Broadcasters, PROs Debate Music Licensing at DOJ Day 2
Updated pacts proposed by BMI and ASCAP should be treated as proposals to terminate the consent decree regime entirely because they include a sunset clause, said NAB General Counsel Rick Kaplan during a panel Wednesday on day two of DOJ’s workshop on music licensing (see 2007280062). ASCAP and BMI are “cartels” and it's in the public interest to constrain them with consent decrees, he said. There are more performance rights organizations than ever, and ASCAP and BMI face competition from publishers through direct licensing and from powerful tech companies, said advocates for ASCAP and BMI.
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The workshop took place as legislators were grilling those same tech companies over concerns they hold too much power (see 2007290063), said ASCAP board member and Sony Music Publishing General Counsel Peter Brodsky. “If there’s a Goliath in this equation, it's not us,” said BMI General Counsel Stuart Rosen.
The consent decrees “distorted” the music licensing market, and a free market operating without the decrees would have indirect effects that would be in the public interest, said University of Chicago economist Kevin Murphy. Kaplan and Brandeis University economist Adam Jaffe said the rise of streaming services hadn’t caused PROs to face a more competitive or changed market, because streaming services behave similarly to broadcasters on performance rights. That’s not the case because of the scale of the large digital streaming services, said Brodsky. The accords were never designed for the modern music business where a handful of massive companies control the main audio streams, he said.
Kaplan resisted the characterization of the pacts as 80 years old, which was emphasized by the PROs and DOJ Antitrust Chief Makan Delrahim during day one. DOJ assessed the decrees and determined they served the public interest four years ago, Kaplan said. That tech companies and streaming services are large companies hasn’t affected PROs' ability to extract competitive rates for licensing, he said. There’s no evidence the consent decrees hurt the ability of songwriters to make music, said Jaffe.
Licensing rights negotiation over content related to music -- such as lyrics and music videos -- occur in the free market without the interference of consent decrees, said Brodsky. ASCAP and BMI want performance rights on the same footing. The PROs would still be bound by antitrust law, Rosen said. In BMI’s proposed changes, there would still be a rate court to settle pricing disputes, Rosen said.
BMI’s proposed “four core” rule changes would eliminate “similarly situated” rules that require the PROs offer similar terms to similar entities, the panelists said. Those rules hinder innovation and prevent the PROs from offering favorable terms for licenses in some situations, Rosen said. “Similar is not the same,” said Brodsky. IHeartMedia Executive Vice President-Business Affairs Tres Williams said protection of those rules allowed iHeart to innovate with its successful app. The rules also protect smaller stations and reduce disputes that end up in rate court, Kaplan said.
Lack of a reliable database about who owns the rights to what music makes competition more difficult, Jaffe said. Williams said BMI’s current database incorrectly labeled songs licensed by competing PRO Global Music Rights. Providing information about GMR’s licenses isn’t BMI’s job, and BMI fulfilled the requirements of the consent decrees it's bound by, Rosen said. Transparent information is required for the free market sought by the PROs, Williams said. “It is a little disconcerting."