NMPA believes the consent decrees have become a significant impediment to a well-functioning market for licencing the performances of musical works, resulting in inefficient licencing and failing to provide fair market-based compensation for songwriters and music publishers.
The consent decrees impose an inherently inflexible court-administered rate-setting process that is unresponsive to market forces and fails to serve the legitimate interests of any stakeholder, including the consumers of music. NMPA makes three primary recommendations for modernizing these decades-old decrees, to remove the confusion, uncertainty, and inequity that plague music performance rights licencing in the United States:
- Allow publishers to elect to negotiate directly digital distribution rights. The decrees should be modified to allow individual publishers to withdraw selectively rights from any performance rights organisation (“PRO”) in order to engage in direct, bilateral negotiation. Just as licensees currently have the right to elect bilateral negotiations, so should individual publishers.
- Allow the decrees to sunset or provide for automatic periodic assessment of their continued necessity. Current DOJ policy rejects the concept of perpetual decrees.
- Improve the rate-setting process. For example, users should be required to pay for music they use during negotiations and any rate court proceedings. Rates should be determined through a more expedited and predictable procedure, such as arbitration, rather than through an expensive and time-consuming proceeding in federal court. And, any arbitration or judicial proceeding should be required to take into account market negotiated rates as benchmarks.
Although the consent decrees were imposed to protect against anticompetitive behavior, they are now used to distort and manipulate the market for the benefit of a handful of powerful digital distribution companies that are the gatekeepers between music’s creators and those who want to enjoy that music. It should be clear that these digital distribution companies do not speak on behalf of artists, songwriters or music users, but on behalf of large corporate interests that are concerned about the impact of a competitive and open market on their bottom lines.
As they are currently interpreted, the consent decrees unreasonably force publishers to licence the performance rights for all of their works collectively, binding individual publishers to ASCAP and BMI for all purposes even as the process for engaging in the direct licencing of rights to some music users is made more efficient.
Thus tied to ASCAP and BMI for the licencing of performance rights, individual publishers lack the flexibility to change the way they licence their works in order to respond to changes in digital technology. Licensees alone have the right to decide when to directly negotiate a performance license with publishers, and can further decide to abandon direct negotiations and licence through ASCAP or BMI if they determine the terms to be more favorable.
The consent decrees currently provide no recourse for songwriters or publishers to receive compensation for the performance of their works before an interim rate is set. A music user need only apply to ASCAP or BMI for a licence to begin immediately using all of the musical works in the PRO repertory, but the publisher and songwriter of those works has no power under the consent decrees to ask the court to set an interim rate – only the music user or PRO can do that. The decrees should be modified so that, upon application to ASCAP or BMI for a licence, the applicant would receive a licence and may begin performing the works covered by the licence, provided it begins paying to the PRO an interim rate.