What Does the Department of Justice Ruling Mean for Songwriters and Publishers

July 13, 2016

Many songwriters and publishers feel like they’ve been kicked in the gut and thrown to the curb by last week’s Department of Justice (DoJ) ruling regarding consent decrees that govern ASCAP and BMI, the two major U.S. performance rights organizations (PROs). We’ve received many calls from writers asking how this will impact their rights, royalties and revenue. Unfortunately, there are no simple answers but it appears the ruling promotes more confusion and complexities about the future of music licensing.

One of the most highly regarded voices as an advocate of songwriter and publisher rights is David Israelite, President and CEO of the National Music Publishers Association (NMPA). Here’s an excerpt from his recent and article in Billboard.

The Department of Justice (DoJ) has dealt a massive blow to America’s songwriters. After a two year review of the consent decrees that govern ASCAP and BMI, career lawyers who were never elected nor confirmed to their positions, led by a lawyer who previously represented Google, determined that songwriters should have even fewer rights, less control over their intellectual property and be treated more unfairly than they already are. The Department ignored the voices of copyright experts, members of Congress and thousands of songwriters and delivered a huge gift to tech companies who already benefit from egregiously low rates.

It is important to note that the “performance right” is the only exclusive right (copyright owners have six exclusive rights) of song owners that is impacted by the DoJ ruling. The PROs manage this right on behalf of songwriters and publishers for music performances like radio, TV, concerts, restaurants, hotels, digital streaming, satellite radio, etc. Songwriters do not have to use ASCAP and BMI (or SESAC) to license their songs, but in practice, most do because it’s the simplest way to collect royalties.

However, the ruling does set critical precedent for several song licensing issues, as Mr. Israelite explains.

The Department has determined that no changes will be made to the current decrees. And they have also now interpreted those decrees to demand that all works must be licensed on a 100 percent basis, meaning that the traditional and logical practice of fractional licensing — or licensing only the share of a song a PRO represents – by ASCAP and BMI will be done away with.

Many think this ruling will create confusion and chaos in licensing and royalty collection and disbursement. In addition, the DoJ appears to be in direct conflict with the recommendations of the US Copyright Office, which stated that, “an interpretation of the consent decrees that would require these PROs to engage in 100% licensing presents a host of legal and policy concerns. Such an approach would seemingly vitiate important principles of copyright law, interfere with creative collaborations among songwriters, negate private contracts, and impermissibly expand the reach of the consent decrees.”

Both ASCAP and BMI leaders are opposing the ruling and indicate they will continue to pursue legal and legislative avenues to try counter the DoJ’s decision. ASCAP CEO Elizabeth Matthews writes to members,

All of us at ASCAP are deeply disappointed by the DOJ’s proposal – especially given that thousands of ASCAP  members wrote to the DOJ expressing serious concerns about 100% licensing and how it would impact songwriters’ livelihoods and creative freedom. The US Copyright Office and numerous members of Congress voiced their opposition to 100% licensing as well. We want you to know that while the DOJ has expressed their views, this is not the final outcome of this process. ASCAP strongly disagrees with the DOJ’s position, and we are carefully considering all of our options, including potential legislative and legal remedies.

The decisions of the Justice Department are not set in stone, as it is a U.S. federal court who has the final say over what becomes of the consent decree.

The 100% licensing aspect of the ruling greatly complicates the music business’s standard practices, and will take time and and more money for the PROs and publishers to implement. Chris Castle has written an insightful article about cost recovery with the 100% licensing scheme.

Simply put, 100% licensing refers to the ability of a co-owner of an undivided interest in real property to grant a nonexclusive license to allow a third party to use the whole parcel without the consent (and potentially over the objection) of the co-owners.  A co-owner relying on this rule also assumes the obligation of accounting to the co-owner and to not license at a rate that constitutes economic waste of the property.

Here is an excerpt from a statement issued by Independent Music Publishers Forum (IMPF) Board of Directors, an international community of international small and medium size music companies. “This decision will result in confusion and chaos for everyone, from music publishers, to collective rights managements organisations around the world, and licensees and sadly and ultimately for songwriters, who will suffer the most, as this new system will lead to unfair prices that do not reflect the real value of their musical works” said Pierre Mossiat, President of IMPF’s Board of Directors. “In short nothing has been fixed but everything has been further broken” he added.

Mr. Israelite further states,

This move also threatens transparency because while songwriters may have chosen to join one PRO, now their payments may be coming from another. And if each PRO can license an entire song, even if it only controls a small portion of it, then licensees may have the ability to license where rates are lowest in a royalty race-to-the-bottom.

There is no question that the final note has not yet been played. Music creators, agencies and legislative advocates will forge an even tighter alliance to counter the DoJ’s ruling and overcome the latest challenge that threatens songwriters future livelihood and the best interest of music creativity.

CCS’s Founder and CVO, Susan Fontaine Godwin is an educator and long-time member of the Christian arts community with 30 years of experience in the Christian media industry, church copyright administration and copyright management. Susan is an author and speaker and frequently writes for several Christian magazines and online publications. She serves as an adjunct professor at the University of Mobile.

About Christian Copyright Solutions: CCS’s quest is to help churches and Christian ministries “do music right.”  CCS is an expert on church music copyrights and our primary focus is providing licensing and clear educational resources to churches, as well as representation, administration and advocacy for copyright owners. Follow us on Twitter, Facebook and Youtube. The information contained herein is for informational purposes only, and is not legal advice or a substitute for legal counsel.

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