ru   en  

Independent Copyright Management Consulting



Free Licences



previous news

next news

USA DOJ decision concerning collective management rules review

The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) are “performing rights organizations” (PROs). PROs provide licenses to users such as bar owners, television and radio stations, and internet music distributors that allow them to publicly perform the musical works of the PROs’ thousands of songwriter and music publisher members. These “blanket licenses” enable music users to immediately obtain access to millions of songs without resorting to individualized licensing determinations or negotiations. But because a blanket license provides at a single price the rights to play many separately owned and competing songs – a practice that risks lessening competition – ASCAP and BMI have long raised antitrust concerns.

At the request of ASCAP and BMI, in 2014 the Antitrust Division of the U.S. Department of Justice opened an inquiry into the operation and effectiveness of the consent decrees. In the course of the Division’s investigation, the Division solicited two rounds of public comments regarding the consent decrees and met with dozens of industry stakeholders. The Division evaluated during its investigation whether various modifications to the consent decrees requested by stakeholders were necessary to account for changes in how music is consumed today. During the discussions surrounding these requested modifications, it became apparent that industry participants had differing understandings of whether the PROs’ licenses provide licensees the ability to publicly perform, without risk of copyright infringement, all of the works in each of the PROs’ repertories. The requests for modifications therefore required the Division to examine the question of whether the consent decrees obligate ASCAP and BMI to offer “full-work” licenses.

The Division has now concluded its investigation and has decided not to seek to modify the consent decrees. As discussed in detail later, the consent decrees, which describe the PROs’ licenses as providing the ability to perform “works” or “compositions,” require ASCAP and BMI to offer full-work licenses. The Division reaches this determination based not only on the language of the consent decrees and its assessment of historical practices, but also because only full-work licensing can yield the substantial procompetitive benefits associated with blanket licenses that distinguish ASCAP’s and BMI’s activities from other agreements among competitors that present serious issues under the antitrust laws. Moreover, the Division has determined not to support modifying the consent decrees to allow ASCAP and BMI to offer “fractional” licenses that convey only rights to fractional shares and require additional licenses to perform works. Although stakeholders on all sides have raised some concerns with the status quo, the Division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact.

The Division recognizes that its views of the consent decrees’ requirements and the nature of the PROs’ licenses are not shared or supported by all industry participants. One year period should allow stakeholders to resolve any practical challenges relating to complying with the full-work licensing requirement, including the identification of songs that can no longer be included in ASCAP’s or BMI’s repertories because they cannot be offered on a full-work basis or the voluntary renegotiation of contractual agreements between co-owners to allow ASCAP or BMI to provide a full-work license to the song.

Many musical works have multiple authors. Under the copyright law, joint authors of a single work are treated as tenants-in-common, so “[e]ach co-owner may thus grant a nonexclusive license to use the entire work without the consent of other co-owners, provided that the licensor accounts for and pays over to his or her co-owners their pro-rata shares of the proceeds.” Copyright holders may, however, depart from the default rules under the Copyright Act. There are therefore at least two possible frameworks under which PROs may license works with multiple owners belonging to multiple PROs. Under a “full-work” license, each PRO would offer non-exclusive licenses to the work entitling the user to perform the work without risk of infringement liability. Under a “fractional” license, each PRO would offer a license only to the interests it holds in a work, and require that the licensee obtain additional licenses from the PROs representing other co-owners before performing the work.

The PROs proposed three significant modifications: first, to allow publishers to partially withdraw works from the PROs, thereby preventing the PROs from licensing such works to digital music users; second, to streamline the process by which fee disputes are resolved; and, third, to permit the PROs to offer licenses to rights other than the public performance right, particularly for users who also need a performance license. Music users proposed additional changes, in particular to promote increased transparency and clarify rules surrounding “licenses-in-effect,” i.e., how withdrawals from a repertory affect the scope of licenses granted by the PROs.

As the Division considered the implications of these proposed changes, particularly partial withdrawal, stakeholders on all sides raised questions about the treatment of multi-owner works. Music users claimed that the PROs had always offered licenses to perform all works in their repertories, whether partially or fully owned. Rightsholders, by contrast, claimed that the PROs had never offered full licenses to perform fractionally owned works. Historically, the industry has largely avoided a definitive determination of whether ASCAP and BMI offered full-work or fractional licenses because the vast majority of music users obtain a license from ASCAP, BMI, and SESAC and pay those PROs based on fractional market shares. These practices made it unnecessary, from both the user and rightsholders perspective, to sort out whether the ASCAP and BMI licenses are full-work or fractional; users have held licenses that collectively cover all works and rightsholders have been paid for their works by their own PROs without having to worry about accounting.

2016 Kondrin
All rights reserved