Dept. of Justice v. BMI
Department of Justice v. BMI
The Songwriting Saga Continues
by Deborah E. Johnson, Esq.
featured in Lawyer’d Magazine, First Edition
In a highly debated case concerning the licensing rights of Performing Rights Organizations (PRO’s), the Department of Justice (DOJ) is appealing a federal court decision to reject the DOJ’s interpretation of BMI’s consent decree regarding musical works licensing.
[A copy of the decision can be read here: https://www.digitalmusicnews.com/wp-content/uploads/2012/04/usa_v_bmi_opinion_2016_09_16.pdf]
WHY DOES THIS MATTER? Songwriters would be affected greatly by any change to current interpretations or use of BMI’s consent decree that has been in place for years. According to BMI, changes proposed could affect the songwriter’s “choice of collaborators, as well as which PRO pays [your] royalties and the value [you] receive for the use of [your] creative work.”1
FACTS: Under the current consent decrees, most PROs have operated using a method in which respective PROs (organizations such as BMI, ASCAP, and SESAC) collect and pay out royalties to songwriters, using fractional licensing where only the shares of a musical work which belong to each respective writer are licensed to a third party. This type of royalty pay-out has been consistently used in the music licensing industry for decades. Fractional licensing allows co-owners of a musical work to license only their share of that work and receive payment from the licensing thereof, from their respective PRO, regardless of whether all songwriters are members of the same PRO.
The change proposed by the DOJ would require 100% licensing of all musical works, as opposed to the currently utilized fractional licensing. The DOJ’s proposed changes to PROs consent decrees could provide for one co-writer the opportunity to obtain 100% control of licensing to a musical work, without the consent of the other co-writers.
In September 2016, BMI prevailed in the legal battle against the Department of Justice when federal judge Louis Stanton, a Senior Judge for the United States District court for the Southern District of New York, sided with BMI, ruling that BMI is free to engage in the fractional licensing of musical works.2 The DOJ now appeals to the U.S. Second Circuit Court of Appeals, seeking once again to force the practice of 100% licensing by PROs in the United States.
BOTTOM LINE: Songwriters do not support the Department of Justice’s proposed change to the interpretation of the current consent decrees. The DOJ’s new interpretation could force members of a PRO to collaborate only with other members of the same PRO to keep a writer who belongs to a competing PRO from 100% licensing a work without one’s consent.
According to BMI’s website, nearly 13,000 affiliates signed a letter delivered to the DOJ, stating that their affiliates do not support the practice of 100% licensing.1
ASCAP also issued a statement on the DOJ appeal. "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 for today’s world.”3
MY TAKE ON THE ISSUE: Many of the clients I represent are singer/songwriters. As a full- service entertainment lawyer, I have frequently assisted in the registration and licensing of musical works. Several clients are members in good standing with BMI, ASCAP, and SESAC. For many, songwriting is their full-time profession. Career songwriters depend on fair licensing laws to make a living. The de-fractioning of licensing could cut songwriter’s royalty payments significantly. For new songwriters, new laws concerning fractional licensing could delay an opportunity to make a career transition into the field. Yet for others, an unfavorable decision could derail their songwriting career all together.
Songwriters should be free to fractionally license any musical work in their repertoire. Entertainment investors, producers, publishers, creative writers, directors – when seeking a musical work to exploit, will quickly move on to another work that fits the criteria they are seeking, if the process of licensing becomes too complicated and convoluted. There are millions of musical works to choose from, and in many circumstances, time is of the essence. Songwriting collaboration is the norm among the music community and the likelihood that all songwriters will belong to the same PRO is frankly, unlikely. Additionally, songwriters must commit to only one PRO at a time. Removing fractional licensing could change the music community significantly, making it too difficult to obtain licenses to desired musical works. I am unsure of the DOJ’s intention behind the appeal. One thing I can be sure of, the music community does not support the DOJ’s position on 100% music licensing.*
UPDATE ON CASE CAN BE FOUND HERE:
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