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Department of Justice Fires Another Shot at Songwriters as Licensing Battle Escalates

Variety logo Variety 5/19/2017 Paula Parisi
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The Department of Justice on Thursday fired another salvo in the battle over song licensing, filing a brief in support of 100% licensing, which BMI and other performing rights organizations (PROs) adamantly oppose.

The DOJ previously announced it would appeal the Sept. 16 order by federal Judge Louis Stanton, who rejected what many felt was a radical interpretation by the U.S. Department of Justice’s (DOJ) calling for 100% licensing. Judge Stanton elected to allow BMI to continue its longstanding practice of fractional licensing.

“The DOJ’s 100% licensing position, an entirely new interpretation never raised by the Department before, unfairly advantages music users at the expense of the American songwriter and upends a longstanding industry practice that has worked effectively for decades,” BMI president and CEO Mike O’Neill said. “We believe Judge Stanton’s decision is correct and look forward to vigorously defending our position in the Court of Appeals for the Second Circuit.”

The maneuvering underscores a larger battle, as stakeholders – including the technology firms, the creatives that drive services and the government agencies that oversee both – gear up to modernize outdated copyright laws. While all parties want to update existing regulations – some have remained relatively unchanged in 100 years – everyone seems to have a different idea as to the best way to do it.

“One-hundred-percent licensing would allow any one co-owner of a work to license 100% of the work without needing the permission of the other co-owners,” O’Neill explained. “Essentially, your writing partner could have 100% control over the licensing of your song, without your say, subject only to an obligation to account to you for your share of licensing revenues.” It would also allow for the addition of new fees based on who was collecting.

This particular battle stems back to 2014, when BMI asked the DOJ for a review to grant three “big asks”: digital rights withdrawal so publishers could withdraw and do their own deals; second was bundling – the ability to offer more than public performance rights; the third was to go to an arbitration model versus rate courts.

The organization was shocked when the DOJ refused on all points, but advanced 100% licensing (interpreted as a concession to Silicon Valley interests). Battles make strange bedfellows, and O’Neill recently proclaimed longtime rival PRO ASCAP “our new best friends on the Hill.”

Accordingly, ASCAP stands in solidarity with BMI on this, with CEO Elizabeth Matthews stating:  “The Second Circuit’s ruling in this case will affect the rights of more than a million American songwriters and composers, thousands of whom have expressed strong opposition to the DOJ’s position and we are hopeful the Court will affirm Judge Stanton’s decision. ASCAP looks forward to resolution of this matter as we continue to advocate for modernizing the consent decrees to better reflect the realities of the digital music marketplace.”

While O’Neill admits no one was surprised by the DOJ pursuing its appeal, he expressed hope for “the opportunity to sit down with the new administration and educate it about the chaos that would result in the marketplace if the DOJ’s interpretation of BMI’s consent decree were implemented.” A 100% approach would upend “how songwriters get paid, how much they’re paid and when they’re paid.”

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