DOJ Won’t Terminate ASCAP, BMI Music Licensing Decrees

There’s opportunity to address inefficiencies, but COVID-19 kept parties from getting into granular negotiations, he said during a Vanderbilt University livestream. Due to the reliance on the decrees, termination “became really not an option in the short term,” said Delrahim. “Modification was much more realistic, but COVID prevented” that.

"The Antitrust Division has considered carefully stakeholders’ views on all of these issues and recognizes that continuing disagreements exist among artists and within the music community regarding the benefits, drawbacks, and continued need for the ASCAP and BMI consent decrees," said Delrahim in his prepared remarks about DOJ’s two-year investigation. "Continued review of, and stakeholder input concerning, the decrees remains necessary to ensure the decrees continue to satisfy their purpose to protect competition and do not act as an impediment to innovation."

DOJ met with various performance rights organizations, digital streaming services, venues and artist groups throughout the review, said Delrahim, who will step down Tuesday: “Everybody had a little different, peculiar issue.” He noted Amazon and Netflix concerns about licensing songs embedded in movies: “There’s a lot of really technical areas here.”

Critics contend the decrees “prevent” ASCAP and BMI from “experimenting with innovative licensing terms to assess whether new or different terms would foster competition,” he said. But proponents note a significant reliance on the decrees, which are “largely working,” he added. Many composers, songwriters and publishers see the ASCAP and BMI licenses as “the most meaningful way to be compensated.”

NAB welcomed the news. “DOJ's decision not to take action will ensure that ASCAP and BMI continue to fairly and efficiently license musical works in a manner that is pro-competitive,” said CEO Gordon Smith.

DOJ's declining to change or eliminate the decrees is a positive for broadcasters, said Wilkinson Barker broadcast attorney David Oxenford. Since the consent decrees were reviewed late in President Barack Obama's administration and then again by the current DOJ, Delrahim’s proposal for periodic reviews is effectively the status quo, Oxenford said. DOJ has already been engaging in periodic reviews, said Benjamin Marks, a Weil Gotshal intellectual property lawyer. Marks told us it’s not clear what the Biden administration’s policies on music licensing will look like, but with back-to-back reviews of the consent decrees on the books, it seems unlikely that they would immediately take up the matter again.

ASCAP and BMI said in a joint statement they were disappointed no action was taken but encouraged by Delrahim’s remarks. ASCAP CEO Elizabeth Matthews and BMI CEO Mike O’Neill noted a few of Delrahim’s points: “Songwriters are the backbone of the music marketplace and must be paid fairly; blanket licensing is incredibly efficient; ASCAP and BMI are innovating to serve the needs of the industry; greater competition and not compulsory licensing is the answer; and the value of music is best decided in a free market.”

The Digital Media Association supported the announcement. “Music licensing is complex, but throughout their existence, the decrees’ protections have fostered an efficient marketplace that in turn has been critical to the resurgence and growth of the music industry,” said DiMA President Garrett Levin. “The ability to fairly and efficiently license music to perform to the public benefits fans, songwriters and U.S. businesses alike and has been foundational in the establishment of a modern music system where more music is being listened to than ever before and more creators are being paid."

The MIC Coalition also welcomed DOJ’s decision: “Maintaining this framework will ensure that millions of American businesses can efficiently and fairly pay for the right to play and perform live and recorded music, which is crucial as venues struggle to open their doors again in the wake of the pandemic, and as more Americans access music from an ever-growing array of platforms.”

The decrees should be reviewed every five years to assess whether they continue to “achieve their objective to protect competition and whether modifications to the decrees are appropriate in light of changes in technology and the music industry,” Delrahim said, noting ASCAP and BMI control about “90% of the public performance licensing market.” DOJ should consider during further review increased competition in the licensing marketplace, “including increased direct licensing or technological developments that may affect the market,” he said.

Antitrust enforcers and Congress should continue to study network effects, in which a winner-take-all approach results in concentrated market power “in the hands of a very few number of players,” the outgoing antitrust chief said. Antitrust law is not about price effects; it’s about “effects on quality, and privacy can certainly be an element of quality.” Congress needs to explore the administration of antitrust law to see if changes are needed, he added: If courts decide Google violated antitrust law (see 2010300027), the administration of antitrust law is “something we really need to take a look at.”