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ASCAP settles Dept. of Justice inquiry, pays $1.75 million, admits nothing

ASCAP logo canvasASCAP, one of the major performing rights organizations (PROs) representing songwriters, publishers, and composers, has reached the end of an investigation by the Department of Justice, settling matters for $1.75-million, while admitting no wrongdoing.

A few threads were woven into this saga, which began during a complicated and drawn-out royalty rate battle with Pandora. Pandora won that litigation, saving considerable money with the court-ordered royalty rate, and winning ASCAP’s appeal also. The whole thing was a bad road for ASCAP, and got worse when the judge in that trial, Denise Cote, found what she described as “troubling coordination” among ASCAP and some of its most powerful represented publishers. The DoJ launched a probe.

Conflict of interest and anti-competitive behavior were the touchstones of the DoJ investigation. In the settlement, ASCAP agreed to remove exclusivity requirements from its representation deals with its clients. ASCAP asserts that it never exercised exclusivity clauses. Exclusivity, whether executed or not, violates the government-regulated Consent Decree which governs ASCAP’s publisher relations and licensing deals with music users (like Pandora).

Non-exclusivity enables ASCAP publishers to take over their own negotiating and deal-making for user of music, with any client, rather than remain subject to blanket licensing at statutory rates. This might seem confusing, because the Consent Decree dos not allow a publisher to remove partial rights from statutory licensing. That is a point of interest when dealing with streaming outlets — some publishers might prefer to remove their digital assets from ASCAP representation and negotiate those in the streaming realm. Doing so could inhibit the online music industry, intentionally pushing it back by removing the availability of blanket licensing from companies like Pandora.

The settlement outcome is that ASCAP may not create exclusive deals with publishers, which would prevent publishers from negotiating all their rights with outlets. But the blanket licensing part of the Consent Decree remains, allowing a digital outlet to benefit from statutory rates across all participating ASCAP music owners.

On the “troubling coordination” front, left over from the Pandora case, ASCAP is acquiescing to disallow participation of its board members who represent publishers, during licensing negotiations.

 

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Brad Hill

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