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Judiciary Committee hears testimony for and against ASCAP/BMI consent decrees

hearing consent decrees overview

The Senate Judiciary subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing this morning to debate arguments for and against so-called Consent Decrees — decades-old laws which govern how ASCAP and BMI represent songwriters and publishers for music licensing. ASCAP and BMI work across several distribution categories, but today’s hearing (and the controversy over Consent Decrees generally) concentrated on streaming services.

The Judiciary Committee marketed the hearing, and its livestream, as if it were a newly released book: How Much For a Song? The Antitrust Decrees that Govern the Market for Music.

The Debate

The argumentative framework, to put it bluntly, was music services (pro Consent Decree) vs. rights-holders (against Consent Decree, or at least arguing for alteration). Broadcasters are aligned with the music services.

Consent Decrees regulate collective licensing of musical creations. They do not touch the rights of performers and labels, whose assets are regulated by entirely different government mechanisms in the U.S. The Consent Decrees make it possible for a distributor (e.g. music service or radio station) to stock a library of music at a set royalty rate, without negotiating with composers and publishers. ASCAP and BMI, the two largest Performing Rights Organizations (PROs) which collect royalties, “consent” to this collective licensing arrangement.

They are not consenting so willingly in the streaming era — hence government examination of the law’s validity. Songwriters think rates are too low, and agencies that represent them have only a cumbersome and expensive recourse: lawsuits which go before a government “rate court.”

Music services and radio stations like the Consent Decrees for allowing frictionless access to music for streaming and broadcast. Music publishers also benefit from the efficiency of collective licensing. They do not like the “all in or all out” aspect of the law, which prohibits rights-holders from selectively exiting the collective consent to negotiate specific rights with certain distributors.

Participants

Against this backdrop, the following expert witnesses sat in the hearing chamber this morning to deliver formal statements and answer questions:

  • Mr. Mike Dowdle, Vice President Of Business Affairs And General Counsel, Bonneville International
  • Ms. Jodie Griffin, Senior Staff Attorney, Public Knowledge
  • Mr. Chris Harrison, Vice President Of Business Affairs, Pandora Media, Inc.
  • Ms. Beth Matthews, CEO, American Society of Composers, Authors and Publishers (ASCAP)
  • Mr. Lee Thomas Miller, Broadcast Music, Inc. Songwriter Affiliate, President , Nashville Songwriters Association International
  • Mr. Matt Pincus, Founder And CEO, SONGS Music Publishing

Key argument points centered around how to best establish a free and competitive market; charges of collusion among music publishers; songwriter viability, and the clash of old law with modern music listening.

Points and Counterpoints

Nike Dowdle testified on behalf of the national Association of Broadcasters (NAB). He asserted that consent decrees create the fair market everyone espouses. “Without consent decrees, no fair market would exist.” He was also the first to accuse music publishers of “anti-competitive practices,” referring to reports of collusion among publishers when they grouped to negotiate outside of ASCAP and BMI.

That point was brought up again and again throughout the hearing. the argument is that the Consent Decrees establish order in a marketplace that could be hijacked by large publishers acting together outside of existing regulations. “When major publishers chose to license their digital rights to Pandora, they chose collusion over competition,” said Jodie Griffin. “At this moment in time we need to protect competition more than ever.”

Likewise, Chris Harrison of Pandora referred to “widely-known anti-competitive behavior.” He continued, “The government has a critical role to play in maintaining a fair and competitive industry.”

Elizabeth Matthews of ASCAP was a serious and determined witness. she advocated for songwriters, and said more than once that the law was out of date. “The use of music has increased exponentially, but the payments have not followed. For a songwriter, this is a terrifying trend.”

Matthews clearly differentiated Consent Decrees (needing change) from collective licensing in principle (should stay). “If the Consent Decrees are not changed and major publishers resign from ASCAP and BMI, then the system of collective licensing may collapse and everyone loses.”

Matt Pincus spoke as a small-business owner in the music licensing field. Many of his comments positioned himself, and others like him, between a rock and a hard place. “I have two very bad choices: Accept unfair government regulation, or withdraw entirely from collective licensing and suffer inefficiency and expense.”

How Streaming Works

At one point in the Q&A portion, songwriter Lee Thomas Miller compared the revenue a songwriter earns from radio play to streaming revenue. In so doing, he repeated (perhaps inadvertently) a mistake often made in such comparisons. He said that when a hit single gets a million radio spins, the songwriter gets a plaque, and, more importantly, good earnings. “A million [radio] plays, and we’re doing OK, taking our kids on vacations.” He complained that a million Pandora spins would deliver a drastically lower royalty payout.

Chris Harrison from Pandora leaped onto this, uninvited by any Senator. He noted that to make a correct apples-to-apples comparison of radio impressions to streaming impressions, it’s important to remember that streaming is one-to-one, while broadcast is one-to-many. Harrison was either quick with math or was prepared for the moment, and he observed that reaching one-million impressions (one million spins on Pandora) a #1 station in a major market would need only 16 spins. Miller did not reply.

Where From Here?

The unanswerable question is whether Consent Decrees will be adjusted, eliminated, or maintained as they are today. The Senate panel did not offer clear clues, and that notwithstanding, changing legacy law is always a heavy lift.

Senator and ex-comedian Al Franken lightened the mood toward the end, when he said, “This ain’t no way to earn a living,” and then remarked that he should write a song with that title. “It’ll be demo’d by the end of the week,” he promised. Someone asked how much it would earn in a streaming service. “Yeah, with three plays,” he cracked.

 

Brad Hill

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