Music industry up in arms over DoJ consent decree amendment

The decision by the US Department of Justice (DoJ) not to amend the consent decrees for two major publishers has been called a ‘clusterfuck’ by an unnamed music publishing executive.

The over 75-year-old rules, or ’consent decrees’ that determine how much services like Pandora and Google Music must pay to license music, will be changed – but it’s not the changes music publishers and performingrights organisations had hoped for.

On Wednesday, the DoJ informed the US’ biggest performingrights organisations (PROs) – BMI and ASCAP – that it doesn’t intend to amend the current rules.It will however enforce the rules in a new way that has the potential to benefit streaming and digital services.

Those decades-old rules, which the PROs have been operating under since 1941, require royalty collection societies to license songs at a fixed rate. In what’s been perceived as a blow to publishers, DoJ is pushing forpublishers and performing rights groups tolicense 100% of a song,even in cases involving songs with multiple songwriters.In those cases, songwriter societies will have to apportion the payment among the different writers.

Speaking to Billboard, which first reported the news, a publishing executive said: “This decision will create a clusterfuck of epic proportions for the US music publishing industry.”

During the two-year review of the consent decrees, BMI pushed for the withdrawal of digital rights to force publishers and music groups to negotiate their own free-market digital deals with publishers, rather than them getting licenses at rates usually set by the courts. The DoJ told music groups this week content owners should not be able to pull out of PROs for digital rights.

Partial withdrawal of digital licenses is possible in the European Union and in Australia too. Brett Cottle, Chief Executive, at APRA AMCOS told TMN:

“APRA and AMCOS’ rules have long permitted the withdrawal of repertoire across a range of usage categories, as well as non-exclusive licences back on a work by work basis.”

Martin Bandier, Chairman and CEO of Sony/ATV Music Publishing, has called DoJ’s interpretation of the consent decrees unjust.

“Its decision is going to cause a tremendous amount of uncertainty and chaos in a market place that has worked well for years and will adversely impact everyone in the licensing process, including PROs, licensees, music publishers and most of all songwriters who can ill afford to hire lawyers to figure out their rights under this inexplicable ruling,” Bandier said. “The decision raises more questions than answers.”

The review of the consent decrees was conflated by a lawsuit between the music industry and internet radio giant Pandora. In May last year a US federal court rejected appeals to have Pandora pay higher royalties and have access to fewer songs. Publishers believe streaming services pay unfairly low licensing rates under the 1941 antitrust consent decree.

The DoJ has not announced its recommendations publicly. In fact, the consent decree and the proposed enforcement of 100% licensing must be agreed upon by BMI and ASCAP. It’s expected the pair will urge a US federal court judge to review the conclusion but won’t be successful.

Brett Cottle told TMN he understands the industry backlash to the DoJ’s approach.

“Although the US consultation process seems to be still underway, the all-or-nothing approach evidently being taken by the DoJ seems contrary to the interests of all stakeholders – namely writers, publishers and licensees – and it is therefore completely understandable that it’s causing such shock and consternation.”