DOJ Makes Smart Decision On Music Licensing... Music Publishers Completely Lose Their Shit

from the calm-down-people dept

For the past couple of years now, the Justice Department has been exploring the so-called "consent decree" around music publishing. This was an agreement, first made in 1941, and then reviewed in 2001, on how music performing rights organizations (mainly ASCAP and BMI) could operate without violating antitrust rules. Without such consent decrees, there was a quite reasonable fear that the performing rights organizations (PROs) would abuse their monopoly positions. This is not a theoretical argument. If you look around the globe, there are many, many, many, many, many stories of these organizations behaving badly.

In this case, ASCAP and BMI had been whining that because of those darn internet companies not paying enough, they need to get rid of the consent decree, mainly so that they can do more to jack up rates (there's more to it, but the end result is they want to be able to withhold rights to force rates up). Of course, in opening up this can of worms, they also got the DOJ to start looking more closely at other practices, including an exploration into so-called split works or "fractional licensing." The details here can get confusing, but in short: when a work has multiple copyright holders, many have argued that you need to get a license and/or approval from every copyright holder. But if you look at the legislative history of the 1976 Copyright Act, legislators made it clear that under the act, they intended to make it clear that any copyright holder in a work with multiple authors had the right to license the whole work.

And now... the DOJ has agreed. It issued an announcement with two key points: it would not take away the consent decree and it said that the law requires "full work" licenses, meaning a single copyright holder can grant a license for the entire work. This is a good thing. It's a very good thing. The DOJ's explanation for this is pretty straightforward:
In the end, the Division concluded that only full-work licenses could fulfill the purpose and meaning of the requirement in the consent decrees that ASCAP and BMI offer blanket licenses that provide users the ability to play all the songs in the PROs’ repertories. Importantly, this does not mean that ASCAP and BMI are required to provide a full-work license to a work when their members cannot grant them the ability to offer such a license. That is, we do not suggest an interpretation of the blanket license that is inconsistent with the Copyright Act. Rather, if the members of ASCAP or BMI are unable to grant to their PRO the rights to license their works on a full-work basis, those works are ineligible for licensing by ASCAP or BMI.

Both sides in this debate pointed to past practices they believed supported their view of whether ASCAP and BMI licenses were full-work or fractional. We think the evidence favors the full-work side. Our determination begins with the language of the consent decrees themselves, which unambiguously require ASCAP and BMI to offer licenses to all works or compositions in their repertories, and not to interests in works. For example, in the case of ASCAP, it must provide a license to perform “all of the works in the ASCAP repertory.”

Our view is also based on what is required for all participants in the industry to enjoy the substantial procompetitive benefits of the PROs’ blanket licenses – benefits that differentiate the PROs from joint price-setting entities that often present significant problems under the antitrust laws. The Supreme Court described blanket licenses in the BMI case as providing “unplanned, rapid, and indemnified access” to the songs in the PROs repertories. Fractional licenses would not offer the benefits the Supreme Court described.

A full-work blanket license from ASCAP or BMI allows the music user to publicly perform, without risk of copyright infringement liability, all works in the licensing PRO’s repertory. Particularly for music users – such as bars and restaurants – that cannot meaningfully control in advance the music they play in public, this feature of the PROs’ licenses benefits both the licensees as well as music creators in that it ensures that users can and will continue to play the creators’ music.

Fractional licensing would not offer the same benefits to users. If a PRO’s license granted a user something less than a license to play a particular song, music users seeking to avoid infringement liability would face the daunting task of identifying and ensuring they obtained licenses from all fractional owners – a challenge made more difficult by the lack of a comprehensive, reliable, and transparent catalog of rights. Under those conditions, even music users with control over the music they perform would have to curtail their performance of music until they were certain they had obtained licenses from all fractional owners. As BMI itself argued in a recent rate-court filing, a BMI license grants to a music user “insurance against copyright infringement . . . and immediate access to more than 10.5 million works in BMI’s repertoire.” A fractional license could not provide these benefits.
A lot of this was rumored a month or so ago, and a bunch of songwriters and publishers freaked out about it. They shouldn't be freaking out about it. This is actually good for them. Back when the expected result was leaked to the press, even Digital Music News, which frequently sides with the legacy industry, said directly that the songwriters' freak out was wrong and that this was a good thing for the music world -- and also notes that this could help finally create the holy grail in the music industry of a single database of published songs.

This should also help create more useful services that will get consumers to use authorized music sources, rather than unauthorized ones. As we've covered, ASCAP played some ridiculous tricks on music services like Pandora, and got slammed for it. But with full work licensing, such gaming will be even less possible, creating more openings for new music services to thrive.

Of course, the PROs, ASCAP and BMI, immediately lost their shit over this announcement and promised to fight back. BMI also announced that it will go to court to try to overturn this decision, while ASCAP has decided to focus on getting Congress to fix it through the legislative route (there's a reason for this bifurcated approach: in the cases involving both organizations, both BMI and ASCAP recognize that BMI has a judge that seems more willing to accept BMI's version of the story, whereas ASCAP's slimy behavior was so egregious that the judge covering its case actually understands the issues at play).

The end result, though, is the same old story: ASCAP and BMI want to abuse their monopoly position to try to jack up rates. Meanwhile, by not allowing that to happen, most songwriters will actually be better off, allowing more useful services to thrive, creating more opportunities for revenue. It's kind of insane that we have to point this out over and over again, but the legacy industry always fights against new innovations in the false belief that it will harm revenue -- yet when they learn how to embrace the opportunities, it turns out that a larger audience has been created and there are even more ways to make money. But ASCAP and BMI, like the RIAA on the recording side, are so focused on controlling their turf rather than seeing the big picture that they miss this entirely.

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  • identicon
    Anonymous Coward, 5 Aug 2016 @ 9:52am

    " BMI also announced that it will go to court to try to overturn this decision, while ASCAP has decided to focus on getting Congress to fix it through the legislative route"

    We should lobby, write, and contact ASCAP and BMI on these issues. Like I said, these guys fight their battles on every front possible and so we shouldn't simply ignore them as a front to fight this battle on.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 Aug 2016 @ 9:56am

    But ASCAP and BMI, like the RIAA on the recording side, are so focused on controlling their turf rather than seeing the big picture that they miss this entirely.

    What do you expect from real Luddites who claim every new piece of technology will destroy their industry.

    reply to this | link to this | view in chronology ]

  • identicon
    techno, 5 Aug 2016 @ 10:04am

    The best part...

    They used their own words against them. This literally is just a ruling that states you have to be consistent and it's hard for the music licensors to understand why nobody respects licenses that are too hard to understand. If you make it too hard, people will just route around you, legal or not. You can't catch them all, and if you start pushing too hard, you'll make people actually start voting over it and believe me ASCAP and BMI you do not want average people caring about copyright. There is a rude awakening these companies have coming for them. Windows is cratering because people don't like licenses for things they are supposed to own.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 5 Aug 2016 @ 10:44am

    Another useful link: here.

    That consent decree is what keeps you alive, BMI. Pray I don't constrict it further... <vader>

    reply to this | link to this | view in chronology ]

    • icon
      Bergman (profile), 6 Aug 2016 @ 6:01pm

      Re:

      Yeah, I noticed that too. The day after they finally get rid of that consent degree is the day they get broken up into half a dozen PROs because monopolies are illegal.

      reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 6 Aug 2016 @ 6:53pm

        Re: Re:

        The day after they finally get rid of that consent degree is the day they get broken up into half a dozen PROs because monopolies are illegal.

        Broken up by who? You've got cable companies literally writing state laws to ensure that they are the only ones able to offer service in areas and only recently is that getting government attention in the form of the FCC saying they're going to get those laws tossed(to the screams of those buying said laws).

        Sure it'd be funny if BMI 'won' here only to get broken up, but I wouldn't expect it to happen.

        reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 5 Aug 2016 @ 11:33am

    BMI also announced that it will go to court to try to overturn this decision

    Based on what? The decision only prevents them from engaging in discrimination (charging more from who they dislike for the same content). There's nothing to overturn here.

    while ASCAP has decided to focus on getting Congress to fix it through the legislative route

    Of course. Because people are asking for laws that allow these dipshits to discriminate between different services. Right.

    These assholes are so out of touch with reality that they should just be disbanded and a pool assembled where anybody could put their work in and anybody could pay a fixed price to use. They are afraid because they are not needed.

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 5 Aug 2016 @ 11:58am

      Re:

      Of course. Because people are asking for laws that allow these dipshits to discriminate between different services. Right.

      Hey, if they can consistently and repeatedly get retroactive expansions to copyright law passed, retroactive expansions that screw the public in favor of select groups and companies, why wouldn't they try to 'nudge' a few lawmakers to change the laws so that they can more easily abuse their monopoly position?

      reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 5 Aug 2016 @ 11:41am

    Of course Masnick approves of what the Google lawyers at the DOJ did, and more screwing of artists. lol

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 5 Aug 2016 @ 11:52am

      Re:

      So now the DOJ works for Google... man, you are getting desperate to find something to object to here.

      reply to this | link to this | view in chronology ]

      • icon
        Hephaestus (profile), 5 Aug 2016 @ 12:26pm

        Re: Re:

        Repeat after me, I will not feed the trolls. Personally, I was shocked by this, with how many RIAA based higher ups there are in the DOJ.

        reply to this | link to this | view in chronology ]

      • icon
        Ninja (profile), 5 Aug 2016 @ 1:06pm

        Re: Re:

        Must feel warm and fuzzy to be willfully blind.

        reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
        identicon
        Anonymous Coward, 6 Aug 2016 @ 7:35am

        Re: Re:

        Renata Hesse used to represent Google, and is the DOJ lawyer responsible for this screwing of songwriters.

        Get your tongue out of Masnick's ass and try not to be an ignorant stooge your whole life.

        reply to this | link to this | view in chronology ]

        • icon
          Karl (profile), 6 Aug 2016 @ 3:11pm

          Re: Re: Re:

          Renata Hesse used to represent Google

          This is a completely overblown accusation, mainly used as a smear tactic by anti-Google compsiracy theory loons like the Trichordist.

          In 2006, Hesse was hired by Wilson Sonsini Goodrich & Rosati to be part of their anti-trust team. In 2008, Google hired WSGR to advise them in the 2008 Google/Yahoo! antitrust case (which ultimately went against them). Hesse was the WSGR employee who advised them.

          But she has never represented Google since then. This was years before 2011, when she was tapped by the FCC to help oversee its review of AT&T's acquisition of T-Mobile. She joined the DOJ's anti-trust division immediately after that.

          In other words, she's been practicing anti-trust law for decades. The notion that she is bowing down to one (of many) tech companies who was once her client years ago is just absurd.

          There's no "there" there.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 8 Aug 2016 @ 2:00am

            Re: Re: Re: Re:

            if you believe Renata Hesse is not acting on behalf of Google you are very naive.
            My girlfriends parents are Washington insiders for 50 years so I know that virtually ALL non-elected high level positions are installed by corporations .
            of course we can say that virtually all elected positions are corporate installs too, or do you really want to debate that?

            reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 8 Aug 2016 @ 2:04am

        Re: Re:

        i know that's so paranoid.
        That's like saying the FDA answers to Monsanto !

        reply to this | link to this | view in chronology ]

  • icon
    That One Guy (profile), 5 Aug 2016 @ 12:09pm

    'Protection racket'? What's that, I'm afraid I'm completely unfamiliar with those words

    As BMI itself argued in a recent rate-court filing, a BMI license grants to a music user “insurance against copyright infringement . . . and immediate access to more than 10.5 million works in BMI’s repertoire.” A fractional license could not provide these benefits.

    "Nice service you've got there, be a shame if you were to accidentally play music you don't have the rights to and ended up being sued into the ground... tell you what though, you agree to the new rates we're offering, and we'll think about granting you a more widespread license, though we can't promise you won't still infringe should one of the song owners not be willing to accept the new rates and want more. But hey, I'm sure you'll have no problem making a deal with them too."

    Love how they used BMI's own argument against them here, pointing out basically that fractional licenses still leave those looking to pay for their music threading a mine-field, with one wrong misstep holding massive potential consequences.

    With agencies involved with wide-spread music licencing they absolutely cannot be allowed to discriminate, and must be forced to offer equal treatment to all, and in ways that doesn't allow them to abuse their monopoly position for personal gain, either for themselves or any other group.

    Being able to offer 'some but not all' licencing, especially doing so in a manner where the other entity doesn't clearly know what music they have licence to play absolutely is an abuse of their monopoly position(not to mention rather negates the point of having central licencing agencies), and I'm glad the DOJ actually got something right for once in slapping them down.

    reply to this | link to this | view in chronology ]

    • icon
      orbitalinsertion (profile), 5 Aug 2016 @ 1:15pm

      Re: 'Protection racket'? What's that, I'm afraid I'm completely unfamiliar with those words

      ... tell you what though, you agree to the new rates we're offering, and we'll think about granting you a more widespread license, though we can't promise you won't still infringe should one of the song owners not be willing to accept the new rates and want more.


      We'll even send you a sampler CD that we can assure you is perfectly OK to play. Uh, just pay the shipping.

      reply to this | link to this | view in chronology ]

  • icon
    Roger Strong (profile), 5 Aug 2016 @ 1:19pm

    > ....legislators made it clear that under the act, they intended to make it clear that any copyright holder in a work with multiple authors had the right to license the whole work

    Consider all the Techdirt stories filed under Sampling and Samples. Does this mean that if a big-name publisher samples or uses your music, artwork or writing in their own work without permission or licencing agreement, then you have the right to the right to license the whole work?

    reply to this | link to this | view in chronology ]

  • icon
    Karl (profile), 6 Aug 2016 @ 3:31pm

    This is not the 100% licensing you're looking for

    It should be noted that one of the reasons songwriters freaked out about 100% licensing, is that it was reported inaccurately in a wide variety of places.

    Here is just a sampling:
    The DOJ decided PROs and Publishers must adopt "100% Licensing." This means the person or group that controls even just 1% of a song has the authority to license the full 100% of the song, without permission from the other songwriters/owners.
    - Consent Decree Impact Infographic (Music Think Tank)

    The DOJ made another decision that will displease publishers: It is moving ahead with its interpretation that the two PROs must use 100-percent licensing and can no longer engage in fractionalized licensing -- meaning that any rightsholder in songs with multiple songwriters, who may be represented by different PROs, has the right to license the entire song to a user, as long as he accounts to and pays the other songwriters. [...]

    Also, some wonder if this ruling will hurt or help the PROs not covered by the consent decree, like SESAC and Global Music Rights.

    On one hand, it could hurt those PROs because licensees of songs with multiple songwriters would likely rather cut deals with ASCAP and BMI -- whose rates are hampered by the consent decree and rate court -- than with the two PROs that have the ability to seek market rates. In the future, digital services would only have to agree to market rates for songs 100 percent controlled by SESAC and GMR, some sources suggest.
    - Department Of Justice To Deny Consent Decree Amendment (Billboard)

    We regard the announced intentions of the DOJ [...] to impose mandatory "full work licensing" on a copyright co-owner or co-­administrator if is so requested by a copyright user, as serious injustices that will further damage the ability of songwriters and composers to earn a living through our chosen profession.
    - MCNA comments to the DOJ

    Next, what about SESAC? They are not parties to the consent decrees. But to read the "new rule that is not really a new rule" correctly, would be that if a SESAC writer composed a song with an ASCAP writer, that ASCAP would not only have the right, but the obligation to license the SESAC share, making SESAC a party to a consent decree that they never were a part of in the first place.

    This is a complete violation of due process.

    And finally, what about my contracts? They say that no one writer can license the work without the consent of the other writer. The DOJ’s "new rule which is not really a new rule" completely abrogates my client’s contract rights, another violation of due process.

    And what’s the point of all this? It’s to lower the fees that independent PRO’s like SESAC and Irving Azoff’s fledging GMR might demand, since 100% of the licensing might be obtained from ASCAP and BMI instead. This benefits, guess who? Pandora, Siruis XM, and of course, YouTube.
    - Stephen Carlisle, You Can’t Make This Stuff Up! The Department of Justice v. ASCAP

    Well, apparently, they were making that stuff up. The "100% Licensing" provision does not require the PRO's to license works to which they have only been granted partial rights.

    Instead, it requires the PRO's to have been granted the ability to issue licenses for 100% of the song by the copyright holders themselves.

    If copyright holders can't or don't want to do this, then the PRO's cannot claim that they can do so, and can't offer licenses for those songs at all. That is completely different than what was claimed.

    Of course, fueling this fire was the fact that the DOJ didn't actually release its ruling until the 4th, so speculation (and the biased claims of the PRO's) was all that anyone had to go on.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Aug 2016 @ 3:45pm

    I would say some of them are slime. When trying to read the article about "losing their shit", I keep getting unwanted ads, even with Adblock running. How are they getting past AdBlock?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Aug 2016 @ 3:55pm

    With Trump wanting to modify NAFTA and TPP if he gets elected, I would not be surprised of the record companies decide to try and push this reversal into any future modification of TPP or NAFTA, as he will seek to get a "better deal" for American workers. I could see a reversal of this being pushed in future modifications of NAFTA and TPP.

    reply to this | link to this | view in chronology ]

  • icon
    Nikkodemus (profile), 12 Aug 2016 @ 2:44pm

    This writer does not seem to understand what the word monopoly means. A monopoly exists when a single entity owns well more than 50 % of a market for a good or service. An example of that would be Google, which controls over 70 % of the search market here, and over 90 % in Europe. Another would be You Tube, which controls the vast majority of the user video market. Neither BMI or ASCAP own over half the PRO market. What is also interesting is that the DOJ dictates that members of ASCAP and BMI are not allowed to negotiate directly with services like Pandora. If they could, the number of sellers on the market would actually go up! So the DOJ on the one hand claims it is concerned about monopoly power, yet, it's own decisions actually force greater market concentration! Kind of Bipolar behavior! Another thing the writer should educate himself on is a concept called "markets." In a market, a buyer and seller come together and if they agree on a price, a transaction occurs. This seems to exist everywhere but in the music industry, where the Obama DOJ seems obsessed with musicians. Did I mention that Google lobbyists visited the Whitehouse more than any other lobbyist these last several years? I do wonder what they talked about?!

    reply to this | link to this | view in chronology ]

  • icon
    Karl (profile), 18 Sep 2016 @ 8:14pm

    Judge Stanton rules against the DOJ

    There has been an interesting development in the "100% licensing" debate.

    After the DOJ ruled that the consent decrees required full-work licensing (called "100% licensing" by publishers and PRO's), BMI asked the rate court for a declaratory judgement that the DOJ was wrong.

    And, now, Judge Stanton has sided with BMI, and ruled that the consent decrees do not require full-work licensing.

    His reasoning is really convoluted. He takes a passage in the consent decree that is essentially a savings clause, and interprets it to mean that copyright infringement itself is not any part of the consent decree:
    If a fractionally-licensed composition is disqualified from inclusion in BMI's repertory, it is not for violation of any provision of the Consent Decree. [...] It does not address the possibilities that BMI might license performances of a composition without sufficient legal right to do so, or under a worthless or invalid copyright, or users might perform a music composition licensed by fewer than all of its creators.

    Yeah, it's a real head-scratcher.

    The whole ruling is here:
    http://4dpavshx5ly3quwy2v9yv83i.wpengine.netdna-cdn.com/wp-content/uploads/2012/04/usa_v_bmi_op inion_2016_09_16.pdf
    It's short (5 pages), so worth reading in its entirety.

    reply to this | link to this | view in chronology ]

    • icon
      Gwiz (profile), 20 Sep 2016 @ 11:55am

      Re: Judge Stanton rules against the DOJ

      Have you checked out Lowery's Trichordist site lately? I hadn't been there in awhile, so I just took a peek a minute ago.

      I think those guys might have finally gone over the edge into crazyland. There's more conspiracy theories floating around there than there is on InfoWars!

      reply to this | link to this | view in chronology ]

      • icon
        Karl (profile), 20 Sep 2016 @ 6:29pm

        Re: Re: Judge Stanton rules against the DOJ

        Have you checked out Lowery's Trichordist site lately?

        Unfortunately, yes. I need something to get me angry sometimes.

        You're right, they're basically an anti-Google conspiracy site nowadays. But that's actually not so much that they're in "crazyland." Some people who write for that site (but not Lowery, AFAIK) are involved with pro-copyright astroturf groups, and they're deliberately pushing propaganda.

        On example: Chris Castle used to head up Arts+Labs, an astroturf group originally started by telecom lobbyists that also supported SOPA and PIPA (and disbanded immediately after they failed). Another frequent contributor, Ellen Seidler (also of popuppirates.com and Vox Indie), is on the advisory board of Digital Citizen's Alliance, the main mover behind the Project Goliath debacle.

        Still, they're good to read just to see what they're angry about, so that you can know what to actually support.

        reply to this | link to this | view in chronology ]


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