Regulating the Blanket License: A Path Towards Terminating the ASCAP/BMI Consent Decrees
By Dallin Earl
Dallin Earl is a 2020 graduate of Harvard Law School and former president of the Recording Artists Project at HLS. The introduction to Regulating the Blanket License: A Path Towards Terminating the ASCAP/BMI Consent Decrees is below and you can read the entirety of this terrific article, by clicking on the hyperlink.
Since 1941, the ASCAP and BMI consent decrees have shaped the legal and business landscape of the music industry. The market efficiencies of blanket licensing introduced by ASCAP’s early 20th Century founding enabled owners of copyrighted musical compositions to monetize and enforce their exclusive rights on a scale previously impossible. Yet just as the public performance blanket license created beneficial market efficiencies, antitrust and anticompetitive concerns arose. The consent decrees were instituted to address such concerns.
Today, ASCAP and BMI say that the decrees regulate more than necessary and are in need of updating, or perhaps even elimination. Some claim the ASCAP/BMI consent decrees have operated to depress rates paid to songwriters and publishers. The performing rights organizations (PROs) argue that these WWII era regulations are out of date and out-of-line with current antitrust consent decree practice. Even the Department of Justice wants to get out of the business of regulating the public performance rights marketplace.
By way of brief overview, those who wish to publicly perform copyrighted musical compositions must obtain a license, or rights, from the copyright owner. Licensees today include bars, restaurants, live music venues, broadcast and cable television stations, radio stations, internet streaming services, and others who publicly perform musical works. The sheer number and fleeting nature of public performances makes it practically impossible for copyright owners to detect every case of infringement or potential licensees to negotiate for every use. To facilitate a marketplace of public performance rights, copyright owners join PROs, which act as a sort of central clearing house and enforcement body. PROs provide users with licenses to the musical works in the PRO’s repertoire and act on behalf of member copyright owners to collect fees and detect infringement. But because the copyright owners also compete with each other to some extent, this arrangement between competitors can raise antitrust concerns involving price-fixing, tying, and other anticompetitive conduct. Attempts to mitigate these concerns include the antitrust consent decrees between the Department of Justice and the two largest PROs, ASCAP and BMI, as well as private antitrust litigation.
Individuals and institutions have made various proposals for overhauling the public performance rights marketplace. For example, Kristelia Garcia proposes to resolve the public performance market’s anticompetition problems through “remedial regulation.” Garcia proposes the creation of a statutory public performance license accompanied by a system to exempt rights holders from the compulsory license via petition demonstrating adequate market competition. Whereas Ivan Ridel concludes that the blanket license itself is a form of price fixing and an “illegal restraint of trade.” In its place, Ridel favors the creation of an eBay-like online platform for transacting public performance rights. And the U.S. Copyright Office, in its 2015 Music Marketplace Report, proposed releasing ASCAP and BMI from some consent decree obligations that they see as obstructing free market negotiations, while migrating the rate setting process from the courts to the Copyright Royalty Board (CRB), and further propose the creation of a General Music Rights Organization (GMRO) that would serve as the default licensing agency for unaffiliated or unidentified songwriters and publishers. On the other hand, ASCAP and BMI have proposed that the decrees be simplified to their most essential elements, accompanied by a sunsetting provision that would ultimately terminate the decrees after a number of years.
But which among these proposed alternatives should, or will, be implemented? At the moment, none of these comprehensive solutions have achieved consensus—somewhat of a prerequisite to getting Congress to act on music industry legislation these days. The challenge is that a comprehensive, status-quo-altering solution to licensing public performance rights of musical works is unlikely. So then what happens if the Department of Justice moves to terminate the decrees, as it has suggested it might? In that scenario it is possible that licensees will push for a compulsory license. But it need not come to that. Instead, Congress could adjust the form of antitrust oversight of the blanket license while maintaining much of the regulatory substance currently provided by the consent decrees.
With some changes to copyright law, Congress can address anticompetitive concerns with the blanket license. This paper examines a Congressional solution to carve out a limited antitrust exemption by granting copyright owners a right to collectively bargain with licensees for the right to publicly perform musical works. To accompany this right, Congress might consider codifying the consent decrees “genuine alternatives” and “similarly situated” licensing provisions as limitations on the right. With such regulation on the blanket license in place, the role of the consent decrees could then be reduced to PRO specific provisions addressing issues such as licensing additional rights, membership qualifications, and other regulations. From there the Department of Justice can focus on regulating potential anticompetitive conduct of the individual PRO instead of the blanket license itself. Admittedly, this proposal is not likely to alter in any dramatic way the status quo between licensees, PROs, or rights holders. But it may get the Department of Justice out of the job of regulating the public performance licensing market and align antitrust oversight of the market with current practices. Further, it moves the immediate conversation away from compulsory licensing and preserves the opportunity for greater discussion and debate of comprehensive solutions to be enacted in the future.