Hello all – on June 29, 2016, ASCAP and BMI (U.S. performing rights societies) met jointly with the Department of Justice Antitrust Division to hear the government’s proposal regarding ASCAP’s and BMI’s respective consent decrees, which have been under formal review for the past couple years (i.e. among other proposed changes, ASCAP and BMI music publishers sought the right to withdraw digital licensing from the blanket licenses in order to cut direct deals, and the ability to bundle additional licensing with additional rights under the PROs blanket licenses). Over the years, numerous individuals and entities within the music industry have contributed to the discussion and supported the position that the consent decrees are antiquated and revisions are critical to the livelihood of songwriters and publishers, alike.
Not only were the proposed revisions declined, the current proposal issued by the Department of Justice would require that ASCAP and BMI license all songs in their respective repertories on a 100% basis, ending the long-standing industry practice of “fractional share” licensing (i.e. if enforced, the PROs would no longer be able to 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). Unfortunately, the Department of Justice indicated that because of the complexities of the transition to this 100% licensing requirement, it would not consider the updates ASCAP and BMI requested to their consent decrees but would revisit those issues after a transition period.
As can be expected, the PROs strongly disagree with the view asserted by the Department of Justice and are disappointed that focus turned to this issue, which was not raised by the parties subject to the decrees. Joint statements by the PROs provided that this approach would create instability, chaos and harm to both music creators and users and would inhibit competition and innovation in the modern music marketplace. They further stated that “even more troubling is the fact that the government chose this path, despite the fact that more than 15,000 songwriters and composers, as well as the US Copyright Office, members of Congress and others in the industry, registered their strong opposition to 100% licensing with the DOJ.”
Some key concerns regarding the proposed 100% licensing scheme include:
· Reduced royalty rates for songwriters because it will allow music services to rate-shop among the licensors for the lowest rate;
· Financial ramifications of this ruling may cut down on collaborations, with some songwriters choosing only to collaborate with fellow songwriters within their own PRO.
ASCAP, BMI and key industry stakeholders have joined forces and are utilizing teams of legal experts evaluating the Department of Justice’s proposal, and are currently contemplating legislative and legal remedies.
Procedural note: Although the Department of Justice authored the consent decrees, the same must be agreed upon by ASCAP and PRO and any changes (i.e. enforcement of 100% licensing), requires approval by the ASCAP and BMI rate-court judges.
By: Michelle M. Wahl, Esq.
Michelle is a Partner at Swanson, Martin & Bell, LLP and is licensed in Illinois and Indiana state and federal courts. With a Masters of Law in Intellectual Property, Michelle is the Vice Chair of the firm’s Entertainment and Media Practice Group and a member of the firm’s Intellectual Property Litigation and Transactional Services Practice Group. Her copyright and trademark practice focuses on intellectual property prosecution and related transactions, including performing trademark availability searches and providing advisory opinions, as well as preparing and filing trademark applications with the United States Patent and Trademark Office, and copyright registrations with the United States Copyright Office. Michelle also assists with the oversight of the firm’s extensive trademark docket and conducts required monitoring and maintenance of clients’ trademark portfolios, as well as provides clients with corporate counseling and innovative corporate solutions to address their respective needs.
Michelle further provides comprehensive representation in the drafting, negotiating and executing of various entertainment-related contracts and licenses, including but not limited to band member agreements, artist management agreements, session player agreements, performance agreements, sound engineer agreements, recording and personal services agreements, publishing agreements and licensing agreements. As a former artist manager, she has implemented many facets of national and regional tours, assembled benefit and charity concerts, communicated with various industry personnel, facilitated radio and internet publicity campaigns, arranged radio, print and internet interviews, and assisted in the development of press kits and websites promoting local talent. Michelle has also guest lectured on entertainment and intellectual property-related topics at The John Marshall Law School, DePaul University College of Law, Chicago-Kent College of Law and Azusa Pacific University (CA), as well as served as a panelist on various other entertainment-related continuing legal education courses. Michelle is an author and editor of the Litigation and Industry Updates Column of the ABA’s Entertainment & Sports Lawyers Journal and has also had numerous articles published by the Chicago Music Guide.
In addition, Michelle serves as Chair of Swanson Martin & Bell, LLP’s Community Service/Pro Bono Committee and proudly volunteers her time as President of the Associate Board and as a pro bono attorney to Lawyers for the Creative Arts, a non-profit organization that provides free legal services to eligible clients in all areas of the arts. She also currently serves as Events Chair for the Chicago Chapter of Women in Music, a non-for-profit organization dedicated to fostering equality in the music industry through the support and advancement of women. She recently served as Chair of the Young Lawyers Division for the Illinois Association of Defense Trial Counsel, where she was recognized as the Rising Star recipient and received a Meritorious Service Award and President’s Commendation.
DISCLAIMER: The information contained in these articles constitutes general information and guidance and shall not be construed as legal advice applicable to or provided for any particular person or entity, and shall not be deemed to create an attorney-client relationship between Ms. Wahl and anyone who elects to read and/or rely, to any extent, on the material provided herein. In that respect, Ms. Wahl hereby expressly and specifically disclaims any such legal relationship, but encourages any person or entity seeking a legal advocate pertaining to the issues addressed and discussed herein to contact her directly for further information. Ms. Wahl may be reached at Swanson, Martin & Bell, LLP (330 N. Wabash, Suite 3300, Chicago, IL 60611 or via telephone at her direct line: (312) 222-8585 or e-mail at: firstname.lastname@example.org.