ASCAP, BMI Consent Decree Action More Likely From DOJ Than Congress
Antitrust Chief Makan Delrahim is more likely to act to change the ASCAP and BMI music licensing degrees than Congress is, and any move DOJ makes in that direction is likely to be an uneasy process and complicated by the presidential election, broadcast and music licensing attorneys said in interviews this and last week. DOJ held a workshop on the possibility last month (see 2007290068). “It remains apparent from the continuing attention that the Antitrust Division is paying to the issue of consent decree reform that the DOJ may act” to modify the decrees, said Weil Gotshal intellectual property attorney Benjamin Marks, who represented the TV Music Licensing Committee. “I don’t think Congress is likely to take up the issue before the election or in the short term."
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NAB and other entities argued that Congress rather than DOJ should handle any changes to the consent decrees. That’s unlikely to happen during a presidential election year and pandemic, said broadcast attorneys and songwriter advocates. Music rights are a technical issue and broadcasters and musicians have been particularly hard hit by the economic side effects of COVID-19, likely making the matter unattractive to legislators, attorneys said. ASCAP, BMI and DOJ didn't comment Monday.
Congressional inaction on the matter might suit NAB, which argued the decrees shouldn’t be altered. Changing them in the manner advocated by ASCAP and BMI would remove provisions that allow smaller broadcasters to license music without hefty legal bills and complicated contracts, said Wilkinson Barker broadcast attorney David Oxenford. “If you take away those protections, the little guy in Kansas is suddenly on his own, with no way to negotiate this.”
One thing that could lead to swift congressional action would be if DOJ moved to eliminate the accords, rather than the gradual sunset proposed by the performance rights organizations, broadcast and music licensing attorneys said. That's considered unlikely. There wouldn’t be the same urgent reaction to a five- or 10-year sunset period, Marks said.
American Beverage Licensees Executive Director John Bodnovich and Manatt Phelps songwriter attorney Jordan Bromley said DOJ hasn’t given a firm signal on whether it plans to eliminate the settlements. Other music industry attorneys said Delrahim has demonstrated an appetite to do away with older consent decrees. Delrahim spoke at length on the need for decrees to include sunsets at the DOJ workshop, and earlier this month a department request led to the termination of 70-year-old consent decrees on how movie studios distribute content to theaters (see 2008070055).
Termination would create serious instability in the market, which needs stability now because musicians are largely unemployed, Bromley said. Any adjustment to the current system could be “devastating,” he said. DOJ should give songwriters a seat at the table if the department moves to take formal action with the decrees, said Bromley. Musicians, producers and independent record labels are happy with the consent decrees, so it’s unclear what’s motivating DOJ, said music licensing attorney Kamal Moo. Since Congress has recently been active with legislation in this area -- recently passing the Music Modernization Act (see 1809260059) -- it wouldn’t be surprising to see lawmakers target the consent decrees as another objective, Moo said.
DOJ action to change or eliminate the pacts likely wouldn’t happen quickly, music industry attorneys said. Such changes would have to be approved by a judge, and on such a contentious issue, a great deal of pushback is likely, they said. There's significant opposition to material decree modification from both the music user community and from prominent songwriter advocates, said Marks. “If the DOJ were to move to dissolve the decrees, it would face opposition in court.”
If the presidential administration changes in the middle of a drawn-out process to revamp the accords, new DOJ leadership may have a different stance on changes to the decrees, attorneys said. One intellectual property attorney suggested Delrahim’s DOJ could seek to make changes to the decrees on its way out the door, but broadcast attorneys said that would likely be quickly reversed.
No Consensus
Copyright, like other policy areas, tends to change when stakeholders coalesce around a path forward. That hasn't necessarily occurred on music licensing PROs.
No clear consensus developed at the workshop among songwriters, publishers and performance rights organizations, Digital Media Association CEO Garrett Levin said. Despite extensive public comment on the matter, the case hasn’t been made that it’s in the public interest to modify or eliminate the consent decrees, he argued, saying DiMA would prefer DOJ take no action. Terminating the decrees could lead to a dysfunctional music licensing market and the threat of monopoly pricing from the two PROs, he said.
Levin noted a lack of workshop discussion on the competitive issues for the consent decrees. The reason is simple, he said: ASCAP and BMI don’t compete for licensees. Each PRO has so many rights that licensees know there's no real choice but to get licenses from them both, he said. DiMA asked to participate in the workshop, but DOJ denied the request, saying the panels were set, said Levin. He noted DiMA had about 10 days of notice before the event.
If the decrees were eliminated, ASCAP and BMI, which control about 90% of the market, would have a total monopoly, said Bodnovich: Hospitality voices weren’t represented at the workshop, which had plenty of songwriters representation. There was little notice for DOJ’s workshop, and the panels were filled with individuals representing songwriters and the recording industry, said a media and tech industry attorney. Bromley disagreed: Many panelists claimed to be representing songwriters, but the PROs and music publishers ultimately represent their own business interests, not those of musicians, he argued. Songwriters of North America, Music Artists Coalition and Nashville Songwriters Association International were the three groups that spoke on behalf songwriters at the workshop, he said.
Groups representing consumers and the broadcast, tech and hospitality industries have shown consensus that the consent decrees should be maintained (see 1908120045), said Bodnovich: The workshop showed disagreement between PROs and songwriters about the path forward for potentially replacing the decrees.