Kafka’s Hypothetical Market Strikes Again: The DSPs’ Latest Move to Silence Songwriters by Throwing GMR Out of Phonorecords V

If you want to understand how the streaming services really view songwriters, look no further than their joint motion to exclude Global Music Rights (GMR) from Phonorecords V. It is not subtle. It is not principled. It is an attempt to narrow the field to those voices the services already know how to manage. (All of these services are being investigated by the Texas Attorney General “over alleged payola schemes in which they accept bribes to artificially promote certain songs, artists, or content.”)

The Services—Spotify, Apple, Amazon, Pandora, and Google—argue that GMR lacks a “significant interest” because it licenses performance rights rather than mechanical rights. That argument is technically obvious and substantively hollow, a mile wide and an inch deep, if that. GMR represents songwriters whose mechanical royalties are directly at issue in this proceeding. The idea that those songwriters somehow lose their “significant interest” because their representative also licenses performance rights is not just formalism. It is exclusion by design.

Let’s be clear about what is at stake. GMR affiliates include some of the most commercially significant songwriters in the world—writers like Drake, Bruno Mars, The Weeknd, Pharrell Williams, Nicki Minaj, Post Malone, Pearl Jam, Prince, and Tyler, the Creator. Nobody else in this proceeding speaks for them. Not the NMPA, which represents publishers. Not the services, who are adverse. And certainly not a system that already tilts toward the parties who can afford to litigate at scale.

When songwriters affiliated with Global Music Rights made a choice about how to license their work, they chose a free market model. They chose to be represented by GMR and to negotiate performance royalties directly with users, in arm’s-length, private negotiations reflecting real-world value. That decision matters. It reflects a preference for market pricing over regulatory pricing, and for merit over compulsion.

But the moment you shift from performance rights to mechanical rights, that choice disappears. Why?

Well, that’s a good question, but the answer for now is that under section 115 of the Copyright Act, those same songwriters are forced into a compulsory license regime administered in large part through the CRB which sets the rates. They cannot opt out. They cannot negotiate freely. Instead, their work is swept into a statutory system where rates are set through a complex, expensive, and heavily lawyered process that bears little resemblance to a functioning market. It is a hypothetical market.

So we end up in a strange place, a Kafkaesque place. The same songwriter who can negotiate directly for the public performance of their work is denied that freedom when it comes to the reproduction and distribution of that same work. One side of the market is competitive and arms length. The other is managed and hypothetical.

That is not a neutral design choice. It is a structural constraint—one that continues to shape outcomes in favor of the services.

The Services claim that GMR lacks a “direct financial interest” in the outcome. That is a remarkable position. The entire proceeding is about setting the value of musical works in streaming. If the rate goes down, songwriters get paid less. If the rate goes up, they get paid more. That is the definition of a direct financial interest. The Services’ attempt to redefine “direct” to exclude the very creators whose works are being priced is not statutory interpretation. It is outcome engineering.

The Services also argue that GMR’s interest is merely “indirect” or “attenuated.” This requires ignoring the bargaining power of the songwriters who effectively are GMR. But this is the same playbook the services have used for years: isolate each rights silo, then argue that no one outside the narrowest licensing box is entitled to speak. The result is a fragmented system where the only voices that remain are those structurally aligned with the services’ preferred outcome.

Then there is the efficiency argument—the Services’ claim that allowing GMR to participate would make the proceeding “lengthy, complex, and expensive.” As opposed to what? Nasty, brutish and short?

That would be more persuasive if it were not coming from the very companies that have turned CRB proceedings into multi-year, multi-million-dollar wars of attrition. These are the largest corporations in commercial history (at least one of which is an adjudicated monopoly) arguing that the problem is too many songwriters having a voice.

Let’s call this what it is: a coordinated effort by a handful of dominant platforms to use their collective market power—and their litigation budgets—to shape the CRB process in their favor. The same companies that work relentlessly to drive down the royalties paid to songwriters are now trying to limit who is allowed to advocate for those songwriters to get fair treatment in the first place.

And here is the practical reality the Services are ignoring: even if the Judges exclude GMR, they are not solving the problem. They are postponing it. When the decision is released for public comment, the absence of these voices will not go unnoticed. It will be exposed—and it will undermine the legitimacy of the outcome. Because they’ll be back for comments which will attack the entire proceeding as arbitrary.

The CRB process already leans heavily toward those who can afford to participate. That is a structural fact. But actively excluding a representative of major songwriters—on the theory that those songwriters do not have a “significant interest” in how their own royalties are set—crosses a different line.

The Judges should reject this motion out of hand.

Because if the people who write the songs do not have a seat at the table, then whatever this process is—it is not a willing buyer, willing seller marketplace. Excluding GMR would raise the question of whether it was ever intended to be one.

Head of Justice Dept Antitrust Division to Speak At Publisher Conference–can end of ASCAP/BMI Consent Decrees be coming?

Really great news!  It was recently announced that the head of the Justice Department’s Antitrust Division will speak at the National Music Publishers Association annual meeting in June!

This year’s keynote will be presented by United States Department of Justice (DOJ) Assistant Attorney General for the Antitrust Division, Makan Delrahim.

As David said a few weeks ago before this announcement, Mr. Delrahim is reviewing hundreds of DOJ consent decrees that have accumulated over the decades to see if these government orders should be continued.  This review includes the ASCAP and BMI consent decrees that Mr. Delrahim specifically mentioned in an address at Vanderbilt Law School earlier this year.  He seems to have come to this idea all by himself.

What’s really great about this is that it could mean the end of consent decrees in a relatively short period of time.  Since it’s never happened before, we don’t know exactly how the end of the consent decrees would impact ASCAP and BMI, but presumably the impact would be positive and quick. Goodbye rate court!  The smart money would probably be on existing rate court cases continuing, but disallowing new cases.  (Mr. Delrahim has been clear that the enforcement side would remain in place, meaning we guess that actual antitrust law violations would be dealt with case by case, just no ongoing regulatory oversight by unelected rate courts.  Example would be Global Music Rights awesome antitrust case against the broadcasters after the broadcasters brought one against GMR.)

It could possibly open the door to both organizations getting into the mechanical licensing administration business in competition with whatever comes of the collective established by the Music Modernization Act (which permits voluntary licenses outside of the collective).  In fact, BMI has already said they intend to pursue licensing outside of performances because their consent decree allows them to do so unlike ASCAP’s:

BMI is also evaluating the option of licensing beyond the performing right. We have long believed our consent decree allows for the licensing of multiple rights, which is why four years ago we asked the DOJ to amend our decree to clarify that ability, among other much-needed updates.

Of course, the last thing that anyone would want is for the DOJ to end the consent decrees, just to be replaced by some other bunch of regulations or bureaucracy.  For once, broadcasters will just have to suck it up.

So it’s a great idea that NMPA is inviting Mr. Delrahim to speak to the publishers who are most in the position to take advantage of a new dawn in songwriter freedom.  Many if not most of the NMPA members will be in the voluntary licensing category under MMA and outside the collective.  They would be in a fantastic position to support a one-stop shop for performance and mechanical licensing from ASCAP and BMI in line with what SESAC/HFA can offer, and presumably GMR could do as well.