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In 2019, the Antitrust Division of the US Department of Justice began a review of the court-administered antitrust consent decrees that have bound ASCAP and BMI since the 1940s.  We wrote about the issues in their review here.  The formal review of these decrees began as part of the DOJ’s broader review of its antitrust consent decrees covering many different industries.  The DOJ received almost a thousand comments on the questions that it asked about the ASCAP and BMI decrees.  It also held public roundtables as well as private discussions with interested parties during its review.  Last week, Makan Delrahim, the outgoing head of the Antitrust Division, presented remarks at a Vanderbilt Law School virtual event where he said that the review would be ending without any proposals for reform.  While the statement notes some of the reforms that were sought by the music industry, it also notes that music users around the country rely on the systems established under the decrees and judge them to be working well.  Mr. Delrahim’s statement says that because of the complexity of the issues and the interruptions caused by the pandemic, no reforms would be offered at this time, but it urged the DOJ to continue to review these decrees on a regular basis – at least once every five years.

This action is significant for broadcasters and other music users as it leaves in place these consent decrees that are the basis on which so many businesses use music in their day-to-day operations.  Given the volume of music they have under license, most businesses do not have an alternative to using the blanket licenses offered by these organizations.  The only alternative would be to license the music themselves which, due to the complexity of the copyright laws and the lack of transparency in music ownership, would be exceedingly difficult for a business where music is but a secondary component to their operations.  Together, ASCAP and BMI provide a license to broadcasters and other music users (including any business that performs music to the public, such as bars and restaurants, retail stores, digital music services, concert venues, hotels and so many other locations).
Continue Reading DOJ Ends its Review of ASCAP and BMI Consent Decrees – For Now…What Does it Mean?

As business adapts to the pandemic so, too, do legal issues.  A couple have come to my attention in recent weeks that I thought bear passing on.  One deals with copyright concerns, the other with FCC matters about use of unlicensed FM transmitters.  Both arise as businesses adapt the way in which they deal with their customers – including how media companies deal with their audiences.

The copyright issues deal with music licensing matters.  Broadcasters are used to having performance licenses that allow them to broadcast music over the air and stream it on the Internet.  Venues for live music have similar licenses, as do hotels and meeting halls where conventions and other meetings take place – often involving the use of music.  But, as people are no longer frequenting these locations, businesses try to recreate their usual ambiance in an online environment using Zoom, Facebook Live, or one of the many other digital platforms that now exist.  If that ambiance includes music or other copyrighted materials, be sure that you have the rights to use those copyrighted materials in the new environment in which your business is operating.
Continue Reading Random Issues to Consider as Media Businesses Adapt to the New World of the Virus – Music Uses on Zoom and Other Platforms, Unlicensed FM Transmitters

Global Music Rights (most commonly known as GMR), the newest of the major performing rights organizations (PROs) licensing public performances of musical compositions, filed a lawsuit against radio operator Entravision Communications earlier this month. The suit alleges that Entravision failed to pay GMR royalties for the public performance of hundreds of compositions written by GMR songwriters. According to the complaint, GMR sent Entravision several letters over the last few years, notifying Entravision that it was playing GMR music and asking that it enter into a license to play that music. When no license was signed or even requested after these multiple requests, the lawsuit was filed.

The suit seeks $150,000 for each copyrighted work that was allegedly infringed – the maximum set out by the Copyright Act for “statutory damages,” i.e. damages that can be collected even without providing evidence of actual harm caused by the alleged copyright infringement. While Courts have discretion to order far lower statutory damages than those being sought here, even the threat of such damages have been enough to put many of the original file-sharing music sites out of business. Of course, in this case, these damages are being sought not from some company that provides unlimited downloads of unlicensed music, but from a publicly traded radio company presumably already paying other performing rights organizations for the use of music.
Continue Reading GMR Sues Entravision for Royalty Payments – Looking at the Issues Raised By This New Development in the Music Royalty Wars

In a very important proceeding we summarized here, the Department of Justice’s Antitrust Division is reviewing the antitrust consent decrees that govern ASCAP and BMI – the decrees that require that these performing rights organizations treat similarly situated licensees (and artists) in the same way and which allow a Court to review the reasonableness…

The Department of Justice’s Antitrust Division yesterday announced that it was starting a review of the ASCAP and BMI antitrust consent decrees that govern the United States’ two largest performing rights organizations for musical compositions (referred to as the “musical work”). The DOJ’s announcement of the initiation of the examination of the consent decrees poses a series of questions to which it invites interested parties – including users, songwriters, publishers and other interested parties – to file comments on the decrees, detailing which provisions are good and bad and, more broadly, whether there is a continuing need for the decrees at all. Comments are due on July 10.

This re-examination of the decrees has been rumored for many months. Back in March, we wrote about those rumors and the role that Congress may play in adopting replacement rules should the DOJ decide to fundamentally change the current provisions of the consent decrees. The DOJ itself just recently looked at the consent decrees, starting a review only 5 years ago with questions very similar to those it posed yesterday (see our post here on the initiation of the last review 5 years ago). That review ended with the DOJ deciding that only one issue needed attention, whether the decrees permitted “fractional licensing” of a song. We wrote about that complex issue here. That issue deals with whether, when a PRO gives a user a license to play a song, that user can perform the song without permission from other PROs when the song was co-written by songwriters who are members of different PROs. The DOJ suggested that permission from one PRO gave the user rights to the entire song, an interpretation of the decrees that was ultimately rejected by the rate courts reviewing the decrees (see our article here).   So, effectively, the multi-year review of the consent decrees that was just concluded led nowhere. But apparently the DOJ feels that it is time to do it all again. To fully understand the questions being asked, let’s look at what the consent decrees are, and why they are in place.
Continue Reading DOJ Starts Review of BMI and ASCAP Consent Decrees – Exploring the Background of the Issues

In the last few weeks, the press has been buzzing with speculation that the Department of Justice is moving toward suggesting changes in the antitrust consent decrees that govern the operations of ASCAP and BMI.  Those consent decrees, which have been in place since the 1940s, among other things require that these Performing Rights Organizations treat all songwriters alike in distributions based on how often their songs are played, and that they treat all services alike with users that provide the same kind of service all paying the same rate structure.  Rates are also reviewed by a court with oversight over the decrees when the PROs and music services cannot come to a voluntary agreement to arrive at reasonable rates.  The decrees have also been read to mean that songwriters, once part of the ASCAP or BMI collective, cannot withdraw with respect to certain services and negotiate with those services themselves while still remaining part of the collective with respect to other music users (see, e.g., our articles here and here about the desires of certain publishing companies to withdraw from these PROs to negotiate directly with certain digital services while still remaining in these PROs for licensing broadcasting and retail music users).

With this talk of reform of the consent decrees, Congress, particularly the Senate Judiciary Committee under the leadership of Senator Lindsey Graham, has reportedly stepped in, telling DOJ not to move to change the consent decrees without giving Congress the chance to intervene and devise a replacement system.  In fact, under the recently passed Music Modernization Act, notice to Congress is required before the DOJ acts.  Already, both the PROs and user’s groups are staking out sides.  What are they asking for?
Continue Reading ASCAP and BMI Consent Decrees Under Review – How Performing Rights Organizations, Antitrust Policy and Statutory Licenses Could Create a Controversy

Last week, after passage by both chambers of Congress and signature by the President, the ‘‘Orrin G. Hatch–Bob Goodlatte Music Modernization Act’’ became law. The law underwent a few changes on its journey to approval, adding new provisions in the Senate to those which we summarized here upon its initial passage by the House. The Act retained its same principal purposes. The driving force behind the Act was the desire to simplify the payment of “mechanical royalties” by digital music services for the reproduction and distribution of the millions of musical compositions that they use in the songs that they serve up to more and more consumers across the country. That simplification was accomplished through the creation of a new collective through which these royalties will be paid – essentially a one-stop shop where the statutory royalty will be paid. The collective will have the responsibility for finding the copyright holders and songwriters who share in the royalties – removing the need for the music services to have to identify and pay all of the appropriate rightsholders, a process that has resulted in legal claims for hundreds of millions of dollars against these services for not being able to find all the parties who are supposed to be paid for the mechanical royalties.

The general layout of the system for dealing with the payment of these royalties, through a collective to be established, remains essentially the same as in the initial House Bill. Other provisions were added in the Senate (and then approved again by the House) dealing with matters including pre-1972 sound recordings, Sirius-XM royalties, and the ability of existing music organizations to continue to do direct licenses for mechanical and other rights outside the new statutory system. We may write about those issues later. But the Senate addition likely to have the most significance for the most music users was one having nothing to do with mechanical royalties, but instead with the performance royalty for music works (musical compositions) that is paid by music services, radio stations, bars and restaurants and any other location that plays music that is heard by the public at large. The new language added by the Senate requires that, before the Department of Justice recommends any changes to the consent decrees governing ASCAP and BMI, the DOJ must first notify Congress of any changes that it will be suggesting to the courts that administer the decrees, so that Congress can decide if it wants to take action to block or modify any such changes. Why is that significant?
Continue Reading Music Modernization Act Becomes Law – Mechanical Rights To Become Easier Just As Performance Rights May Become More Difficult

Next Wednesday, July 25, I will be speaking at the Podcast Movement Conference in Philadelphia, as part of the Broadcasters Meet Podcasters Track, discussing legal issues that broadcasters need to consider as they move some of their content into podcasts. One of the topics that I will be discussing will be the music royalty obligations of podcasters who use music in their programs. A month ago, we wrote about how broadcasters’ streaming royalties are affected by smart speakers like the Amazon Alexa and Google Home, as these speakers play the digital streams of a radio station’s programs where SoundExchange royalties must be paid, as opposed to the over-the-air signal of the station, where no such royalties are owed. These smart speakers may have an impact on podcasters royalties, affecting who needs to be paid in connection with the use of music in podcasts.

When I initially started to write about issues of music use in podcasts, my emphasis was on the need to secure direct licenses from performers and composers (or their record companies and publishing companies) for the rights to make reproductions and distributions of music in podcasts. When digital content is downloaded, it triggers rights under copyright law implicating the reproduction and distribution rights of copyright holders (see our article here), as opposed to their public performance rights – the rights with which broadcasters are most familiar as those are the rights that they obtain when paying Performing Rights Organizations ASCAP, BMI, SESAC and GMR in connection with their over-the-air broadcasts and those PROs plus SoundExchange in connection with noninteractive digital streaming. When podcasts were something that were downloaded, just like the purchase of a download of a song from the iTunes music store, it was the reproduction and distribution rights that were triggered, and conventional wisdom was that the PROs had no role to play in the licensing of downloaded media. As technology has changed, the analysis of what rights you need to use music in podcasts may well be changing too. The direct licensing of music for your podcast is still needed – but a public performance right may well also be necessary.
Continue Reading Hey, Alexa, How Are Your Affecting My Podcasting Music Royalty Obligations?

The Copyright Royalty Board on Friday published in the Federal Register its decision setting the royalty rates that noncommercial broadcasters will pay to the performing rights organizations for the public performance of musical compositions in over-the-air broadcasting during the period 2018-2022.  The rates reflect settlements between ASCAP, BMI and SESAC and various organizations representing…

Last week, I participated in a discussion about music royalties for broadcasters at the Texas Association of Broadcasters Annual Convention in Austin. Speaking on the panel with me were the heads of the Radio Music License Committee and the TV Music Licensing Committee. These are the organizations that represent most commercial broadcasters in their negotiations with ASCAP, BMI and SESAC for public performance licenses for “musical works” or “musical compositions” – the underlying words and music to any song. In our discussion, there was a general summary of the licenses needed for the use of music by broadcasters, a summary of the status of some of the current royalty negotiations, and questions about other issues in music licensing. As this discussion raised a number of issues that I have covered in articles posted on this blog, I thought that it might be worth highlighting some of that past coverage so that those interested in any topic can read a bit more on these subjects.

The TV industry seems to have far fewer issues than radio, perhaps because radio is so much more music-dependent. While there is music in many TV programs, some of it is cleared (i.e. licenses have been negotiated) by the program providers (including some networks), so that stations need only worry about licenses for programming where the music has not been pre-cleared. Thus, TV stations have alternatives of blanket licenses for all programming (principally used by affiliates of networks where music has not been pre-cleared) or per-program fees where stations pay for music only in programs or program segments where music has not been licensed by the program suppliers.
Continue Reading Looking at Music Royalty Issues for Radio and TV Broadcasters