About Those Consent Decree Battles…DoJ Just Lost a Key Battle

The messy state of affairs pertaining to consent decrees and royalty licensing just got even messier as a court ruled against the US Department of Justice late last week.

In a typical “news dump” fashion, Judge Louis Stanton in the US District Court for the Southern District of New York issued a decision at 5 p.m. Friday, just two hours after a hearing to consider BMI’s challenge of DoJ’s ruling.

In his ruling, Judge Stanton said he “took issue with the Justice Department, citing a decades-old consent decree between BMI and the government, which is still in effect,” Reuters reports.

“Nothing in the consent decree gives support to the (Justice Department Antitrust Division’s) views,” Stanton wrote in his decision, according to Reuters. “It does not address the possibilities that BMI might license performances of a composition without sufficient legal right to do so.”

Stanton’s six-page decision can be read here.

To recap: DoJ had ruled that BMI and ASCAP, the two major performance rights organizations (PROs) with ownership of most licensing and royalty rights for most songs, would be forced to license all songs under their purview if they could affirm to “full work” licenses, in which all parties given credit for a song agreed to joint ownership of the work. This is quite a change from the “fractional” licenses BMI and ASCAP have been issuing, where it was assumed the responsible parties would be covered by one or both of the PROs and therefore everyone would get their fair share.

This was after a review of the consent decree system that took several years to complete and, as soon as DoJ finalized its ruling in August, both BMI and ASCAP promised to pursue legal actions.

As noted by Billboard, Stanton said in his ruling that “The consent decree neither bars fractional licensing or requires full-work licensing,” the exact opposite of what DoJ ruled when giving ASCAP and BMI one year to work it out and begin using full-works licensing.

The quickly turned-around ruling was welcomed by both organizations.

“Today’s decision is a victory for the entire music community,” BMI president and CEO Mike O’Neill said in a statement released that afternoon.

Similarly, ASCAP CEO Beth Matthews called the decision “terrific news for all of us in the songwriting community as we continue to work on modernizing the consent decrees to reflect the real world.”

DoJ, naturally, is “reviewing” the order, Reuters reports.

At stake, to boil it down, is the licensing rights and regulations for the work of more than a million songwriters and composers: ASCAP has 575,000 artists in its registry while BMI is responsible for 700,000.

It is unclear at this time whether the decision on Friday will have any implications for the lawsuit filed against DoJ last week by the Songwriters of North America, which calls the full-work licensing an “illegitimate assertion of agency power.”

For more analysis, read here, here and here.