ASCAP, BMI Consent Decrees Remain Necessary To Promote Fair, Efficient Music Licensing
August 6, 2014
The Consent Decrees governing the licensing of musical works performance rights by ASCAP and BMI provide important protections for licensees from potential anti-competitive behavior by the performance rights organizations (PROs) and their protections should be maintained in full, NAB said in comments filed today with the Department of Justice's Antitrust Division.
In its filing, NAB voiced support for the views expressed by the Television Music License Committee and the Radio Music License Committee to the DOJ, and cited an analysis by economist Steven Peterson expounding the public interest benefits of the Consent Decrees. The Consent Decrees, Peterson’s analysis found, creates numerous efficiencies through the aggregate licensing, enforcement and administration of the rights to musical compositions. In addition, the analysis cited the conduct of SESAC – a PRO not governed by a consent decree – to highlight the abuses possible by PROs with blanket licensing ability that is unrestricted by DOJ oversight.
"The aggregation of rights gives the PROs tremendous market power, which in the absence of the Consent Decrees would allow the PROs to extract supra-competitive pricing for their licenses," said NAB in the filing. "Radio and television broadcasters lack control, in certain instances, over the particular songs that are broadcast. Even with respect to programming created by broadcasters, each of the PROs has aggregated such a large repertory that there is often no practical way to avoid playing music licensed by each of the PROs."
NAB referred to recent rulings in two antitrust cases brought against SESAC in which the courts expressed the view that there was sufficient evidence that the PRO had engaged in anti-competitive behavior that gave licensees no choice but to purchase SESAC's licenses.
NAB also urged the DOJ to not amend the Consent Decrees to allow some music publishers to selectively withdraw their catalogs from the PROs for some licensees but not for others. If allowed to do so, music publishers could discriminate against some licensees and leverage their outsized market power relative to those licensees to extract to pay exorbitant fees.
"The major music publishers with substantial catalogs have essentially the same market power as the PROs because their catalogs do not compete with one another, and each has aggregated a large enough number of songs from individual songwriters as to make the licensing of their catalogs indispensable for broadcasters," said NAB. "If allowed to circumvent the Consent Decrees, those publishers will abuse their market power to extract supra-competitive rates, terms, and conditions from the blanket licensees they choose to target."
If the DOJ decides to amend the Consent Decrees, NAB said, then it should focus on requiring greater transparency by ASCAP and BMI. The PROs should provide more accurate and comprehensive information about the musical compositions that are being licensed, which could help develop an alternative to the anti-competitive effects of blanket licenses.
"Lack of meaningful access to such information has increased transaction costs and hindered licensing activities – both direct and collective," said NAB in its comments. "Repertory transparency would allow licensors, licensees, and the rate courts to better understand the rights that are being licensed and their value."