Royalties

The chairman of the Senate Judiciary Committee has a message for the Department of Justice as it reviews the consent decrees that govern how radio stations and others license music from ASCAP and BMI: we’re watching you. Senator Lindsey Graham (R-SC) said the Judiciary Committee has “great interest” in whether the DOJ takes steps to modify or terminate the decrees, particularly the potential impact on the music marketplace and whether a legislative response is needed in order to “maintain market stability.”

Assistant Attorney General Makan Delrahim, who heads the Antitrust Division that’s analyzing 1,300 decrees for possible termination, has said he expects they’ll give some indication of which way they are heading possibly as soon as year-end. “To be clear, the DOJ has not decided yet whether the ASCAP-BMI decrees should be modified in any way or if they should be sunset,” Delrahim said during a symposium held in September. He also said it was possible the DOJ would take no action.

DOJ attorneys are currently digesting 878 comments that were filed from both supporters of the decrees, a group made up mostly of music users like radio, and their critics. ASCAP and BMI would like to see the decrees terminated, but they have both backed an interim solution that would allow the current guidelines to be modified and then sunset at a later, unspecified date. The National Association of Broadcasters has said it would support an interim arrangement as long as it is dependent on Congress passing legislation that would put several of their antitrust protections into a new federal law. “Congress needs to be involved in this or else there won’t be the certainty that’s needed for all of the people who need to succeed in music,” said NAB President Gordon Smith during the Salt Lake City symposium.

That viewpoint appears to have the backing of Graham, whose committee oversees the Justice Department. In a letter to Delrahim last week, Graham noted there are “vastly differing opinions” on what steps the DOJ should take, if any, and whether the business models used by music users like radio would be “upended.” Graham also noted that small business owners in South Carolina don’t have the ability to directly negotiate with ASCAP and BMI, telling Delrahim he’s heard concerns from them about major changes to the current licensing regime.

“Given this broad divide among stakeholders, I have every expectation that your division will conduct a thorough review with the guiding priority of maintaining a functioning music marketplace for creators, businesses that license music, and consumers,” wrote Graham. Earlier this year Graham said he felt the current system is “functioning rather well,” a conclusion that earned him praise from businesses back at home, including from the South Carolina Association of Broadcasters.

As the radio industry waits to see what Delrahim’s next move is, Smith said the threat posed by a possible termination of the ASCAP and BMI consent decrees has become larger than the risk of Congress passing a performance royalty right on over-the-air music use. Speaking on the Inside Radio Podcast last month, Smith said the lack of a licensing framework could lead to “the Wild West and chaos” for music users like radio. He also reiterated that the NAB would be willing to work with the performance rights organizations on a compromise that would codify some of the decrees elements into federal statutes.

Listen to the Inside Radio Podcast HERE.