If you have been following the machinations by the Obama Justice Department [sic] over amending the ASCAP and BMI consent decrees, you may have found yourself wondering who was responsible for rejecting the good faith efforts of the songwriting community in favor of a cynical back room deal with multinational tech companies and broadcasters. I […]
Let’s look at the implications of the DOJ 100% rule for the writers of the 5th most popular Hip Hop Song in the US this week.
These are the four samples in For Free, by DJ Khaled featuring Drake. Each of those sampled songs also has multiple writers. Consequently the list of writers for the composite work is quite long. In this case there are 13 Songwriters, 4 BMI publishers and at least 3 non BMI publishers. 6 writers use ASCAP to license performing rights. 6 writers use BMI and one writer is Canadian so they use SOCAN. As is always the case with works composed of samples, these writers have a co-writer agreement to spell out ownership percentages and then an agreement that specifies each party will license and collect it’s own fractional share. “You do your business and collect your money, I do my business and collect my money”
This is how the “Tax” comes in. The DOJ 100% licensing rule says fractional licensing is “illegal” under the BMI/ASCAP consent decrees so two things could happen.
- All thirteen writers and 7 publishers must throw out the old agreement and come together and negotiate a new co-writer agreement that allows either BMI/ASCAP to license this song in full, and either pay writers directly or pass it through to the other PRO. That’s 20 entities that may all have to agree on this final document. What if one ASCAP writer will only accept payment from ASCAP another ASCAP writer is cool with being paid from BMI to limit overhead deductions. Imagine if each of these parties are represented by a lawyer? What are the legal fees? $20,000k? This is the first tax on hip hop.
- If the 20 parties can’t agree? Or what if one of the authors is deceased? Maybe the heir can’t be found or the estate is unsophisticated and says “no re-negotiation?” Then the work violates the DOJ rule and can no longer be part of the ASCAP and BMI repertoires. This song becomes “stranded.” It will not be possible to perform this song in the US. No ASCAP or BMI royalties. That’s the second tax on hip hop.
Further I worry that because Hip Hop uses so many samples and co-writer deals that require fractional licensing that music users (radio stations, tv etc) begin to avoid the entire genre because they aren’t sure which tracks are “stranded” and hence unplayable in the US.
Maybe that’s a third tax on hip hop.
Getting the right result for our corporate masters.
We need to get the OIG to investigate or even recommend the disbanding of the DOJ Antitrust Litigation Section III over their handling of the 100% song licensing rule. This is getting totally ridiculous.
First: there is the very real chance of corruption here as this appears to have been rammed through at the behest of Google by former Google lawyer Acting Assistant Attorney General Renata Hesse. See full timeline of Google takeover of Antitrust Division:
The DOJ Antitrust Division Litigation Section III/AG Lynch/And WhiteHouse needs to get the shit FOIA-ed out of them on this alone. Everybody involved in this sorry episode needs to be investigated.
Second: Look at how stupid/Juvenile the DOJ division is. In a brief to Judge Stanton in defense of their 100% licensing rule they arrogantly take a potshot at the US Copyright Office because they dared to oppose the DOJ on this. In reference to this Kelsey Shannon says:
“the question at issue, however, is one of antitrust law and decree interpretation, not copyright law.”
The reason this is so arrogant is because the Copyright Office was not in disagreement with the DOJ on copyright issues! The Copyright Office was weighing in on the structure of the music licensing market as it stands and the effect of the DOJ rule on private contracts between songwriters; administration costs; downstream licensing and loss of repertoire to BMI and ASCAP. In short the Copyright Office noted it would be extremely disruptive and result in less competition and less efficiency.
The DOJ knows this. But these idiots are now further disgracing themselves by trying to mount a false and misleading PUBLIC RELATIONS campaign against the US Copyright Office for opposing them. (Appears letter was leaked to journalists before making publicly available, hence public relations campaign).
This is the bureaucratic equivalent of telling the Copyright Office “Shut the fuck up we are the anti-trust division.”
The argument has no substance. Who are these clowns over their anyway?
Investigate them. Prosecute them. Fire them all.
Music Tech Policy Podcast with David Lowery and Steve Winogradsky. Great stuff from Steve on how the DOJ 100% licensing rule will affect TV broadcast and syndication among other things.
David Lowery, Steve Winogradsky and Chris Castle discuss the implications of the new rule by the U.S. Department of Justice re-interpreting the ASCAP and BMI consent decrees to require 100% licensing and prohibiting partial withdrawal.
David Lowery is the founder of Cracker and Camper van Beethoven, leading artist rights advocate and writer of The Trichordist blog, and teaches at the Terry School of Business at the University of Georgia at Athens.
Steve Winogradsky is a senior music lawyer and co-proprietor of the music services company Winogradsky/Sobel in Los Angeles. Steve teaches at UCLA and Cal State Northridge and is the author of a leading legal handbook Music Publishing: The Complete Guide.
Chris Castle is founder of Christian L. Castle, Attorneys in Austin, Texas and edits the MusicTechPolicy blog. He is formerly an adjunct professor at the University of Texas School of Law, and lectures at law schools, music schools…
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Some casual reading on set top box proposal. But it’s important to note that the issue here is remarkably similar to the DOJ 100% licensing rule.
1) non-legislative likely unconstitutional attempt to establish what is essentially a statutory license.
2) interferes with private contracts.
3) comes at the behest of Google int the 11th hour of Obama administration.
Copyright law, ever a sore point in some quarters, has found a new field of battle in the FCC’s recent set-top box proposal. At the request of members of Congress, the Copyright Office recently wrote a rather thorough letter outlining its view of the FCC’s proposal on rightsholders.
In sum, the CR’s letter was an even-handed look at the proposal which concluded:
As a threshold matter, it seems critical that any revised proposal respect the authority of creators to manage the exploitation of their copyrighted works through private licensing arrangements, because regulatory actions that undermine such arrangements would be inconsistent with the rights granted under the Copyright Act.
This fairly uncontroversial statement of basic legal principle was met with cries of alarm. And Stanford’s CIS had a post from Affiliated Scholar Annemarie Bridy that managed to trot out breathless comparisons to inapposite legal theories while simultaneously misconstruing the…
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You may not realize this yet but the new 100% DOJ licensing rule, attempts to put an enormous financial and compliance burden on BMI/ASCAP songwriters. Read the rule folks. Within the next year we are required to indemnify our PROs and the services that use our songs, that our co-writers won’t sue if they start licensing 100% of a co-written song. IF YOU HAVE CO-WRITER AGREEMENTS THAT SAY EACH WRITER ADMINISTERS THEIR OWN SHARES YOU WILL HAVE TO RENEGOTIATE THOSE AGREEMENTS.
I have a remarkably small number of songs in my catalogue of 400+ songs that will require this fix. But I estimate it will be a minimum $1,000 in legal fees for each of those agreements. If you are a professional songwriter in Nashville, instead of a performer/songwriter like me it is likely that you have a lot of co-writer agreements to modify. You could be facing tens of thousands of dollars in legal fees to renegotiate those co-writer agreements.
Fuck these people. I’m sick of it. Aren’t you?
We tried to reason with these fucks and explain just how disruptive this 100% licensing bullshit was gonna be.
THE FUCKING US COPYRIGHT OFFICE TOLD THEM IT WOULD BE CHAOS.
Yet they didn’t’ listen.
The DOJ Antitrust Litigation Division Section III appears to be completely in the pocket of Google so they just went ahead and did it anyway. Because it fucking helps Google, no one else. It is the only logical explanation.
Maybe we should bring on the chaos? If songwriters are gonna be locked in a Kafkaesque nightmare with no due process, no appeal, no reasoning and no recourse? Maybe we should bring the whole system down. Break the entire music licensing system.
Fortunately I think the DOJ overreach on this one may have given us the monkey wrench we needed.
See songwriters can’t really strike. We aren’t considered laborers so we can’t form unions. The closest thing we have to unions are our non-profit “performing rights societies” or PROs. The largest and most well known of these are ASCAP and BMI. And these have been under “temporary” justice department consent decrees for 75 years, basically because there was essentially previous threat of something like a strike.
Because we are not unions and we produce a good, if we collectively decided to withhold our goods I suppose the US Government (and Google controlled) DOJ Antitrust Division Litigation Section III could come after us for collusion or some other trumped up charge. And given their thuggish, corrupt and unconstitutional behavior since ex-Google lawyer Renata Hesse arrived to oversee this division you can bet they WOULD come after us.
However I think the DOJ over reached on this one. Here’s how we get away with it.
We don’t do anything.
Look at the clause below.
“To facilitate this adjustment and ease the transition to a common understanding, the Division will not take any enforcement action based on any purported fractional licensing by ASCAP and BMI for one year, as long as ASCAP and BMI proceed in good faith to ensure compliance with the requirements of the consent decrees. During this year, to the extent doubt exists about the PROs’ ability to license specific works, the Division expects that ASCAP and BMI will take the steps necessary to eliminate such uncertainty, including obtaining from songwriter and publisher members the assurances they need and, to the extent necessary, removing works from their licenses if they cannot be offered on a full-work basis. In order to facilitate this transition, the Division strongly urges industry stakeholders to explore means of further promoting transparency, including transparency regarding the identity of rightsholders from which music users may license any works they cannot obtain from ASCAP and BMI.”
You see even though this is a Kafkaesque nightmare, the DOJ still seems to realize they can’t go back in time and make previously legal private contracts between songwriters illegal. Something to do with the constitution…. But they can require PROs to ask songwriters to give them “assurances” that there are no longer co-writer agreements that prevent 100% licensing. But the DOJ can’t make us give those assurances.
What if we didn’t? What if we did nothing? Give no assurances and provided no information on co-writes and whether co-administration agreements exist that prevent full work licensing. Remember we are not legally required to respond. And if the DOJ tries to force us to respond…well that is exactly how autocracies get started.
See here is the thing. We call their bluffs. This isn’t like we are dealing with the Counter Terrorism part of the DOJ, these are a bunch of pussy assed Harvard/Yale/Berkeley political appointees that would cross the street or lock their car door if they saw a musician walking down the sidewalk towards them.
Is the DOJ Antitrust Litigations Section III, really just gonna let all millions of songs in the BMI and ASCAP catalogues disappear from radio, tv, syndicated television shows, bars, jukeboxes, streaming services, and webcasting services? Especially considering many of these services are locked into four, six even eight year contracts with BMI and ASCAP. There just went their cushy revolving door job at Sirius XM, YouTube or Cox Media!
We should just sit back eat some popcorn and enjoy the show. Let’s make Renata Hess and the DOJ explain to music users what the fuck just happened.
DO NOTHING. MAKE THEM FIX IT.
To the barricades. What if we refused to comply? What if we withdrew our music from every PRO? We could bring the entire music licensing system crashing down. No legal music for TV, radio, streaming, YouTube, movies, restaurants, venues and bars? Maybe we should burn the whole fucking thing down. Let the DOJ explain to the public why there is no music.
The below statement has been issued by NSAI Board President and songwriter, Lee Thomas Miller on August 4, 2016.
“I cannot emphasize strongly enough how ludicrous this DOJ ruling is. NSAI has had multiple conversations and meetings with the DOJ.
When I met with the assistant Attorney General, who is behind this, I graphically explained to her and her team the damage that the current, archaic music licensing and rate setting process is having on the songwriters. I then told her that her 100% licensing plan will threaten the last stream of income we have.
I am disgusted that they are proceeding with this hostile attack against the smallest business in America- the songwriter. Please know that we at NSAI will not be silent. We do not accept this.
Songs do not fall out of the sky. They are created slowly through…
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(Performing rights organizations or PROs are unions of songwriters. They are also licensing organizations that peform a valuable service to the public. They allow a quick way for any business big or small to get a license to play music. You’ve heard of BMI, ASCAP right? These are the main two PROs. There are also two other smaller ones SESAC and GMR. But most of this blog concerns the DOJ rules that govern BMI and ASCAP).
I’m gonna make this very easy for everyone to understand. These are the companies and organizations that make up the MIC-Coaltion. As a venue or restaurant your interests in music licensing are represented by National Restaurant Association, Alcohol Beverage Licensees or National Retail Federation. They are all members of this group.
As far as we can tell this was the only group (along with Google) that was pushing the DOJ to change song licensing from the historical and internally accepted standard of fractional licensing to “100% licensing.” Or forcing a single co-writer to license the song for everyone else.
Google (the de facto leader of the MIC Coalition) especially wanted songs to be licensed this way because of the threatened lawsuit above. See Google could get a license to many of Pharrell (and other GMR artists’) songs, by getting DOJ to force his BMI and ASCAP co-writers to license songs. Clever right? That’s why Google formed this coalition right about the time this dispute began. And let’s not kid ourselves, Google formed this coalition and drove the entire lobbying effort.
Google to restaurants and venues: “Kumbaya, Let’s all work together to keep our songwriter royalty rates low.”
Translation: “Hey restaurants, bars and venues want to be human shields?”
Yes, in reality Google was simply using these other organizations as human shields. It was quite predictable that restaurants, bars and venues would end up as collateral damage. Google doesn’t care about anyone but Google.
This is Renata Hesse. She is the Acting Assistant Attorney General of US. She oversees DOJ Antitrust Litigation Section III that has decided to meddle relentlessly in music licensing space. She also represented Google when she was in private practice right before she (re) joined the DOJ. She has been the DOJ point person on this issue. She even met with songwriters to explain to them why this new rule would be good for them! How nice!
Too bad she should have recused herself from this matter because she worked for Google on Antitrust issues before coming back to DOJ. Can you say conflict of interest? She also violated Obama administration ethics rules by getting involved in this.
Shortly before the MIC Coaliton was formed the DOJ put forth this proposal to radically change how music is licensed. Odd timing? Did Mic Coalition leader Google know it was coming?
Many people in the music industry (both creators of music and users of music) were perplexed by the DOJ sudden fixation on the issue. Until the DOJ put forth this bizarre “fix” for something that wasn’t broke, no one in the industry (music creators or users) questioned the fractional licensing of songs. It was so perplexing my own congressman Doug Collins asked the Register of Copyrights to explain (see above).
And this is the response from the Register of Copyrights. In the recent Copyright Office music licensing consultation, NO ONE asked to change music licensing from fractional to 100% licensing (see above). The Copyright Office makes it unequivocally clear. So who supported and pushed this change? How did it emerge as an idea from the dark Googley recesses of the DOJ?
Even though this was a change that no one but Google seemed to want, the DOJ with former Google lawyer Renata Hesse leading the charge went ahead and initiated the rule.
Above is the US Constitution. Songwriters have constitutional rights (although lately I’ve come to doubt it). For instance we have a right to make legal private contracts with our co-writers without the federal government later making them illegal. In order for Renata Hesse and the rest of the can’t-shoot-straight DOJ antitrust gang to institute this new rule without violating existing private contracts between songwriters, the final rule is incredibly complex. Unless hundreds of thousands of songwriters (or their estates) go back and modify co-writing agreements with hundreds of thousands of co-writers, hundreds of thousands of songs (maybe millions) will no longer be available for licensing. This rule change requires a vast re-ordering of the music licensing system that will likely take decades.
Now as a restaurant or venue owner how does this affect you?
First you know how you obtain the right to publicly perform music for the public in your establishment, right? From your ASCAP, BMI and SESAC licenses! The very licenses the DOJ (apparently at the behest of Google) has just obliterated.
Currently these are blanket licenses. You don’t have to keep track of what songs the bands are playing and what songs the DJs are spinning. You don’t have to check the bands setlist before they go on stage or dig through the DJs crate of albums and note which albums are not licensed and forbid DJs to play these songs. That is the beauty of the songwriter rights organizations. They create efficiency. It’s a win-win. Venues are shielded from infringement claims. Songwriters get paid. Without these blanket licenses a bar, restaurant and venue would literally have to license each song directly from every music publisher and songwriter.
Will it stay this way? It is highly unlikely. A significant number of songs will be unavailable for licensing and you will have to negotiate and obtain many more licenses from many more organizations to have the same coverage you have now. You may even be required to negotiate directly with an individual writer depending on the song.
“Hi this is John from the Red Dog Saloon outside North Platte Nebraska. I’d like to talk to Max Martin about licensing that Taylor Swift Song”
Above you can see what BMI wrote to the Judge Stanton who oversees BMI’s consent decree (the rule DOJ changed). A significant portion of songs especially songs with foreign writers or cowriters, (and works with samples) become “stranded.” Same thing would happen to ASCAP. So because of the new DOJ rule, certain songs become “incapable of being performed in this country.” Suddenly your BMI and ASCAP licenses are not “blanket licenses.” Don’t believe BMI? What does the US Copyright Office say?
The copyright office said the same thing last year when they warned against changing this rule. See above. “…might well result in a sharp decrease in repertoire available through these PRO’s blanket licenses.” Now that we’ve seen the actual text of the DOJ rule we see the Copyright office was correct in its prediction.
Even the Department of Justice admits in their own brief (above) that this new rule will require removing songs from BMI and ASCAP “blanket” licenses.
Further order that BMI and ASCAP identify the songs no longer allowed in the blanket licenses. The expenses associated with this Sisyphean task (new songs constantly created) will come out of songwriter royalties or higher licensing fees to venues. That’s right lower royalties, higher costs for venues and fewer songs available. Doesn’t this violate the entire antitrust division mandate.
How many fewer songs available?
A shitload. Think about this for a minute. ASCAP and BMI are tasked with reviewing tens of millions of songs, contacting and getting responses from hundreds of thousands if not millions of songwriters, who then in turn need to review co-writer arrangements with co-writers and execute new agreements and get back to BMI and ASCAP.
In one year.
Pure comedy gold.
It seems reasonable to say that this is an impossible verification task and the resulting database of unlicenseable songs will be in the millions. Tons of work. Less songs. Massive inneficiency that benefits no one except Google (they can always rely on the DMCA safe harbor and let users upload unlicensable songs a bar can’t).
Guess what venue, restaurant and bar owners? You’ve been fucked. By your own public policy folks and Google through your membership in the MIC-Coalition.
“You see what happens when you find a stranger in the alps? ”
Looks like restaurants, venues and bar owners WILL be asking bands and DJs which songs they will be playing and checking the setlist against some sort of database.
Oh and this pretty much makes your BMI/ASCAP/SESAC licenses considerably less valuable. They are no longer blanket assurances that you won’t get sued by some gold digging lawyer with a few song copyrights. And with millions of “stranded” songs floating around it’s inevitable. But you’ll still be paying for your PRO licenses. Because some significant portion of the songs will still be in BMI and ASCAP.
And the DOJ went along with this idiotic rule. Despite the fact the US Copyright office warned them this would happen.
This is completely batshit crazy.
This is one of the most powerful departments of the US government Staffed with lawyers from elite institutions like Yale, Harvard and Berkeley. (Hmm maybe that’s the problem!). How did they fuck things up this bad. I mean shouldn’t these people be fired? At least investigated for corruption? Sadly corruption or lose-your-law-license incompetence are the two most plausible explanations.
My bet is on corruption. I mean doesn’t it seem a more than a little odd that this rule benefits no one but Google and it was pushed through by a DOJ official that used to work for Google?
Yet looks like the public policy folks that should be looking out for the interests of bar, restaurant and venue owners are applauding this decision. Apparently they were too lazy to read the actual rule. Or too stoopid to understand the implications clearly spelled out.
Look what theABL president says:
“ABL also welcomes DOJ’s confirmation of ‘full-work’ licensing, which means that the blanket licenses offered by Performing Rights Organization’s (PRO’s) provide licensees with the right to use all the works in that PRO’s repertoire without risk of copyright infringement.”
Either he is conveniently leaving out the fact that potentially millions of songs will be removed from those blanket licenses. Or he doesn’t understand what he is celebrating. Before all of this venue owners were pretty much insulated from random copyright infringement with the blanket licenses. Now by the admission of the DOJ they won’t. Songs will be removed from those repertoires!!!
Restaurant and venue owners should ask their public policy folks exactly why they supported a rule that clearly will make licensing music less efficient,more expensive or even impossible?
If they can’t give you a straight answer?
Fire their asses as well.
BTW the solution is incredibly simple. Withdraw the rule. Continue with the old system of fractional licensing. It was working just fine. And in the previous 80 years no one objected.
The MusicTechPolicy podcast is back! Next week we will kick things off with a discussion of the Department of Justice [sic] ruling on 100% licensing and partial withdrawals. Participants will be David Lowery, Steve Winogradsky and Chris Castle.
Paul Williams Letter to ASCAP Members on DOJ ruling against songwriters.