Broadcasters made their case to the Senate Judiciary Committee Tuesday (March 10) on why it should not overhaul the consent decrees that allow performance licensing organizations (PROs) like ASCAP and BMI to collectively negotiate the rights to music on TV, radio and the Internet.
The hearing was on whether the 80-year-old regime was in need of tweaking, overhauling or elimination in the digital age.
Making the broadcasters' case was Mike Dowdle, VP and general counsel at Bonneville.
He told the senators that despite the technological advances in how music is performed, the consent decrees allow for a "fair and efficient music licensing marketplace." In their absence, he argued, the PROs would not have that antitrust governor on their 90% share of public performance rights.
Dowdle pointed out that ASCAP and BMI aggregate rights from a host of musical works and provide a blanket license for their performance at a single price, regardless of whether an individual work is actually performed. Without the consent decrees, which were struck with the Department of Justice in 1941 following complaints of anticompetitive activity, Dowdle says such control over music licenses would be a de facto antitrust violation.
He said that the system has generally worked, though a bit more transparency would be helpful.
Music publishers at the hearing are looking to get selectively out of the BMI/ASCAP regime so they can independently negotiate with digital suppliers like Pandora, arguing they are being undervalued in digital play. Dowdle said that can't be allowed.
"[I]n an attempt to circumvent the consent decrees, large music publishers have sought to selectively withdraw from ASCAP and BMI, to directly negotiate with certain digital services," he said in his testimony. "Two federal courts interpreted the consent decrees to prohibit such partial withdrawals, and now the PROs are asking both DOJ and Congress to amend them. Such a modification for partial withdrawals cannot be permitted."
While network programming is handled on that end, syndication and commercial music is not. Dowdle said that without a blanket license, broadcasters could be subject to significant penalties for airing music over which it has no editorial control.
ASCAP CEO Elizabeth Matthews said that in a perfect world the consent decrees would be removed because in the digital age it makes it harder for songwriters and composers to be compensated. She is all for collective licensing, which is why there is an ASCAP and BMI. It is the government oversight through the consent decrees she thinks needs to go.
Pandora VP Christopher Harrison said that the consent decrees provide essential protections because they require the PROs to make licenses available on nondiscriminatory terms and conditions.
"While music publishers and the PROs cloak their requests for increased royalties in the rhetoric of free-market capitalism, what they really seek is a licensing regime that is structured to insulate publishers and PROs against the forces of competition," he said.