PRS for music’s and JASRAC’s public comment on collective management rules review
Any restrictions on ASCAP or BMl's ability to administer PRS's repertoire effectively in the US will directly prejudice the royalties flowing to PRS's members and undervalue PRS's members' musical works in the US. Specifically, if the rules do not allow members to decide whether it would be more efficient to appoint ASCAP or BMI for certain types of exploitation of the performing right but not others, there is a real risk that major members will withdraw completely from ASCAP and BMI, which would result in ASCAP and BMl's repertoire becoming less valuable: this could lead to a reduction of rates achieved in the market on PRS's behalf by ASCAP and BMI and the application of higher commission rates in order to meet their costs. Clearly, this would be to the detriment of members who may continue to be represented by the US CMOs and by CMOs internationally, particularly the members of PRS.
PRS is therefore very concerned about the way in which the rules, if not revised to reflect the changing market conditions, could prohibitively restrict ASCAP and BMl's ability to license PRS's repertoire effectively in the US and prejudicially impact the inter-CMO services market to the detriment of PRS's members. PRS urges the Department to consider the relevance and the impact of the rules not only on ASCAP and BMI in the US market, but also on the inter-CMO services market and overseas CMOs including PRS. ASCAP and BMI should each be permitted to accept partial grants of rights -this is in the best interests of rightholders and will better protect and promote competition in the US. PRS urges the Department to align its thinking with the Commission and consider the pro-competitive effect of allowing rightholders to grant rights partially to CMOs: it is in the best interests of rightholders to choose the most efficient way in which to license their intellectual property (i.e. either directly or via an intermediary). Moreover the consequences of not allowing a partial grant of rights to ASCAP and BMI in the US could have a prejudicial effect on the inter-CMO services market.
ASCAP and BMI should each be permitted to participate in the licensing of rights beyond the performing right -this is in the best interests of all stakeholders and will better protect and promote competition in the US. Specifically, many publishers reorganised the way in which they were operating, and chose to appoint one or more CMOs to administer centrally the licensing of their mechanical rights for online/new media services. In parallel, it was necessary for such publishers to conclude agreements with performing right CMOs to license the performing right alongside the mechanical right in licences with online/new media services. As a result, this enhanced competition between CMOs to win mandates from the publishers, therefore incentivising CMOs to improve the efficiency and effectiveness of their services in Europe. PRS urges the Department to: (i) consider the effect of its review on CMOs that rely on ASCAP and BMI as trading partners; and (ii) ensure consistency with the approach taken in Europe, particularly given the Department's long history of cooperation with the Commission in aligning the competition laws of the US and the EU.
The Law on Management Business of Copyright and Neighboring Rights (hereafter referred to as "the Management Business Law") was enacted in 2001. JASRAC was registered as a management business operator under the Management Business Law, and continued its collective management business. Since other management business operators for music copyrights were also registered, a multiple-СMO environment emerged in the field of music copyright administration in Japan. Coinciding with the enactment of the Management Business Law in 2001 and the emergence of multiple CMOs, JASRAC introduced a system of selective partial entrustment of rights. Under this system, JASRAC members may continue to entrust all rights to JASRAC, or they may exclude any of 4 categories of rights (performing rights, mechanical rights, lending rights and print rights), and 7 categories of utilization types (recording in films, recording in videos including rental videos, recording in game software, recording in advertisements for transmission, broadcasting and cable transmission, interactive transmission, and online karaoke) from JASRAC's administration. This amendment to JASRAC's copyright trust contract allowed members to consign rights that were excluded from JASRAC's administration to other management business operators, or to administer such rights by themselves.
When JASRAC intends to set or amend its tariff rates, JASRAC is required to hear in advance the opinions of the representative of music users in the relevant category of music exploitation, in accordance with the Management Business Law. In cases where JASRAC cannot come to an agreement with the representative of music users, either party may apply for arbitration by the Commissioner of the Agency for Cultural Affairs. JASRAC members are allowed to exclude the "interactive transmission" (digital music use) usage category from their entrustment of rights, and this would include both the performing and mechanical rights involved. Because other copyright management business operators offer their own members the same choices for interactive transmissions, Japanese right holders can choose how they wish to administer their rights regarding interactive transmissions, and digital service providers can obtain the necessary licenses without confusion. JASRAC anticipates the deregulation of constraints placed on ASCAP and BMI in the US. JASRAC specifically requests the US Department of Justice to 1) allow their members to partially grant their rights to CMOs, 2) not limit their licensing to the public performance right, but to allow them to license other rights including mechanical rights, 3) allow rate-setting procedures other than through the judicial rate court, and also 4) allow them to collect public performance royalties from motion picture theater exhibitors for the right of public performance for music synchronized with motion pictures.