ASCAP & BMI Consent Decrees Will Not Be Modified; DOJ Antitrust Div.

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Here is a copy of the Statement of the Department of Justice on the Closing of the Antitrust Division’s Review of the ASCAP and BMI Consent Decrees (Aug. 4, 2016).  In short:

... the consent decrees, which describe the PROs’ licenses as providing the ability to perform “works” or “compositions,” require ASCAP and BMI to offer full-work licenses. The Division reaches this determination based not only on the language of the consent decrees and its assessment of historical practices, but also because only full-work licensing can yield the substantial procompetitive benefits associated with blanket licenses that distinguish ASCAP’s and BMI’s activities from other agreements among competitors that present serious issues under the antitrust laws. Moreover, the Division has determined not to support modifying the consent decrees to allow ASCAP and BMI to offer “fractional” licenses that convey only rights to fractional shares and require additional licenses to perform works. Although stakeholders on all sides have raised some concerns with the status quo, the Division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact. The Division’s confirmation that the consent decrees require full-work licensing is fully consistent with preserving the significant licensing and payment benefits that the PROs have provided music creators and music users for decades. 

First, the DOJ described the background of the consent decrees.  Thereafter, the DOJ found that there is broad consensus that ASCAP and BMI as currently constituted fill important and procompetitive roles in the music licensing industry; the consent decrees require full-work licensing; modification of the consent decrees to permit fractional licensing by ASCAP and BMI would not be in the public interest; and other modifications to the consent decrees would not be appropriate at this time (e.g., modified to allow PRO members to “partially withdraw” rights and thereby prevent the PROs from granting licenses that include those rights to certain users (in particular, digital music services) but not to other music users).  Further,  the DOJ stated that assuming ASCAP and BMI proceed in good faith, the Division will forbear for one year from any enforcement action based on any purported fractional licensing by ASCAP or BMI.  Also, the DOJ identified certain guidelines and practices that may be useful as the industry moves towards such a shared understanding on fullwork licensing.  Lastly, the DOJ concluded that the consent decrees remain vital to an industry that has grown up in reliance on them.  But the consent decrees are inherently limited in scope, and a more comprehensive legislative solution may be possible and preferable.

ASCAP Settles DOJ Action Concerning Exclusive Licensing Agreements

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USA v. ASCAP, No. 41-1395 (S.D.N.Y. May 12, 2016) (Doc. 749).

The Dep't of Justice and ASCAP have settled a claim concerning approximately 150 ASCAP agreements that granted the performing rights organization exclusive licensing rights allegedly in violation of an earlier consent decree.  The settlement prohibits ASCAP form entering into any agreement under which a songwriter, composer, or music publisher grants ASCAP the exclusive right to license the right of public performance in musical works, and further limits the licensing activities of board members and music publishers.  Further, ASCAP agreed to pay $1.75 million.

FCC Denies ASCAP's Challenge To Pandora's Acquisition Of FM Radio Station

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In re Pandora Radio LLC, FCC 15-129 (FCC released Sep. 17, 2015).

The FCC denied ASCAP's motion for reconsideration of (1) the Media Bureau's decision granting the application to assign the license of KXMZ FM radio station in South Dakaota to Pandora; and (2) the Commission's declaratory ruling, which held that it would serve the public interest to permit a widely dispersed group of shareholders to hold aggreage foreign ownership in Pandora in excess of the 25% benchmark set out in Section 310(b)(5) of the Communications Act of 1934 (subject to certain conditions).  The FCC re-affirmed its finding that ASCAP lacked standing to challenge the license assignment.  ASCAP also claimed that the Bureau should have examined the rationale and motivation behind Pandora's transaction, specifically, Pandora's hope by acquiring the radio station to qualify for lower music license royalty rates.  The FCC found that "whatever the impact of its acquisition on such royalty rates may be, Pandora has undertaken to offer programming responsive to the interests of its local listeners, and ASCAP has failed to identify any substantial and matieral question about Pandora's ability to provide such service in the public interest."

Second Circuit Affirms ASCAP Rate Court In Pandora Dispute Over Partial Withdrawals And License Rate

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Pandora Media, Inc. v. ASCAP, 14-1158-cv(L) (2d Cir. May 6, 2015).

The Second Circuit Court of Appeals affirmed the ASCAP "rate court's" decision: (1) granting Pandora summary judgment that the ASCAP consent decree unambiguously precludes partial withdrawals of public performance licensing rights; and (2) setting the rate for the Pandora‐ASCAP license for the period of January 1, 2011 through December 31, 2015 at 1.85% of revenue.

ASCAP contended that publishers may withdraw from ASCAP its right to license their works to certain new media music users (including Pandora) while continuing to license the same works to ASCAP for licensing to other users.  The appellate court agreed with the district court’s determination that the plain language of the consent decree unambiguously precludes ASCAP from accepting such partial withdrawals. Also, the Court found that under the circumstances, it was not clearly erroneous for the district court to conclude, given the 6evidence before it, that a rate of 1.85% was reasonable for the years  in question.

Transmittal Of Publisher's Lawyer's Analysis To ASCAP Did Not Waive Attorney-Client Privlege

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Good Morning You Prod. v. Warner/Chappell Music, No. 2:13-cv-04460 (C.D. Cal. filed 07/25/14) (Doc. 132).

The Court concluded that the 1979 transmittal by a music publisher to ASCAP, of letters prepared by the publisher's attorneys, did not waive the attorney-client privilege applicable to those materials.  The letters "speak directly to the validity of the copyrights" in the song Happy Birthday To You.  "The [transmittal] letter is silent as to the specific reason why [the publisher] provided materials from its outside lawyer to the association’s lawyer regarding the validity. However, the only sensible conclusion that the Court can draw – that is, based on the evidence presented, it is more likely than not – is that ASCAP needed or requested this information to properly represent [the publisher] in exploiting its song rights. ASCAP would only have been able to sue an infringer if it could demonstrate that its principal [the publisher] owned a valid copyright"

Rate Court Sets ASCAP Fee For Pandora

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IN RE PETITION OF PANDORA MEDIA, INC., No. 12 Civ. 8035 (S.D.N.Y. filed 03/18/14) [Doc. 738].

In a lengthy decision, the ASCAP rate court held that: "The headline rate for the ASCAP-Pandora license for the years 2011 through 2015 is set at 1.85% of revenue for every year of the license term. Pandora is entitled to take a deduction for any direct payments to publishers made following their partial withdrawals from ASCAP."

BMI Rate Court Holds Withdrawals Of Digital Rights Ok

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BMI v. Pandora Media, Inc., 2013 ILRC 3301, No. 13-cv-4037 (S.D.N.Y. Dec. 19, 2013).

The BMI rate court (District Court Judge Louis Stanton) holds that when BMI no longer is authorized by music publisher copyright holders to license their compositions to Pandora (and other New Media Services), those compositions are no longer in BMI's "repertory" and BMI can no longer license them to Pandora or any other applicant.  Accordingly, the Court denied Pandora's motion for partial summary judgment.  The holding is contrary to the ASCAP rate court's finding.

The BMI court focused on section 106 of the Copyright Act and a copyright owners right to "license, or not license, the performance of their compositions as they see fit.  In the exercise of that right the publishers have agreed with BMI to withdraw their New Media performance licensing rights from Pandora and New Media Services.  That is well within their power as copyright holders."  The Court held that songs that publishers have withdrawn New Media licensing rights are not in BMI's new media repertory and therefore BMI cannot deal in or license those compositions to anyone.  "BMI's repertory consists of compositions whose performance BMI 'has the right to license or sublicense.'"

Notably (in fn. 4), the BMI rate court acknowledged that its finding is contrary to that of the ASCAP rate court (Judge Cote).  The BMI court stated: "The inconsistency is just a difference of view of the power of the application of Section 106 and the copyright holders' rights under the Copyright Law, and will be resolved by the Court of Appeals for the Second Circuit or decree amendment procedures, or managed commercially."

EMI and Sony Permitted To Intervene In ASCAP/Pandora Rate Court Matter

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In re Petition of Pandora Media, Inc. [related to US v. ASCAP]; No. 1941-cv-01395 (S.D.N.Y. filed Dec.13, 2013) [Doc. 733].

EMI and Sony moved to intervene in the Pandora rate-court proceeding (ASCAP) after the Court's summary judgment opinion issued on September 17, 2013 in which the Court held that the Second Amended Final Judgment ("AFJ2") prevented ASCAP from withholding from Pandora the rights to compositions in its repertory while licensing those compositions to other users. In re Pandora Media, Inc., 12 Civ. 8035 (DLC), 2013 WL 5211927 (S.D.N.Y. Sept. 17, 2013) (“September 17 Opinion”). The summary judgment practice was precipitated by putative publisher partial withdrawals of rights from ASCAP.

The Court analyzed Rule 24 of the Federal Rules of Civil Procedure.  It considered whether the publishers' motion to intervene was timely (mixed finding), and whether the publishers possess an interest related to the subject of the action (yes).  Ultimately, the Court granted the motion to intervene on the condition that the Publishers "may not raise new arguments on appeal that were not raised by ASCAP, with the exception of the Section 106 of the Copyright Act argument".

ASCAP Required To License ALL Songs In Its Repertory To Pandora

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In re Petition of Pandora Media, Inc., No. 1:12-cv-08035-DLC (S.D.N.Y. Opinion & Order filed 09/17/13) [Doc. 70], related to U.S. v. ASCAP, No. 41 Civ. 1395.

ASCAP must license all songs in its repertory to Pandora, even though certain music publishers have purported to withdraw from ASCAP the right to license their compositions to “New Media” services such as Pandora, holds the ASCAP rate court in interpreting the consent decree under which ASCAP operates.  "Because the language of the consent decree unambiguously requires ASCAP to provide Pandora with a license to perform all of the works in its repertory, and because ASCAP retains the works of 'withdrawing' publishers in its repertory even if it purports to lack the right to license them to a subclass of New Media entities, Pandora’s motion for summary judgment is granted."

In April 2011, ASCAP began to allow members to withdraw from ASCAP its rights to license their music to New Media outlets, while allowing ASCAP to retain the right to license those works to other outlets.  Subsequently, several music publishers withdrew their New Media licensing rights from ASCAP, and Pandora then engaged in license negotiations directly with those publishers.  On July 1, 2013, Pandora filed a motion for summary judgment, seeking a determination that “ASCAP publisher ‘withdrawals’ [of New Media rights] during the term of Pandora’s consent decree license do not affect the scope of the ASCAP
repertory subject to that license."  ASCAP argued that “’ASCAP repertory’ refers only to the rights in musical works that ASCAP has been granted by its members as of a particular moment in time.” Pandora argued that ASCAP repertory” is a “defined term[] articulated in terms of ‘works’ or ‘compositions,’ as opposed to in terms of a gerrymandered parcel of ‘rights.’” The Court found that Pandora was correct.  “ASCAP repertory” is defined in the consent decree in terms of “works” and not “individual rights” in works with respect to classes of potential licensees.  The Court also held that Pandora's subsequent negotiations with the publishers did not alter interpretation of the consent decree because Pandora is not a party to the consent decree.

2d Cir Affirms Adjustable Carve Out Rates For Performance Rights Licenses

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BMI v. DMX, Inc., Docket Nos. 10-3429-cv and 11-127-cv (2d Cir. decided June 13, 2012) (decision).

The 2d Circuit holds that the consent decrees with the performing rights organizations permits blanket licenses subject to carve-outs to account for direct licensing by the music user.  Then, the 2d Circuit held that the rate-court (SDNY) set reasonable rates.

ASCAP Royalty For Mobile Devices Affirmed By 2d Cir.

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ASCAP v. MobiTV et al., Docket Nos. 10-3161-cv(L) (2d Cir. May 22, 2012).


This  appeal  concerns determination  of  the  proper  royalty  that ASCAP is  entitled to  receive  for  a  blanket  public performance license for music in the ASCAP repertory that is embodied in  television  and  radio  content  to  be  delivered  to  viewers  and listeners using mobile telephones.

When the parties could not agree on a price for the performance rights to the music component of Mobi’s offerings, ASCAP sought a reasonable rate in the District Court for the Southern District of New York, acting as a rate court pursuant to  a  consent  decree.  Following  a  bench  trial,  the  District  Court
(Denise  Cote,  District  Judge)  issued  a  judgment  on  July  7,  2010, establishing various royalty rates, depending on the nature of the programming, and designating the revenue bases to which those rates apply. See  In re Application  of MobiTV, Inc.,  712  F. Supp.  2d  206 (S.D.N.Y.  2010).  ASCAP  appealed,  contending  that  the District Court’s rate formulation should have been based on the retail
revenues  received  by  the  wireless  carriers  from  sales  to  their customers, rather than the content providers’ wholesale revenues paid by Mobi.  The Second Circuit disagreed with ASCAP and AFFIRMED.

9th Cir. Affirms Public Performance Liability Against Restaurant

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Range Road Music, Inc. v. East Coast Foods, Inc., No. 10-55691 (9th Cir. filed Jan. 12, 2012).

The 9th Circuit affirmed the district court's grant of summary judgment and legal fees in favor of plaintiffs (ASCAP) against defendant (restaurant/lounge). Defendant was vicariously liable for copyright infringement related to the public performance, both by a live band and by a CD, of copyrighted songs. Plaintiff's proof was an investigative report by a visitor to the premises. The report did not need to be by a certified expert because "identifying popular songs does not require 'scientific, technical, or other specialized knowledge'.” The Court rejected defendant's argument that a showing of substantial similarity was required for a public performance case. The Court properly awarded attorney's fees to Plaintiff.

Downloads Not Public Performances; Fees Must Be Recalculated

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US v. American Society of Composers, Authors and Publishers, 09-0539-cv (L), NYLJ [web_id_#], at *1 (Court, Decided September 28, 2010) [LINK]

"This case presents two distinct questions that arise from the transmittal of musical works over the Internet: First, whether a download of a digital file containing a musical work constitutes a public performance of that musical work; and, second, whether the district court, acting in its capacity as the rate court, was reasonable in its assessment of the blanket license fees of Yahoo! Inc. and RealNetworks, Inc. (collectively, "the Internet Companies") to publicly perform any of the millions of musical compositions in the American Society of Composers, Authors and Publishers ("ASCAP") repertory.

For the reasons set forth below, we affirm the district court's ruling that a download of a musical work does not constitute a public performance of that work, but we vacate the district court's assessment of fees for the blanket ASCAP licenses sought by the Internet Companies and remand for further proceedings."

ASCAP Blanket Fees for YouTube

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U.S. v. ASCAP, NYLJ 5/21/2009 "Decision of Interest" (S.D.N.Y. May 13, 2009) (Connor, J.)

Proceeding was before the Court for the setting of interim fees for a blanket license for the public performance of any of the more than two million musical compositions in the repertory of the American Society of Composers, Authors and Publishers ("ASCAP") on the streaming video service provided on the Internet by YouTube, LLC f/k/a YouTube, Inc. ("YouTube").

The Court saw no reason why the basic formula that ASCAP proposed and the Court adopted in United States v. ASCAP in re AOL, RealNetworks and Yahoo! Inc., 562 F. Supp. 2d 413 (S.D.N.Y. 2008) ("In re AOL, et al.") was not equally appropriate in the present context.

It is therefore ordered (1) Within thirty days YouTube shall pay to ASCAP the sum of $1,610,000 for interim fees accrued through March 31, 2009; and (2) Within one week after the end of each calendar month after March 2009 until the determination of final fees in this proceeding, YouTube shall pay to ASCAP the sum of $70,000 for interim fees accruing during that month. These interim fees are subject to retroactive adjustment when final fees are determined.

Streaming Rate - ASCAP

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ASCAP license fee dispute over streaming digital services, rate holding here. USA v. ASCAP, No. 41-1395 (WCC) (S.D.N.Y., White Plains, opinion and order 4/30/08):

"[T]he fee for a blanket license for unlimited performance of all music in the ASCAP repetory for all open periods to December 31, 2009 shall be determined by multiplying the total revenue of the licensed business unit ... less customary deductions for advertising sales commissions and traffic acquisition costs, by a music-use-adjustment fraction whose numerator is the total number of hours music is streamed to users by the licensee ... and whose denominator is the total number of hours of use of the licensee's website ... and applying to the resulting music-use-adjusted revenue a fee rate of 2.5%."

[See conclusion].

Zeppelin Named as Plaintiffs in ASCAP Suits

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We've covered the public performance cases filed by ASCAP and BMI, and usually the named plaintiffs are (i) major publishers, like EMI and SonyATV, and (ii) the artists' boutique-publishing LLC. So, it was with great surprise that OTCS discovered this public performance case with the members of Led Zeppelin as individual named plaintiffs.

Don't get excited. The complaint is as vanilla as the rest. But, it is interesting to observe that Led Zeppelin appears to handle their publishing personally, at least on some level.

The Caption -- No. 1:08-cv-00604-WDM (D.Colorado filed Mar. 24, 2008)

ODNIL MUSIC LIMITED, FIFTY-SIX HOPE ROAD MUSIC LIMITED, JAMES PAGE (JIMMY PAGE), ROBERT PLANT, JOHN BALDWIN (JOHN PAUL JONES) and PATRICIA BONHAM, individually and as Guardian of the children of deceased author JOHN BONHAM, JASON BONHAM and ZOE BONHAM

Plaintiffs,

v.

FRANKIE’S TOO, INC, and
FRANKIE D. PATTON

BMI Public Performance Suit

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Not to be outdone by the competition (i.e., ASCAP), BMI and various publishing companies has filed suit in the Western District of New York against a Rochester nightclub for copyright infringement arising out of the defendants' allegedly unauthorized public performance of musical compositions. Does this look familiar?

[Broadcast Music Inc. v. Pittsford Cafe and Bistro, Ltd.; case 6:08-cv-06047-MAT; filed 1/31/2008]