Justice Department Leaves Music Industry Consent Decrees Unchanged

Jem Aswad
·5-min read

UPDATED: In a move that brought deep chagrin to songwriters and publishers and joy to the broadcasting industry, after years of talk, the Justice Department has decided to leave unchanged the 80-year-old consent decrees that govern the public performances of music, Makan Delrahim, the outgoing Justice Department Assistant Attorney General for the Antitrust Division, announced Friday.

The music publishing community and particularly performing-rights organizations ASCAP and BMI have long advocated for changes to the decrees — which were instituted in 1941 — arguing that they are vastly outdated in the digital age and favor broadcasters to the detriment of creators. Broadcast organizations have long argued that changes would wreak havoc.

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“Throughout the Division’s investigation, many licensees expressed the view that the decrees are largely working,” Delrahim said at a webinar sponsored by the Vanderbilt Law School. “For many composers, songwriters, and publishers, ASCAP and BMI licenses provide the most meaningful way to be compensated for the public performance of their works with respect to many categories of music users.”

Delrahim said that the Music Modernization Act, which was signed into law in 2018, has already addressed licensing problems that were leaving many songwriters unpaid.

ASCAP and BMI represent approximately 90% of the public performance market, with the remainder being covered by SESAC or Global Music Rights, which are not bound by the consent decrees. The consent decrees require ASCAP and BMI to offer licenses to their entire catalog to any entity that requests one, for a fee that is either negotiated or set by a federal judge in a “rate court.”

While ASCAP and BMI are fierce competitors in most areas, they are united in saying that the consent decrees are in dire need of updating and issued a joint statement saying so in February of 2019, and made final appeals in August of that year to modernize the “outdated” decrees.

The reaction to Friday’s announcement was swift. In a joint statement, ASCAP and BMI CEOs Elizabeth Matthews and Mike O’Neill said: “While we were disappointed that no action was taken, we are encouraged to see how the DOJ’s approach to these issues has evolved. In his closing remarks, AAG Makan Delrahim recognized several important truths that we have long understood: Songwriters are the backbone of the music marketplace and must be paid fairly; blanket licensing is incredibly efficient; ASCAP and BMI are innovating to serve the needs of the industry; greater competition and not compulsory licensing is the answer; and the value of music is best decided in a free market. While BMI and ASCAP have long advocated for updating and modernizing our consent decrees, it has become clear over the course of two different reviews by two different DOJ administrations in the past eight years that modifying or terminating our decrees would be extremely challenging.

“We knew that reaching consensus would not be easy,” it continues. “It soon became clear that key industry participants could not agree on how best to move forward. Unfortunately, we also found that some were using this review to advocate for even greater restrictions in our decrees, either for their own benefit or in an effort to regulate the marketplace as a whole through BMI and ASCAP. We were concerned that the lack of consensus in the market could lead to a legislative push resulting in unwarranted government regulation of our industry in the form of compulsory licensing. In addition, our victory in confirming the industry-wide practice of fractional licensing would have been revisited. These factors would absolutely not be in the best interest of our songwriters, composers and publishers, and indeed, would represent a major step backward. Although it would have been wonderful to see our decrees modernized, we would rather they remain as they are, than see an outcome that could adversely affect music creators for generations to come.”

In a statement, National Music Publishers Association chief David Israelite said: “We appreciate the Antitrust Division has spent a great deal of time and effort reviewing the ASCAP and BMI consent decrees, however we are disappointed that DOJ chose not to update the regulations to allow for freedoms that would have greatly helped songwriters and music publishers realize the true value of their work. We understand that the PROs and the Department could not come to an agreement on broad changes and therefore allowing selective withdrawal of digital rights could not be fully considered, however we see this as a massive missed opportunity for music creators.

“Our hope is that the Biden Administration will pick up where this administration left off and take decisive action that would give songwriters and music publishers the ability to directly negotiate with the giant tech companies who continue to pay below market rates.”

In contrast, the National Association of Broadcasters said in a statement: “NAB is very pleased that the Department of Justice will not move to make changes to the ASCAP and BMI consent decrees. We appreciate the willingness of DOJ to have an open mind and to conduct a comprehensive review of all of the possible issues raised by stakeholders concerning modifying or eliminating the decrees. DOJ’s decision not to take action will ensure that ASCAP and BMI continue to fairly and efficiently license musical works in a manner that is pro-competitive.”

Senator Amy Klobuchar (D-Mn.) said in a statement: “At the start of its review, I urged the Antitrust Division to be mindful of the harmful effects that abruptly discarding old antitrust consent decrees — like the ASCAP and BMI consent decrees — could have on consumers. Lengthy reviews of the ASCAP and BMI consent decrees by this and the prior administration should be enough to conclude that leaving these decrees in place will best serve competition. I urge the Biden Administration to focus future reviews on other highly-concentrated industries to facilitate urgently needed enforcement to protect competition.”

Digital Media Association President and CEO Garrett Levin said: “We welcome the news that the Department of Justice will be maintaining the consent decrees, which means that successive Administrations have now rejected calls to alter these essential pro-consumer protections. Music licensing is complex, but throughout their existence the decrees’ protections have fostered an efficient marketplace that in turn has been critical to the resurgence and growth of the music industry.”

Delrahim’s comments come just days before his resignation becomes effective on Jan. 19.

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