By: Mike Montgomery
When the Copyright Royalty Board issued its rate increases last winter, it seemed like the battle over reasonable royalty rates for music was finally settled. But the music labels were furious because they were banking on extracting far more from yet-to-be-profitable digital music services, so they could enjoy even higher margins at the rest of the industry’s expense.
Undeterred, the publishing arms of these foreign-owned behemoths, already raking in record revenues from streaming services, now want to leverage their monopoly control over musical works to extract higher royalty payments to further enrich themselves instead of the songwriters they represent. But they’ve run into an obstacle: their collection goons, ASCAP and BMI (aka the performance rights organizations, or PROs) are limited by federal antitrust consent decrees.
And that’s a good thing. The Department of Justice originally sued ASCAP and BMI – which together control use of approximately 90 percent of all music – for collusive, anticompetitive behavior more than 70 years ago. Today, the consent decrees are the only obstacles keeping these cartels from throttling the growth of innovative music platforms.
And yet the music mafia is begging the DoJ to bless the very kind of collusive behavior that landed them in antitrust court in the first place; behavior that the consent decrees safeguard against.
Today, when a digital music service (or anything else that plays music) negotiates a license with the PROs, they get the full use of the song even if ASCAP or BMI controls less than the full ownership stake in that song. In other words, any partial owner of a song can license the entire work (they just need to share revenues proportionally with other owners). This is known as “100 percent licensing,” and is a bedrock of the current blanket licenses.