Anti-trust! Unfair competition! Monopolies! Consent Decrees! We know many folks are clamoring about it due to “Big Tech”, but just exactly what does this have to do with the music industry?
In 1941, the United States, through the U.S. Department of Justice, brought lawsuits in the Southern District of New York against ASCAP and BMI to address unfair competition arising from the market power these public performance organizations held as a result of the public performance rights they administered on behalf of their member songwriters and music publishers. The actions were filed under what is commonly known as the Sherman Anti-Trust Act, designed to prevent the collusion among companies to hold a monopoly in vital segments of the economy, including price-fixing, simultaneous actions that adversely impact consumers, and other actions that restrain trade.
To resolve the lawsuits, ASCAP and BMI entered into Consent Decrees with the U.S government whereby they were ordered to grant non-exclusive licenses to use musical works for each of the performing rights organization’s respective catalogs, and that the licensing would be monitored by the DOJ and if needed, the district court to assure that there was fair competition. Both Consent Decrees have been amended since the entry of the orders in 1941 upon a review of their operation and effectiveness in the music industry marketplace. ASCAP’s decree was last amended in 2001, and BMI’s was last amended in 1994, even thought DOJ reviews have occurred in other years.
The U.S. Justice Department generally invites comments from interested parties when it conducts a review in order to determine if the Decrees continue to uphold competition. Typically, songwriters, publishers, and other industry-related parties such as the National Association of Broadcasters will render comments for the DOJ’s consideration.
In 2019 such comments were invited to determine, among other things, whether the Decrees adversely impact competition, whether termination of them would serve the public interest, and whether any modifications would enhance competition. Songwriters and publishers had hoped to be able to exercise more free market control over their works, particularly in the digital space. The entire music industry hinges upon the creation of musical works, and those writers and publishers believe they are not being fairly compensated for the use of their works by digital and terrestrial platforms that profit unfairly from their works. In the past few years, writers and publishers advocated for fractional licensing rather than full-work licensing by one performing rights organization without regard to the writers/publishers’ affiliation with ASCAP or BMI. Writers and publishers also wanted to be able to withdraw works for certain users, such as denying licensing to digital streaming services and requiring direct license negotiation with writers and publishers.
This week the DOJ ended its review without taking any action, citing, in part, the inability to meet in person due to COVID-19 restrictions. (What? No Zoom account like the rest of us?) In other words, the status quo remains, likely frustrating both ASCAP and BMI who have been governed by the Consent Decrees for 80 years. The DOJ seems to think that the public has come to rely on the Consent Decrees rather than the free market. While acknowledging that the Consent Decrees should not continue in perpetuity (aka forever!), the DOJ took no action, leaving both ASCAP and BMI bound by the Consent Decrees, while leaving other performing rights organizations to operate in the marketplace, free of the judicial control.
Both BMI and ASCAP issued open letters, expressing their disappointment but some optimism that at least the outgoing Assistant Attorney General recognized that control in perpetuity is unacceptable. For many publisher and writers, however, 80 years already has been “perpetuity” to them. To read the DOJ decision to not act, click here: https://www.justice.gov/atr/page/file/1355391/download