The status quo for music licensing is far from perfect, but it works
The U.S. Justice Department last week concluded its multiyear review of consent decrees for the two largest performance rights organizations (PROs), the American Society of Composers (ASCAP) and Broadcast Music Inc. (BMI) — two organizations that handle licensing for the vast majority of music in the United States.
Instead of updating the decrees to align with the demands of one side or the other in the ongoing war between publishers and digital streaming services, the DOJ punted – declaring that that’d take a pass.
The decision has prompted various observers, including some members of Congress, to declare the sky is falling. Drawing particular attention as an especially contentious aspect was the DOJ’s clarification of an obscure issue for how works with multiple authors are licensed.
When a song is produced, it often has multiple songwriters. Take for example, Rihanna’s latest single, “This Is What You Came For,” which was written by Calvin Harris, and Nils Sjöberg (Taylor Swift’s Swedish pseudonym). The publishers for this track are Sony and Westbury Road. Swift/Sjöberg is a member of BMI and Harris is a member of ASCAP.
Without the DOJ policy in place, co-authors in this kind of arrangement would have the ability to veto licensing for the entire work. And with the lack of clarity about who owns what music, this could create all kinds of liability problems for small businesses like bars and restaurants that just want to play songs.
More recently, a bipartisan group of congressmen (including my former boss, Rep. Blake Farenthold, R-Texas) sent a letter to the DOJ supporting “100 percent licensing.” The letter makes an important point about how we need to keep the market working. By allowing for “split” licensing, the music marketplace would become hamstringed by the uncertainty of figuring out who owns what and by increased transaction costs for contracting with multiple parties per work.
Even if the current system isn’t perfect (and indeed, it has been nothing like a free market for decades), it basically works. If we pull out one piece of this Rube Goldberg machine of excessive government intervention to satisfy one stakeholder or another, the whole thing may come crashing down under its own weight.
Update (Aug. 11, 11:22 a.m. ET) : In response to BMI’s pre-request motion last week to U.S. District Court Judge Louis Stanton of the Southern District of New York (which has jurisdiction over the PRO’s consent decree), the DOJ submitted its own letter Tuesday defending their interpretation of the decree. BMI later released a statement stating they “fully expected the DOJ to disagree,” but “were surprised by the distortion and misinterpretation of statements” made during the negotiations.
Update (Aug. 30, 4:05 p.m. ET) : Texas Gov. Greg Abbott sent a letter yesterday to U.S. Attorney General Loretta Lynch urging her reconsider the U.S. Department of Justice’s decision on the consent decrees. Among other things, he asks Lynch for a new amendment to the decrees that would impose fractional licensing.