DOJ

As the Department of Justice winds down its review of the consent decrees governing ASCAP and BMI without recommending any changes—to the cheers of broadcasters—the performance rights organizations are signaling they aren’t ready to give up their battle to have the guidelines updated.

“While the DOJ has expressed their views, this is not the final outcome of this process,” ASCAP chief executive Elizabeth Matthews says. “ASCAP strongly disagrees with the DOJ’s position, and we are carefully considering all of our options, including potential legislative and legal remedies,” she writes in a note to her company’s songwriters.

A team of legal experts from ASCAP, BMI and other music industry stakeholders is coordinating a response. They along with other players—including the Radio Music Licensing Committee and the National Association of Broadcasters—will meet with the DOJ Antitrust Division this week for a formal update. While the Department of Justice hasn’t formally announced it will close the nearly three-year investigation into the consent decrees, both ASCAP and BMI representatives have said that’s what they were told in meetings before the July Fourth holiday.

Matthews says she is also “deeply disappointed” in the DOJ’s proposal to tack on a new requirement that both ASCAP and BMI license all songs in their respective repertories on a 100% basis. That means any of the rights holders in a song can license the entire song even if not all the songwriters are represented by the same performance rights organization and they split the revenue among themselves.

Matthews thinks that would hurt songwriters’ ability to make a living while limiting their creative freedom. “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,” she says. BMI president Mike O’Neill has expressed similar concerns.

Any victory lap may be premature for broadcasters, but AM/FM radio had lobbied Justice to keep the decades-old consent decrees as they are, arguing they’re still needed to provide “important protections” against the “inherently anti-competitive features” of ASCAP and BMI licensing.

RMLC executives are “guardedly optimistic” about the direction the DOJ is headed and expect to have a better reading on the situation after they meet with government attorneys this week.

Broadcast radio pays ASCAP and BMI roughly $150 million a year in royalties and that figure won’t be immediately affected by the DOJ decision. But it may impact future negotiations and payments. The RMLC has said the consent decrees prevent the use of “gun to the head licensing tactics” while empowering the federal courts to act as a rate-setting court when the industry cannot reach an agreement with ASCAP and BMI.

Although it appears broadcasters will emerge from the review in a better position, it may be a short-lived victory. After meetings with government lawyers Matthews says the DOJ may “revisit” the performance rights organizations’ requests to update the consent decrees “after a transition period” when the impact of the 100% licensing requirement has become clear.

While the jury may be out for ASCAP and BMI, the digitally focused public interest group Public Knowledge is welcoming the DOJ move toward mandating all-or-nothing blanket licenses. It argues it will prevent the performance rights groups from withholding select music under what’s known as fractional licensing.

Raza Panjwani, policy council at Public Knowledge, says voiced antitrust concerns have only gotten louder in recent years as music industry titans grew bigger with recent acquisitions, such as Universal Music Publishing buying BMG Publishing for $2.1 billion and Sony/ATV buying EMI Publishing for $2.2 billion. “Antitrust protections should not be removed at a time when the music publishing industry is more concentrated than ever,” he says. “The state of the marketplace and recent bad behavior by the publishers have made it clear granting the music publishers the changes they requested would serve as a green light for additional abuse.”

Panjwani believes songwriters will benefit from a diversity of outlets playing their songs, adding, “The ultimate winner is the public.”