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Business News (more headlines) 08-10-2014

NMPA Submits Comments To DOJ On Modernizing Outdated Consent Decrees

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The National Music Publishers' Association submitted comments to the US Justice Department request for comments regarding review of ASCAP and BMI consent decrees

The National Music Publishers' Association ("NMPA") submits these comments on behalf of its music publisher members and their songwriter partners, who create and license the vast majority of songs enjoyed in the U.S. everyday. We applaud the Justice Department ("DOJ") for undertaking a serious review of the ASCAP and BMI antitrust consent decrees.1 NMPA believes the consent decrees have become a significant impediment to a well-functioning market for licensing the performances of musical works, resulting in inefficient licensing 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. In addition, pursuant to recent court decisions, individual publishers are prohibited from electing to negotiate new media rights directly without forfeiting their right to engage in any collective licensing at all, creating a licensing ecosystem that is unacceptable.

The music industry today is not the same as when the consent decrees were entered into in 1941, before the Internet, before satellite radio, and before digital streaming. Advances in digital technology have dramatically changed the way music is consumed. And, today, licensees include powerful and highly sophisticated digital distribution companies like iTunes, Google's YouTube, Spotify and Pandora, all of which possess significant power vis-à-vis the creators of music. The decrees must be substantially modified to reflect these realities, so that consumers can continue to have access to a wide variety of legal options for enjoying music across multiple platforms and devices and permit music creators to be fairly compensated for the use of their property, talent, and effort.

NMPA makes three primary recommendations for modernizing these decades-old decrees, to remove the confusion, uncertainty, and inequity that plague music performance rights licensing in the United States today.

1. 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 right organization ("PRO") in order to engage in direct, bilateral negotiation. The purpose of the decrees was to regulate the collective licensing of music when BMI and ASCAP licensed almost all music in the marketplace, not to prevent copyright owners from engaging in individual licensing, which is presumptively legal, and by promoting competition, achieves one of the overarching objectives of antitrust law. Just as licensees currently have the right to elect bilateral negotiations, so should individual publishers.

2. Allow the decrees to sunset or provide for automatic periodic assessment of their continued necessity. Current DOJ policy rejects the concept of perpetual decrees, particularly in rapidly evolving industries such as music distribution. Consistent with that policy, and reflective of recent changes that have increased competition in the licensing of performance rights, these decrees should provide for a definite sunset or, at least, automatic periodic assessment of their continued justification based on the structure of the licensing market.

3. Improve the rate-setting process. As long as the decrees continue to exist, they must be more efficient, fair, and market-responsive. 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.

NMPA believes these changes are essential to a more efficient and fair system of licensing music. They would help to restore a market-based mechanism for determining the fair value of creative works and give songwriters and publishers needed flexibility in responding to evolving consumer demand.

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