Recording Academy Letter to Members on DOJ 100% Licensing

For the past week, media reports have circulated about the U.S. Department of Justice’s pending decision regarding its review of the consent decrees that govern ASCAP and BMI.  On July 5, the Academy’s Advocacy Team participated in a briefing with the Antitrust Division of the Department of Justice and heard directly from the officials working on the matter.  Given the importance of this issue to our members, we wanted to reach out and share what we learned firsthand from the Department of Justice (DOJ) and keep you updated on The Recording Academy’s efforts in this matter.

As you may know, in 2013 some publishers attempted to partially withdraw their catalogs from the PROs so that they could enter into direct licensing deals with digital services.  The courts ruled that the consent decrees do not allow partial withdrawal, and this was followed in 2014 by DOJ opening a review of the consent decrees. The decrees, which date back to 1941, had not been updated in over a decade. The result is that the consent decrees prevent ASCAP and BMI from responding to changes in the marketplace to secure fair market value for the works of the songwriters they represent. The review was seen as an opportunity to update and reform the consent decrees to reflect the new digital marketplace so that it’s possible for songwriters to get fair pay for their work.

From the beginning of the process, The Recording Academy supported reforms to the consent decrees that would improve the ability of songwriters to get fair market value for the use of their work and preserve the long-term viability of the PROs so that they can continue to serve their songwriters. To that end, we filed comments with the DOJ supporting changes to the consent decrees to allow partial withdrawal by the publishers, allow the PROs to bundle multiple rights together for licensing, and provide an expedited rate setting process for PROs and licensees. These proposals were similar to those put forth by the PROs and other stakeholders representing songwriters. You can read a summary of our comments on the advocacy blog. We also anticipated that Congress might have to ultimately intervene to achieve real fairness for songwriters, and we encouraged Congress to consider bold reforms in a blog post.

Late last year, we learned that DOJ had started looking at the issue of “full work” licensing, a new issue that had not been previously raised publicly by any stakeholders. Under full work licensing, ASCAP and BMI would be required to offer a full license for any song that is in their repertoire, even if the song has multiple songwriters that belong to different PROs. This is a change from the current practice of “fractional” licensing, whereby a PRO only provides a license for the portion, or fraction, of a song written by the PRO’s affiliated songwriter. The Recording Academy strongly urged DOJ against adopting this interpretation, arguing in formal comments and in direct meetings that the current practice of fractional licensing is in the best interest of songwriters. Shortly after our filing, songwriter/producer and Los Angeles Chapter Vice President Evan “Kidd” Bogart authored an advocacy blog post on the issue. A delegation of leading songwriters reinforced that view in an in-person meeting with DOJ during GRAMMYs on the Hill.

In our July 5th briefing with the DOJ, we were informed of two major decisions that are the result of their review. First, the DOJ has decided to enforce its interpretation that ASCAP and BMI must offer full work licenses for any song in their repertoire, ending the current, established practice of fractional licensing. Second, the Department of Justice has decided not to adopt any of the proposals put forward to reform and update the decades-old consent decrees, including the proposal to allow publishers to partially withdraw their catalogs from the PROs. The DOJ is expected to announce these decisions publicly by the end of July, but we wanted to inform you of them right away.

Although the outcome of DOJ’s review is disappointing, it is important to note that this is not the end of the process. DOJ must still make its recommendations public, negotiate the recommendations with the affected PROs, and get the recommendations approved by a federal judge. The PROs and DOJ could also settle these issues in court. Finally, it is also possible that Congress could intervene to resolve these issues and protect songwriters as we suggested last year. In our briefing, the DOJ even acknowledged that a legislative solution may be preferable. Once the decision is final, DOJ will give the parties one year to make the transition to full work licensing. Please be assured that The Academy’s Advocacy Team in Washington will continue to engage directly with DOJ, the PROs, and our congressional allies to protect the interests of our songwriter members.

Sincerely,

Your Advocacy Team
Washington, DC

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