By John Bodnovich, Shannon Meade, and Tara Good
December 4, 2018 at 5:00 am ET
When a customer walks into a bar, restaurant, hotel, brewery or winery, they’re focused on enjoying the experience, not the intricacies of music licensing. Instead, hundreds of thousands of public hospitality venues across the nation are responsible for purchasing a music license from performing rights organizations, like ASCAP and BMI, through a confusing, opaque and often cumbersome process. If music is being played in their business via CD, DJ, band, a streaming platform, karaoke, iPad, radio, television or otherwise, they must buy a license.
ASCAP and BMI’s functional duopoly of the performance rights market — in which they reportedly control more than 90 percent of existing performance rights — is permitted under the agreements they entered into with the Department of Justice, which are intended to prevent collusion and market manipulation. These agreements, called “consent decrees,” have been remarkably profitable for the PROs, with both ASCAP and BMI each having cleared more than $1 billion in revenue in 2017. The consent decrees have also proven beneficial to more than 75 years’ worth of retailers, restaurants, breweries, taverns, hotels, and TV broadcasters and digital music services who have secured the performance rights to play large catalogs of songs through PRO “blanket license agreements.”
Yet despite decades of successful operability for venues and unprecedented profits for ASCAP and BMI, as well as the content creators they represent, this system is now at risk.
Earlier this year, Makan Delrahim, assistant attorney general for the Antitrust Division of the DOJ, indicated that he is considering terminating the ASCAP and BMI consent decrees, and has failed to propose an alternative music licensing framework that restrains the PROs from abusing their market power and position. A sudden termination of the consent decrees would have a devastating effect on the venues that make music available to consumers and has sparked great concern within the music user community.
Without the consent decrees in place, ASCAP and BMI could discriminate against public venues by manipulating the price and availability of blanket licenses, subsequently harming small businesses across the country. This would be a terrible development for the music marketplace. Small businesses from New York City to Salt Lake City would be faced with an impossible choice: attempt to navigate a chaotic licensing landscape with the potential for exorbitant price demands, discriminatory conduct by licensors, uncertainty about rights obtained, and a sky-high risk of ruinous infringement claims, or stop playing music — including live music — altogether.
While the current music licensing system is not perfect, the ASCAP and BMI consent decrees have allowed the music marketplace to thrive — benefiting consumers, songwriters and venues who perform music. In fact, in 2016, the DOJ completed a two-year review of the ASCAP and BMI consent decrees, “determining that no modifications are warranted at this time.” More than 1,250 small business owners have signaled their agreement by signing on to a letter urging assistant Attorney General Delrahim to protect these decrees.
Congress has also taken note of the importance of the ASCAP and BMI consent decrees and has committed to engaging in the discussion on these important protections. Included in the recently passed Music Modernization Act are important provisions to ensure congressional oversight as the DOJ continues with its ongoing review of the ASCAP and BMI consent decrees.
In the coming months, Congress should have opportunities to address the concerns of music consumers by getting to the bottom of Delrahim’s plans for the consent decrees. It is reasonable to expect that members of the House Judiciary Committee and others will want to know more about a matter that affects music lovers in every congressional district, and which could jeopardize the licensing system that enables millions of businesses across the country to play and pay for publicly performed music.
As the 116th United States Congress is seated in January, it is imperative that legislators ensure the ASCAP and BMI consent decrees are maintained. Regulatory certainty is important for any business, and the longer that music venues’ reliance interests in the legitimate and long-established music licensing system are left dangling, the worse off the artists who create the music and the consumers who enjoy it will be.
The ASCAP and BMI consent decrees are critical to preventing anti-competitive behavior in the music industry, maintaining efficient licensing for music users, and providing fair compensation to music creators.
We urge Congress to fulfill its important oversight and deliberative role to protect these consent decrees and the music licensing ecosystem.
John Bodnovich is the executive director of American Beverage Licensees, Shannon Meade is the vice president of public policy & legal advocacy at the National Restaurant Association, and Tara Good is the vice president at WineAmerica. All three organizations are members of the MIC Coalition — an organization committed to a rational, sustainable and transparent system that will drive the future of music and ensure consumers have continued access to music across a variety of platforms, venues and services.
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