[Update]: ASCAP Says District Court Decision Could Threaten Viability

[Update]: ASCAP President and Chairman Paul Williams issued the following statement regarding ASCAP’s submission of public comment this week, as part of the DOJ’s review of the ASCAP and BMI consent decrees:

“ASCAP supports the ongoing consent decree review process at the Department of Justice, and we welcome the opportunity to update our music licensing system to better reflect how people listen to music today. These issues are both urgent and complex, and the volume of comments submitted speaks to that. Everyone agrees that the music landscape has shifted dramatically. Songwriters understand that their futures are at stake and that updating the consent decrees is critical for them. Some music users have found ways to exploit this outdated system. And not surprisingly, they are among the first to defend that status quo. At the end of the day, ASCAP believes the U.S. must modernize music licensing in order to preserve the benefits of collective licensing to businesses that license music, give consumers greater access to the music they love, and allow the more than 500,000 songwriters, composers, and music publishers we represent to be compensated for the true value their music brings to the marketplace.”

ASCAP’s submission to the DOJ outlines three critical updates to the consent decree that we believe will make the system work more efficiently and effectively for music creators, licensees and listeners in the digital age:

• Allowing ASCAP to accept a limited grant of rights from its members, meaning ASCAP is able to license certain uses while the rights holders handle others directly. Allowing greater flexibility is necessary to hold the system together.
• Replacing rate court with a faster, cheaper dispute resolution process.
• Permitting ASCAP to offer all the rights in a music composition a licensee needs to operate their business – something that ASCAP’s competitors are already free to do.

[Original post, Aug. 5, 2014]:

On July 28, ASCAP filed its opening brief with the Second Circuit Court of Appeals in the Pandora litigation. On Monday, Aug. 4, the brief was unsealed. The brief asks the appellate court to reverse both the district court’s summary judgment ruling, and to either adopt ASCAP’s license fee proposal as described in the brief, or to reverse the district court’s rate determination and remand, and adopt a rate that reflects all arm’s length benchmark agreements.

“This is an appeal from two district court decisions that, if not reversed, threaten the viability of the American Society of Composers, Authors and Publishers (“ASCAP”), this nation’s oldest and largest performing rights organization (“PRO”). Such an outcome would have a profoundly negative effect on songwriters, music publishers and music users themselves, disrupting the marketplace for the licensing of music performing rights that has functioned for many decades as a result of the well-established efficiencies provided by an ASCAP license,” the brief began.

The brief claims that the district court’s decision to grant partial summary judgment to Pandora Media, Inc. erroneously concluded that the ASCAP consent decree precludes ASCAP members from withdrawing from ASCAP the right to license their musical works to some new media services. Additionally, the brief claims that the second decision set a below-market 1.85 percent of revenue royalty rate for Pandora’s use of ASCAP’s repertoire for the period of 2013 through 2015.

“These two decisions, taken together, effectively re-write the consent decree, and arbitrarily depress ASCAP license rates below the rates that would be obtained in a competitive market, leaving ASCAP members who seek competitive market rates from new media services, such as Pandora, no alternative but to resign from ASCAP.” the brief states.

“ASCAP believes that the district court’s summary judgment misinterprets the ASCAP consent decree and deprives ASCAP’s members of rights expressly granted to them by the Copyright Law,” ASCAP’S EVP and General Counsel Elizabeth Matthews says. “With respect to the district court’s rate determination, ASCAP’s brief argues that the court set a below-market price for Pandora’s license, resulting from the court’s failure to use recent direct licensing deals as relevant benchmarks. The district court’s decisions leave music creators at serious risk of consistently being compensated at rates that are below the fair market value of their work. The decisions also risk undermining the benefits that the more than 500,000 songwriters, composers and music publishers ASCAP represents, as well as thousands of music users, enjoy from a robust and efficient collective licensing system.

“Songwriters rely on ASCAP to ensure they are treated with fairness and respect for the value of their creative work in the marketplace and for the certainty that comes with the benefits of collectively licensing their works,” Matthews adds. “We believe the district court’s decisions threaten the very future for all of ASCAP’s members, and that’s why we’re appealing this decision and leading this fight on their behalf.”

Meanwhile, the Department of Justice is reviewing the ASCAP and BMI consent decrees.