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Justice Department to Uphold Music Licensing Agreements

The Justice Department has completed its review of 75-year-old consent decrees that govern how music rights organizations set rates for licensing songs — and they are proposing no changes.

“Although stakeholders on all sides have raised some concerns with the status quo, the division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact,” the DOJ said in a lengthy statement explaining its reasoning on Thursday.

ASCAP and BMI had been pushing the DOJ to revise — or even abolish — the consent decree, first entered into in 1941 as part of antitrust cases, by arguing that the changing face of the industry makes significant modifications necessary. They have argued that the different ways that consumers listen to music, such as with streaming subscription music services, make it difficult for songwriters to earn a living.

The DOJ’s antitrust division, which started the review in 2014, rejected proposed modifications, including ones in that would allow for fractional licenses that would require additional licenses to perform certain works. Instead, the DOJ was adamant that the consent decrees require licenses be granted on a “full work” basis. Radio stations, television stations, bars, restaurants and digital music services depend on licensing from ASCAP’s and BMI’s repertories.

But the DOJ said it concluded that “only full-work licensing can yield the substantial procompetitive benefits associated with blanket licenses that distinguish ASCAP’s and BMI’s activities from other agreements among competitors that present serious issues under the antitrust laws.”

David Israelite, president and CEO of the National Music Publishers Assn., said that the decision was “a massive blow to America’s songwriters.”

“The interpretation that the consent decrees demand that all works must be licensed on a 100% basis is both unprecedented and disastrous to the songwriting community,” he said. “The decision represents a misunderstanding of copyright law and directly violates the legal guidance given by the Register of Copyright. The defiance displayed by these career antitrust lawyers in ignoring the legal opinion of the Register of Copyright is shocking.”

Update: ASCAP and BMI issued a joint statement in which they said that the DOJ decision “will cause unnecessary chaos in the marketplace and place unfair financial burdens and creative constraints on songwriters and composers.”

BMI said that it is taking legal action to challenge 100% licensing, while ASCAP is pursuing a legislative solution.

In a letter to members on Thursday, ASCAP president Paul Williams wrote that “unfortunately, rather than updating the antiquated framework of laws that govern how songwriters license their work and tackling some of the biggest challenges facing the music industry, the DOJ chose to avoid a solution at this time and maintain the current decrees. The DOJ also announced that it plans to upend decades of industry practice by imposing new ‘full work’ or ‘100% licensing’ requirements on the PROs, despite very public opposition to this proposal.”

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