Don McLean forever memorialized Feb. 3, 1959—the date of the plane crash killing Buddy Holly, Ritchie Valens, and J. P. “Big Bopper” Richardson—as “the Day the Music Died” in his song “American Pie.” If you ask most songwriters or music creators, June 30, 2016—the date the Dept. of Justice ruled on music licensing consent decrees—may go down in history as “the day the music rolled over in its grave.”
How severe are the rulings by the Dept. of Justice? “This would create Armageddon in the professional songwriter community,” Nashville Songwriters Association (NSAI) Executive Director Bart Herbison said in a press release. “I am stunned and sickened [by the ruling],” NSAI President Lee Thomas Miller added. “DOJ did not take the impact on songwriters into account when issuing this ruling.”
Songwriting and music licensing is one of the most strongly regulated areas in entertainment, dating back to pre-World World II policies put in place by the federal government to control how the two largest performing rights societies (PROs), ASCAP and BMI, can license music. It goes without saying that the music industry is entirely different today than it was 60 years ago…or even six years ago. Streaming services, in particular, have greatly disrupted the industry and led to tremendous declines in the revenue paid to songwriters. However, songwriters’ hands are mostly bound, because the federal government’s Consent Decree mandates how songwriters can be paid.
Each songwriter belongs to a PRO. That PRO is responsible for collecting royalties on the songwriter’s behalf when a composition is licensed, including licenses for digital stream services, use in public places, on radio stations, TV shows, etc.When a song has more than one writer, it’s common for PROs to share administration rights to the song specific to their individual writer member, meaning each party must license the song to be used on radio or offered to a digital music company for performance rights licensing. For example, a song with three co-writers might be equally administered by BMI, ASCAP and SESAC depending on the PRO affiliation of the writers.
The songwriting community, led by ASCAP and BMI and other songwriter advocacy groups like NSAI, has been negotiating changes to the Consent Decree with the DOJ for more than three years. The DOJ denied virtually all requests from music publishers and songwriters, and also ruled that each PRO can license 100% of a song for use, regardless of what percentage of the song a PRO represents. This is a problem because it will discourage songwriters from collaborating with other writers outside their own PRO (essentially, many of your favorite songs might have gone unwritten) and create havoc on a licensing and administration side, as each PRO currently lacks most information about writers outside their own organization.
Also in the ruling, the DOJ denied requests from songwriters to be able to withdraw their catalog from digital licensing services, which would essentially allow them to negotiate fair market rate payments from digital services like Spotify, Soundcloud and Apple AAPL +0.35% Music. Record labels and recording artists, who are not bound by the pre-WWII Consent Decrees, already have these rights. This issue is at the root of reports you’ve probably heard about songwriters getting ridiculously low payouts from digital streaming services, including “All About That Bass” songwriter Kevin Kadish’s claim he made $5,679 from 178 million plays on Spotify.
Martin Bandier, Chairman and CEO of publishing companySony /ATV, said of the DOJ ruling:
“We are incredibly disappointed by the unjust way the Department has decided to interpret the consent decrees. Its decision is going to cause a tremendous amount of uncertainty and chaos in a marketplace that has worked well for years and will adversely impact everyone in the licensing process, including PROs, licensees, music publishers and most of all songwriters who can ill afford to hire lawyers to figure out their rights under this inexplicable ruling. The decision raises more questions than answers.”
Bandier’s disappointment is shared by many in the music industry.
Although the DOJ has ruled, this debate is far from over. “We are disappointed with the DOJ’s recommendation, which after years of hard work and discussion brings us no closer to much-needed consent decree reform than when we started,” BMI president Mike O’Neil said.
The U.S. Copyright Office and members of Congress including Doug Collins (GA) and Hakeem Jeffries (NY) had asked DOJ not to enforce 100% licensing prior to the ruling. The U.S. Copyright Office further said “such an interpretation of the consent decrees that would require these PROs to engage in 100-percent licensing presents a host of legal and policy concerns.”
ASCAP, BMI and other songwriter advocacy organizations are currently regrouping to determine their response to the Dept. of Justice. U.S. Rep. Marsha Blackburn told the Tennesseanthe response she has heard “seems universal” against the DOJ’s move and that she hopes the DOJ will reconsider.
Those on the opposite side of the debate—namely, digital companies like Google GOOGL +1.11% and Spotify who don’t want to pay higher royalties to songwriters—argue that the Consent Decree is status quo and that songwriters and PROs should continue to be bound by it.
source: forbes.com by Brittany Hodak