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Bart Herbison’s public comment on collective rights management rules review

The Consent Decrees are not only outdated, they are obsolete. With new delivery systems for music emerging almost daily, the only possible way to keep pace is in the marketplace. Allowing the marketplace to develop new and innovative music licensing and collection models is the path to establishing true competition.

The ability of ASCAP and BMI to compete in the music-licensing marketplace is increasingly difficult under the current Consent Decree structure. The inability or lack of clarity imposed by Consent Decrees to allow ASCAP and BMI to collect more than just performance royalties is also an economic disincentive to competition in the music licensing arena. Competitive oversight can best be accomplished within a free marketplace by sunsetting the ASCAP and BMI Consent Decrees or with the creation of a meaningful arbitration system to replace the current Rate Court structure.

The compulsory rules in the Consent Decrees have severely limited the ability of American songwriters and composers to see the worth of their compositions keep pace with inflation. Record labels now employ a 360 contract model with artists which see the artist share sources of income that were not traditionally part of the agreement between a label and artist. This can include music publishing, which puts great economic pressure on artists to write songs, further diminishing the songwriter/publisher share of the music revenue pie.

DOJ should allow both ASCAP and BMI to collect all royalty streams. The efficiencies gained by bundling mechanical, performance and other royalties collections will increase efficiency which could produce dramatic savings that would allow pricing flexibility in a free market.

Creators who are clients or members of current or future collection bodies should have full transparency and dispute resolution mechanisms that ensure they are being paid in a fair and timely manner. Songwriters should be represented on dispute resolution bodies that should have an ability to look at pertinent payment records at little or no cost when resolving disputes. This should apply to any entity licensing music and collecting all or a portion of a songwriter/composer’s royalties. The DOJ should consider forming any music licensing/collection body under a not-for-profit type structure to ensure accurate payments to songwriters and composers.

If music publishers begin a partial or whole withdrawal of rights from ASCAP and BMI there is a near certainty that those collective licensing models would suffer greatly or collapse entirely. How efficient can direct licensing be if each music service must deal individually with each music publisher instead of a collective society? How efficient can direct licensing be when many songs have co-writers, often multiple co-writers, each represented by different publishers? In such circumstances ASCAP and/or BMI can still play a vital role in administering direct licenses.

An arbitration system would constitute a vast improvement over the current Rate Court system of resolving differences between ASCAP, BMI and licensees. Digital services have often used the Consent Decrees Rate Court mechanisms to manipulate payments in the marketplace. In many cases, if fair market value evidence were admissible in setting their royalty rates, songwriters would have otherwise received higher compensation.

If ASCAP and BMI are allowed to license and collect all royalties, including mechanical royalties, competition would be fostered and songwriters, composers and artists would pay lower collection costs; savings that could be passed on to the consumer. Many new music distribution business models need to acquire multiple licenses. Efficiencies would be created because of the micro-penny nature of royalties in interactive streaming and payees being able to deal with a single entity.