Updated: Music Publishing Industry Concerns Grow Following Department Of Justice Ruling

Updated 8:15 a.m.: ASCAP CEO Elizabeth Matthews has released a statement regarding the Department of Justice’s ruling. Her full commentary is published below.

The Nashville music publishing community responded with disappointment, shock and surprise when the Department of Justice unexpectedly introduced a 100 percent licensing model involving PROs.

The decision on 100 percent licensing means that a song co-written by an ASCAP songwriter and a BMI songwriter would be available to license with approval from just one PRO. It also means that if a songwriter owns only a portion of the song, he or she can license the full song, as long as that songwriter ensures the other credited writers are getting paid. Under the current system, known as fractionalized licensing, each copyright owner in the song takes care of licensing their portion.

Meanwhile the ruling declined requests from major publishing companies to have a right to negotiate licensing rates with digital music providers like Pandora and Spotify. The original consent decree was enacted in 1941, and pertained specifically to ASCAP and BMI, but the music industry has lobbied for the last two or three years to modernize the law. Their requests were all denied in the ruling.

Technically, both PROs must consent to the changes. The next step is approval from federal rate court judges.

Following the announcement of these decisions on Wednesday (June 29), BMI President & CEO Mike O’Neill, Sony/ATV Music Publishing President/CEO Martin Bandier, and Bart Herbison and Lee Thomas Miller from Nashville Songwriters Association International (NSAI) offered statements expressing their disappointment.

Elizabeth Matthews, CEO, ASCAP:
Yesterday, ASCAP and BMI met jointly with the Department of Justice Antitrust Division to hear the government’s proposal regarding our respective consent decrees, which have been under formal review for nearly three years.

As several news reports have mentioned, the DOJ’s current proposal would require that ASCAP and BMI license all songs in our respective repertories on a 100% basis, ending the long-standing industry practice of fractional share licensing.

Unfortunately, the DOJ indicated that because of the complexities of the transition to this 100% licensing requirement, it will not consider the updates we requested to our consent decrees at this time but, instead, may revisit those issues after a transition period.

We strongly disagree with this view and we are disappointed that the DOJ has chosen to focus on this issue, which was not raised by any of the parties to the decrees. Rather than fostering more competition and innovation in the modern music marketplace, we believe that this approach will only create confusion, chaos and instability, harming both music creators and users. Even more troubling is the fact that the government chose this path, despite the fact that more than 15,000 songwriters and composers, as well as the US Copyright Office, members of Congress and others in the industry, registered their strong opposition to 100% licensing with the DOJ.

ASCAP, BMI and key industry stakeholders each have a team of legal experts evaluating this proposal, and we are considering all options, including legislative and legal remedies.

ASCAP takes great pride in being the only PRO owned and run by its music creator members, and we will proceed in a way that is best for our members – the songwriters, composers and publishers who are the foundation of the music industry – and in a way that moves the industry forward.

Mike O’Neill, President & CEO, BMI:
Yesterday, BMI and ASCAP met with the Antitrust Division of the Department of Justice to hear its proposal regarding our respective consent decrees. After almost three years of deliberation, the DOJ is recommending no changes to the current decrees. In addition, it has determined that the PROs must follow a 100% licensing model, a practice that has never been the industry standard and one that presents numerous challenges for the marketplace. We have informed the DOJ that we are evaluating its proposal and will get back to them in the near term.

We are disappointed with the DOJ’s recommendation, which after years of hard work and discussion brings us no closer to much-needed consent decree reform than when we started. Instead, the DOJ chose to address only the issue of 100% licensing, a concept we never raised and one that the marketplace has worked out on its own over the last half-century. We are surprised that the DOJ feels it needs to restructure a world that is efficient into one that we believe won’t be. We are also extremely disappointed that the DOJ did not take in to account the nearly 13,000 BMI songwriters who strongly voiced their concerns over a shift to a 100% licensing model and the creative and financial impact it would have on their ability to create music.

While we had hoped for a different outcome, we will continue to make every effort to reach a mutually agreeable solution with the DOJ. The DOJ realizes that change of this magnitude is not an easy process and it intends to give the PROs at least a year to work through the challenges presented by its proposal. We will evaluate all of our options consistent with our core mission to protect the value of music and the creative freedom of our songwriters top of mind.

Bart Herbison, NSAI Executive Director
“This would create Armageddon in the professional songwriter community. Since one performing rights society does not hold information on co-writers who are members of other societies, there is no effective way to make sure those co-writers are paid. Administrative costs will soar and there is a strong likelihood that songwriters may now only write with songwriters from the same performing rights society.”

Lee Thomas Miller, NSAI President:
“If accurate, this is unimaginable and the worst possible outcome for songwriters. Earlier this year in Washington D.C., I explained to DOJ that our profession was already decimated and how mandating 100% licensing could put the final nail in our coffin. I am stunned and sickened. DOJ did not take the impact on songwriters into account when issuing this ruling.”

Martin Bandier, Chairman and CEO of Sony/ATV Music Publishing:
“We are incredibly disappointed by the unjust way the Department has decided to interpret the consent decrees. Its decision is going to cause a tremendous amount of uncertainty and chaos in a market place that has worked well for years and will adversely impact everyone in the licensing process, including PROs, licensees, music publishers and most of all songwriters who can ill afford to hire lawyers to figure out their rights under this inexplicable ruling. The decision raises more questions than answers.”