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NMPA'S ISRAELITE ON CONSENT DECREES AND B.S.

With word that the Department of Justice may be prepared to reconsider the consent decrees affecting ASCAP and BMI—with a possible public-comment period to begin the process—we asked some prominent biz folks who actually understand this stuff to explain it to us.

National Music Publishers’ Association chief David Israelite was a major player in the push for the Music Modernization Act, which was passed by Congress and signed into law last year; he says that the time has come for a change on this front as well.

“The public performance right of songwriters and music publishers is not regulated by law. It's a free market,” Israelite says. “So if you write a song that is publicly performed, whether that's over broadcast airwaves or a digital stream or in a live venue like a bar, restaurant or hotel, you have a property interest in your copyright—they have to license it from you. And it is a free-market exercise that is unlike the record labels who have a very narrow public performance right; they only have one for digital radio, and a lot of people get confused by that. For songwriters and publishers, they have a very broad performance, right, and it's not regulated by law.”

Israelite notes that there are four PROs whose business is to license performance rights for writers and publishers: ASCAP, BMI, SESAC and GMR. Of these, only ASCAP and BMI operate under consent decrees (SESAC and GMR operate in a free market). This stems from a 1941 DOJ decision based on the conclusion that these two had too much market power compared to the fledgling broadcast industry. Naturally, a lot has changed since then. The broadcast sector is now incredibly powerful and consolidated, as are the other media that license music.

(New consent decrees passed after 1979 had built-in sunset clauses, by the way, but that doesn’t affect the 1941 decree.)

Any change, it should be said, would happen slowly, and deliberation is the watchword among all interested parties.

“What's happening now,” says Israelite, “is that the people who license from ASCAP and BMI are so concerned about the possibility that they would have to negotiate the value of songs in a free market that they're already running to Congress asking for help” in case action is taken. The MIC Coalition, an umbrella lobbying group of broadcasters, DSPs and “general licensees” (bars, restaurants, hotels, etc.), has been most vocal about how disruptive any change to the status quo would be. But Israelite says this claim isn’t the real issue.

"This kind of fear-mongering—that they couldn’t possibly operate without the government making the songwriters license? It’s just bullshit, because they do it today in many other forums."

“I think that they just don't want to be in a marketplace where they have to negotiate the value of the songs,” he says. “We're sympathetic that if anything were to change with the consent decrees, it would have to be done in a thoughtful, slow process. You can't just change the rules overnight. Where we disagree is that if the Department decides to walk away, which would be way down the road, we don't think that the government should step in and basically take over what is currently a private business of songwriting and regulate it. But [the MIC Coalition’s constituents] do want the government to take over the business of songwriting; they want a compulsory license. So that songwriters can't say no and the price is not set in the marketplace.”

But of course, as he and many publishers point out, lots of rights are negotiated without a compulsory license. “So this kind of fear-mongering—that they couldn’t possibly operate without the government making the songwriters license? It’s just bullshit, because they do it today in many other forums,” Israelite insists. He adds that such claims from digital behemoths like Google, Amazon and Apple are “the most offensive—the idea that the world’s largest companies need antitrust protection against the songwriters. It’s preposterous.”

Israelite also points to the saga of the Radio Music Licensing Committee, a broadcast coalition he notes was assembled to “negotiate prices for radio. This is what GMR is suing them for right now, because they sued GMR and then GMR turned around and said, ‘You think we're an antitrust problem? Why did you all get to come together and negotiate prices with 100% of the market together?’ For the broadcasters to complain about market concentration? Look at the consolidation in the broadcast industry.”

Meanwhile, when the broadcasters create their own content and get into a licensing dispute with a carrier over fees, Israelite notes, “What happens if they don't like the price being offered by the carrier? You have a blackout. So when they negotiate their intellectual property for someone else to carry, they want to be in a free market and they want to be able to say, if we don't like your price and you can't use it. We can walk. But then when they want to use someone else's intellectual property they want a compulsory license. It’s the most hypocritical stance I've ever seen. It's just unbelievable.”

 

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