What are the ASCAP/BMI Consent Decrees?
In the United States, performing rights organizations — also known as PROs — collect and distribute music royalties of various kinds.
To learn more about PROs and how they work, check out our “Music Licensing 101: ASCAP, BMI, SESAC, and GMR: What is a Performing Rights Organization?” blog post.
The consent decrees governing the PROs were the byproduct or years of anti-competitive behavior by American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI) that resulted in Department of Justice (DOJ) intervention in the early 1940s. At the time, both PROs asserted significant dominance over the music marketplace, resulting in major antitrust harms to music users and consumers.
With the scales heavily tilted in favor of the PROs, the DOJ took action. The resulting consent decrees ensured that everyone would have fair access to the PROs extensive musical repertoires. The consent decrees were the government’s way of addressing anticompetitive behavior without tearing apart the music licensing industry. The Disruptive Competition Project (DisCo) explains it this way:
PROs gather many composition licenses together and offer them at a blanket rate to music buyers. This is, of course, called price fixing in antitrust terms. However, the DOJ recognized the benefits of PROs and negotiated a settlement that would allow the PROs to continue to operate unchallenged by antitrust laws as long as they were bound by certain rules that ensure the PROs played fair and didn’t abuse their immense power. This assessment of the PROs was later endorsed by the Supreme Court. The set of rules the PROs operate under is called the consent decrees, which cover the two largest PROs in the music industry — ASCAP and BMI. These consent decrees provide a floor of protections for music buyers.
In a market like the music industry, where concentrating all the musical works under a few organizations makes licensing efficient but also prone to anti-competitive practices, consent decrees help prevent potentially abusive behavior.
Although the consent decrees governing each PRO have been updated and amended on multiple occasions over the last seventy years, the protections they provide have been foundational to the building the American’s modern music marketplace. So why do they matter?
In a word: competition. As DisCo puts it:
A properly constructed consent decree between the government and a company accused of anticompetitive behavior can restore competition and foster new competitive entry…these decrees ensure that new entrants can obtain licenses, that those licenses will be set at fair rates, and that there won’t be discrimination between similarly situated music users.
For music licensees like venues, music streaming services, and broadcasters, efficient access to a PRO’s entire database at a fair price is critical. As a result of the consent decrees, both PROs introduced blanket licenses that make efficient access to a PROs entire musical repertoires possible.
For artists, the consent decrees also leveled the playing field. They ensure that everyone from emerging young writers to veteran hitmakers are treated the same in that they receive direct payment from their PROs under fair revenue shares.
Not only do the consent decrees safeguard competition, but they also prevent individual copyright owners from holding songs “hostage.” Consent decrees secure a 100% licensing framework, meaning that you only need a license from one copyright holder — very handy when there can be dozens or more copyright holders on a single song — to play the whole song.
Across the board, the ASCAP and BMI consent decrees have been a key resource for protecting competition and music users, making sure that the beat goes on.
Where can I learn more?
To learn more about consent decrees, check out resources like this in-depth consent decree explainer from the DisCo or this music licensing history piece by the NRB Music License Committee. You can also access the DOJ’s “Antitrust Division Review of ASCAP and BMI Consent Decrees 2014” and related documents on the DOJ website.
For more about the music licensing ecosystem, be sure to visit us at mic-coalition.org.
