ASCAP's Desire To End Antitrust Agreement Leads DOJ To Investigate Latest Collusion Between Music Publishers
from the look-at-that dept
Over the last few months, you may have noticed that ASCAP, BMI and the various music publishers have been pushing strongly to end the so-called “consent decree” around music publishing. This was an agreement from 1941 (and reviewed in 2001) limiting how performance rights organizations like ASCAP and BMI could act, given their position as a somewhat natural monopoly over the compositions they represented. The idea was to stop those companies from holding those works hostage — which is why there are things like rate setting procedures by the Copyright Royalty Board. Now, we have our problems with the CRB and the rate setting process, but there is a very real fear that ASCAP, BMI and others would make music streaming prohibitively expensive if given the chance. The whole focus on getting rid of the consent decree is to try to remove any effort to block them from jacking up their prices to ridiculous rates.
The attempt to ditch the consent decree seemed especially odd, given that just months earlier, a court had called out the clear collusion by ASCAP and a bunch of music publishers to try to artificially jack up Pandora’s rates. The details were a little convoluted, but basically certain publishers “withdrew” certain music from ASCAP, claiming they wanted to negotiate directly with Pandora. They didn’t negotiate in good faith, and basically waited right up until the deal was about to expire. They then refused to even name what songs would no longer be covered, leaving Pandora at a very real risk of streaming songs it no longer had the right to (without even knowing which songs were being “pulled.”) Because of this, Pandora was forced to sign exorbitantly high rates, which ASCAP and others then used to try to get even higher rates for others. It was clearly collusion, because while ASCAP should have been upset about publishers withdrawing music, it clearly was not. Furthermore, there were clear discussions between ASCAP and the publishers about all of this.
The end result of that case was that ASCAP lost its attempt to really jack up rates to Pandora much higher, but many people wondered how ASCAP could get away with doing that without any sort of punishment. Well… new reports say that the Justice Department is investigating ASCAP, BMI, Universal Music Publishing and Sony/ATV over possible collusion. This is being done as part of the DOJ’s review of the consent decree, but ASCAP’s decision to attack the consent decree right after a court called it out for collusion may backfire badly:
The CID requests are seeking documentation across a lot of particulars, including the effect of the consent decrees on rates, whether partial withdrawals of digital rights should be allowed, and plans to license other rights beyond the public performance rights that PROs handle today. However, a memo obtained by Billboard that was sent to employees by ASCAP senior VP of legal Richard Reimer began by noting that the CID is connected to the DOJs review of the consent decree. And, as a possible reminder to be careful of what you wish for, the DOJ is also investigating of alleged coordination among ASCAP, BMI, Sony/ATV Music Publishing, and Universal Music Publishing Group.
That aspect of the DOJ investigation was mentioned in a note to ASCAP employees telling them to “preserve all documents, whether in paper or electronic format, on all the CID-related topics.”
In the Billboard article, the publishers and ASCAP insist they’re not worried about all of this because they believe the judge in the Pandora rate setting case “got it wrong.” That’s quite a bit of hubris to have, given all of the evidence of collusion that was presented in that case. It seems quite possible that rather than ending the consent decree, as ASCAP and publishers would like, the DOJ may actually come down on all of them for some fairly serious antitrust problems.
Filed Under: antitrust, collusion, consent decree, doj, music, music publishing, partial withdrawals, streaming rates
Companies: ascap, bmi, pandora, sony music, sony/atv music publishing, umg, universal music, universal music publishing group
Comments on “ASCAP's Desire To End Antitrust Agreement Leads DOJ To Investigate Latest Collusion Between Music Publishers”
The same DoJ which took down Megaupload without due process?
Color me confident this will have an outcome in favor of those being screwed.
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Re: Re:
If it looks like a duck they’ll shoot it! (Or platypus, it all depends on point of view).
“the DOJ may actually come down on all of them for some fairly serious antitrust problems.”
It all depends on if ASCAP can negotiate some desirable back door dealings with the DOJ. You should know how it works by now, the law is just a front for the personal advancement of politicians and regulators.
It wont happen and here is why…DOJ just wants their cut of the increased profits.
Off the mark
Trying to make Pandora look like the good guy here is hysterical. BMI didn’t love the withdrawal but it was better for them than a wholesale withdrawal by EMI as the first mover. ASCAP had to follow suit to allow partial withdrawal. All publishers are asking for is a market rate. The problem is the publishers are not themselves monopolies but they’re treated that way by the DoJ because of the consent decree. I believe the DoJ will reform the consent decree to permit partial withdrawal because doing so furthers the DoJ’s anticompetitive objective and the consent decree is no longer serving it’s purpose and is enabling Pandora massively better rates. Tim Westergren takes home more money than all publishers combined.
Re: Off the mark
Let’s face it, neither Pandora (& other broadcasters/services) nor the publishers are the bad guys here. They’re all basically being forced into fighting over paltry table scraps by the greedy, manipulative artists who exercise a disproportionately large influence over the industry. These so-called “creators” just love to rake in the lion’s share of the profits despite the fact that their contributions to the overall business have dwindled to almost nothing over the years.
Re: Re: Off the mark
Sarcasm or insanity. Can’t quite tell.
Re: Re: Re: Off the mark
I aimed for some overtly nonsensical prose… but couldn’t seem to make it ridiculous enough not to be considered Poe-etry.
Re: Off the mark
“Trying to make Pandora look like the good guy here is hysterical.”
and you’re just a shill.
“All publishers are asking for is a market rate.”
Then lets abolish copy protection laws and see what the market rate is.
Your statement is sorta disingenuous. What you mean by ‘market rate’ is all publishers are asking for is to conspire to raiser their prices as much as they can so that they can take the lions share of the profits for contributing absolutely nothing while allowing everyone else (like Pandora and the artists) to do all the work of producing everything and distributing it to customers. All publishers want is to charge everyone else monopoly prices for being worthless middlemen. That’s what you mean by ‘market rate’.
“The problem is the publishers are not themselves monopolies but they’re treated that way by the DoJ because of the consent decree. “
Copy protection laws are monopoly laws and when they hold the copy protection over something they are monopolists.
“is no longer serving it’s purpose and is enabling Pandora massively better rates.”
You are really on crack or something.
The purpose of the consent decree wasn’t to help protect the profits of publishers and to ensure that they (the parasite monopolist publisher that contributed nothing and simply gets paid for holding the copy protection) can fully milk artists, Pandora, and others (those that contribute something) out of every penny they can. Just because Pandora earned some money doesn’t mean that the parasite middlemen are somehow entitled to gouge as much of it as they can. The purpose of the consent decree is to prevent publishers from colluding to fully gouge everyone else (ultimately consumers). To that degree it is serving its purpose. Preventing publishers from colluding to overcharge Pandora and artists so that others (those that contribute something) can make more without getting scammed is the purpose that it’s supposed to serve. Your problem is that it’s serving its purpose.
“Tim Westergren takes home more money than all publishers combined.”
[citation needed]
Re: Off the mark
Apologies for the long reply, but this is a subject that I am very very concerned about.
First of all, I’m absolutely loving the fact that this tactic backfired. Allowing partial withdrawals from ASCAP or BMI would be catastrophic for the artists they represent. That’s why actual songwriters (as opposed to the major publishers) were opposed to it.
Here’s the relevant passage from the ASCAP rate court decision (which should really be read in its entirity):
Now to Jon’s comment.
BMI didn’t love the withdrawal but it was better for them than a wholesale withdrawal by EMI as the first mover. ASCAP had to follow suit to allow partial withdrawal.
I haven’t read the BMI ruling (couldn’t find a copy online), but in ASCAP’s case, it was even worse than that. The major publishers were so devoted to being monopoly players, that they threatened not just to leave, but to sue ASCAP if it closed a deal with Pandora:
However, I don’t see any indication that the BMI withdrawals had anything to do with it. Like I said, I don’t have a copy of the BMI decision, so I don’t know the dates; but I would guess that the major publishers had been blackmailing both PRO’s simultaneously.
All publishers are asking for is a market rate.
Yes: they are asking for a completely unfair market rate. One that is set exclusively by the publishers, and that Pandora (and others) have absolutely no chance to negotiate.
More quotes from the ASCAP rate court decision:
This was not even remotely close to negotiating a “fair market rate.” It was blackmail, pure and simple.
The problem is the publishers are not themselves monopolies but they’re treated that way by the DoJ because of the consent decree.
First of all: The DOJ’s consent decrees govern ASCAP and BMI, not the publishers themselves. And they are monopolies.
If they were not, then Pandora (and radio stations, and bars, and rock clubs…) could negotiate with competing PRO’s for the same material. So, if you wanted to play “All the Single Ladies” on your jukebox, you could choose from ASCAP, BMI, or SESAC (or anyone else) for the lowest rate to play that particular song.
Of course, that’s not how it works. And that is because copyright itself is a monopoly. It is a monopoly on a single work, but since it is transferrable to a PRO (in this case), that PRO has a monopoly on all of the works that are transferred to it.
This is completely uncontroversial, and it’s why ASCAP and BMI had to agree to consent decrees in the first place: if they didn’t, they would violate the Sherman Antitrust Act.
And this is why there cannot possibly be a “fair market price” for copyrighted material: copyright is simply not part of an open market. Again, from the ASCAP decision:
The publishers themselves form an oligopoly. They effectively become a monopoly when they collude to raise prices (instead of competing to lower prices). That is clearly what happened with Pandora.
And Pandora (and all the rate court judges) are not the only ones that are concerned about this. This is from SiriusXM’s comments to the Library of Congress (PDF):
I believe the DoJ will reform the consent decree to permit partial withdrawal because doing so furthers the DoJ’s anticompetitive objective
Unless you consider large publishers with monopolies over their own music colluding to selectively raise rates to be “competitive,” I believe you’re wrong. If anything, the DOJ should expand the consent decrees to cover the publishers themselves, and not just the PRO’s.
and the consent decree is no longer serving it’s purpose and is enabling Pandora massively better rates.
“Massively better rates” than who? Pandora pays higher rates than comparable services. For example, iHeartRadio pays lower rates than Pandora does for streaming over the Internet. (Pandora pays 1.85%, iHeartRadio pays 1.70%.)
Tim Westergren takes home more money than all publishers combined.
This is a complete joke. According to my back-of-the-envelope calculations, Pandora paid roughly $8 million to publishers in 2013 (1.85% of total revenue, which was about $427 million). There’s no way that Westergren takes home that much in a year.
And that’s just coming from Pandora (and doesn’t include sound recording royalties). In 2013, ASCAP paid out over $851.2 million in royalties, and BMI’s income exceeded $944 million. In other words, both organizations brought in roughly two times Pandora’s total revenue.
So, no. Westergren does not make more than “all publishers combined.” He does not even make more than what Pandora pays to “all publishers combined.” Nice try, though.
Re: Re: Off the mark
Jeesh man, after a blistering counter like that, the least you could do is point them towards the nearest burn center.
Re: Off the mark
Cocksucking must be a lucrative business, eh?
DOJ won’t do shit to MAFIAA ASSBAGS.They will just offer to make a bigger bribe I meant donation as they call their bribery.
I wouldn’t put too much weight on the Pandora ruling. The judge didn’t have an IP industry sock puppet like Joe Biden interfering with his work.
DoJ doing their jobs? Yeah, I’ll believe it when I see some convictions, as right now I expect nothing more than some slapped hands, and maybe some low level employees offered up as the ‘guilty parties’ if it even reaches that point.
Publishers don’t get their rights out of nowhere. Songwriters (not artists…it’s an important distinction) convey their rights to publishers because it enables them to make more money through better collection, procured placements, etc. If publishers were worthless middlemen the business wouldn’t be sustained by songwriters. It’s the writers choice and there’s a reason they do it. It’s the same reason so many songwriters appeared on Capitol Hill rallying for things like the songwriter equity act. If you’re fighting for songwriters then you want to fight for the publishers in respect of the ability to negotiate better rates. As against Pandora, songwriters interests are 100% aligned with the publishers that represent them. This seems to be the primary disconnect you have from reality. And you’re right in that copyright laws are legal monopolies but without incentivizing songwriters financially there would be substantially less quality music. The objective of the consent decree isn’t to prevent all copyright holders from negotiating fairly. The point of the consent decree is to keep ASCAP/BMI from flexing its muscle and all US repertoire is licensed by them or Sesac. By enabling publishers to withdraw certain rights they become necessarily less anticompetitive because they only represent their catalogs (and truthfully the co publishers can license 100%). We are talking market rates here because any other industry is allowed to negotiate without their hands tied. I don’t personally object to the consent decree but I do object to the denial from the court to allow publishers to selectively withdraw rights. It’s in publishers interest (and trying to do so is part of their duty to their songwriters to get better rates for their songwriters). You argue the purpose of the consent decree is to keep publishers from colluding….no it’s not….that’s federal antitrust law…the purpose is to keep each of ASCAP and BMI from bullying the market. Allowing partial withdrawal does that. Keep in mind songwriters that aren’t artists don’t make money other than through their publishing. You don’t seem to understand that. I’ll look for the report again about Tim but I’m not prone to giving citations in comments. Feel free to do a search of songwriters opinion of pandora. If you’re concern is the artists…that’s recorded music and it’s likely you don’t understand the difference. That’s who takes home the lion’s share from the copyright holders perspective and that is a market rate not set by any consent decree. So the people only making money on their publishing (not touring, merch, etc) get the shaft because the DoJ hasn’t stepped in to revise the consent decree to reflect modern times.
Hubris, or not
It should be nothing but hubris for ASCAP and the others to think they could have a verdict go against them on grounds of collusion, and minutes later demand the consent decree be ended.
The sad thing is that, given the government we’ve seen recently, it won’t surprise me if the result is termination of the consent decree and a final ban on Pandora.
So is it really hubris? Or do they have the fix in place?
Re: Hubris, or not
If by ‘fix’ you mean, ‘enough bought and paid for people in the right positions to be sure that they’ll never face any real consequences for their actions’, then the answer is mostly likely ‘Yes, yes they do’, and that is why they are so confident.
i’d given an earlier response that seems only now to be published so feel free to comment on that as well.
the only thing i will mention is that when i mentioned the tim westergren/publishers pay, considering this is a topic on pandora, i obviously meant pay in respect of pandora. for him to build a business on the backs of the rights of others (SONGWRITERS and publishers), the least he can do is pay rights holders more than he pays himself. the best i was able to reobtain was the following (posted by a SONGWRITER).
https://twitter.com/thevandykeparks/status/467421279608254464
(the facts I’d seen indicate the publisher’s share of the ASCAP/BMI $ is less than Tim’s salary)
Trust me…PLENTY of songwriters are against Pandora and they lobbied on Capital Hill to that very effect. Of course you wouldn’t know that.
Also, the BMI issue wasn’t about any case….it was bc the consent decree says all or nothing…EMI years ago said “ok, nothing.” BMI scrambled to do what they could to keep EMI to keep BMI’s own catalog as big as possible…that’s why they (and ascap) permitted digital withdrawal. You’re arguing in theory when you have no notion of what’s actually happening. Of course that’s why you’re here on comment boards instead of giving actual legal analysis.
Market rate means negotiated. Why wouldn’t pandora be able to negotiate? Of course when publisher’s leave the PRO they negotiate a higher rate…that’s not blackmail, that’s fair market not constricted by monopoly rules imposed on them when they are not deemed by the DoJ to be monopolies. Copy/pasting whole blocks of text does nothing to further your argument. I didn’t argue PROs aren’t monopolies (of course they are)…all I said is that selective withdrawal furthers the anticompetitive spirit to put the rights in the hands of a greater number…PROs have some (indies), majors keep their own…thus if publishers can withdraw digital rights, it is de facto less competitive. You confuse so many issues that I’m silly to be wasting my time. If there is collusion….that’s different (hint, there’s not). It’s not collusion to follow the lead of a market leader. EMI withdrew and everyone else said “hey, we want to do that too.” Why withdraw? To get better rates? Who benefits? The Songwriters (and the publishers). that is completely uncontroversial. Truth is, in the end, if the DoJ doesn’t permit selective withdrawal, publishers will completely withdrawal and in the long run it’ll benefit songwriters and publishers alike.
Karl, at least it was reasonably well reasoned. That One Guy/AnonCow, wish I could say the same.