCAP CEO Beth Matthews. Much competition comes from the “FAANG” of Facebook, Amazon, Apple, Netflix and Google, which face far less-restrictive rules, she said. “Songwriters are more regulated than Facebook.” BMI proposed revamped rules that would include a sunset clause and incorporate four main provisions, which CEO Michael O’Neill called the “four core.” The new decrees would give all licenses automatic access to the BMI and ASCAP repertoires as soon as they pay, retain the current system of resolving disputes in rate court, keep the current forms of license the industry has been using, and preserve the current rules on direct rights deals between artists and licensees, O’Neill said. The proposal is intended to create measured change, the music licensing groups said. Industry shouldn’t rip off “an 80-year-old Band-Aid,” said Matthews.

The rules for direct deals were a contentious subject . National Music Publishers’ Association President David Israelite said any changes should allow rightsholders to selectively withdraw from blanket rights licenses to negotiate with music rights services. “These tech giants don’t need market protection,” Israelite said. PRO representatives said that would lead to opponents pushing the matter to Congress and seeking a compulsory license regime, which would greatly depress the price for licenses. That’s “fearmongering about government intervention and doomsday scenarios,” said Universal Music Publishing Group Chief Counsel David Kokakis. “No one can make a sustainable living under compulsory licensing,” said O’Neill. NAB opposes modifications that would allow selective withdrawals, Smith said, saying modifying the decree is so challenging that doing so through Congress is the only equitable way.

Any discussion of modifying the decrees must start with requiring that broadcasters and others licensing songs be able to license the whole work rather than fractional licensing, Smith said. Under the current fractional licensing system, broadcasters can’t perform a work until they have licensed it from every license holder. Such a requirement would mean entities could use songs without negotiating with all the owners, said Songwriters of North America Executive Director Michelle Lewis. Smith said DOJ should reassess the breadth of its consent decrees, and require that they apply to all PROs.

Smith chastised the licensing organizations over what he said is the lack of a reliable database of song and rightsholder information. That lack is “a stumbling block to a free market place,” said TV Music License Committee Executive Director Janet McHugh. BMI Executive Vice President-Creative and Licensing Mike Steinberg said BMI has long provided such information on its website and in other formats, and the licensing organizations are working on a comprehensive database called SongView that will do that. Steinberg said SongView is expected to be ready in 2020. “What other business is asked to pay for something, yet they have no way of knowing what is included in the package?” Smith asked.