Texas Governor Greg Abbott Leads the Push Back Against DOJ’s Attack on Songwriters–will others join him?

It may be lost on the elites in Washington, but songwriting is not something that only happens in New York City, Nashville or Hollywood.  Music contributes billions of dollars to local economies in states all across the country and to cities all across those states.

Texas is no different–music contributes over $1 billion a year of economic impact to the City of Austin alone.  Many other states come to mind who are likely similarly situated in addition to California, New York or Tennessee.

A random choice would be  Illinois, Washington, Mississippi, Louisiana, Colorado, Oregon, Georgia, Florida and the District of Columbia in no particular order.  Chicago, Seattle, Clarksdale, New Orleans, Denver, Portland, Atlanta, Miami and DC all have associated themselves with music both culturally and economically.

In fact, one could pretty easily point to some aspect of every state’s economy that gets a significant contribution from music–and great records and great shows rely on great songs.

That’s why the Department of Justice Antitrust Division Litigation III Section’s decision to adopt the cockamamie position on 100% licensing that is so destructive to the music ecosystem is rightly of concern to governors and mayors across the country.  Protecting our songwriters is a bi-partisan issue that everyone can agree on.

That’s also why it is so gratifying and encouraging to see Texas Governor Greg Abbott lead the way for the protection of Texas songwriters against the DOJ’s Kafka-esque overreach by unelected and unconfirmed lawyers on its antitrust mandate.  Governor Abbot has asked U.S. Attorney General Loretta Lynch to reconsider the DOJ’s position in this letter.

We all truly appreciate his leadership at a time when we could all use some good news.

G O V E R N O R  G R E G  A B B O T T

August 29, 2016

The Honorable Loretta E. Lynch
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, D.C. 20530-0001

Dear Attorney General Lynch:

I write to express my disagreement with the U.S. Department of Justice’s (DOJ) recent decision regarding the consent decrees in United States v. Broadcast Music, Inc. 1 and United States v. American Society of Composers, Authors and Publishers. 2 The Texas Music Office is housed within my office and is charged by law with promoting the Texas music industry. As the head of that office, I must object to the DOJ’s position in these cases, which is both legally flawed and threatens to harm the music industry in Texas. I respectfully request that the DOJ reconsider its position.

The DOJ ultimately concluded that the consent decrees require Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors and Publishers (ASCAP) to offer only full-work licenses to their respective music repertoires, including those songs in which BMI or ASCAP only represent a fraction of the ownership rights. However, despite claims to the contrary, BMI and ASCAP have never offered full-work licenses to fractionally owned songs, and the consent decrees have never been interpreted by the DOJ to require that until now. This drastic change in course will have severe consequences for music artists and the music industry as a whole. Specifically, the DOJ’s conclusion will inhibit collaboration between music artists, upend longstanding practices within the music industry and further reduce royalty payments to music artists.3

The DOJ claims that the plain language of the consent decrees does not permit it to reach any other conclusion. That is incorrect. The decree language on which the DOJ bases its conclusion states  that  BMI  and  ASCAP  must  grant  to  users  licenses  to  “perform”  the  songs  in  their

1 64 Civ. 3787,  1994 WL  901652 (S.D.N.Y.  1994).

2 41 Civ. 1395, 2001 WL 1589999 (S.D.N.Y. 2001).

3 These effects, along with many others, are explained in detail in the dozens of public comments the DOJ received during its review of the consent decrees. See https://www.justice.gov/atr/ASCAP-BMI-comments-2015.

The Honorable Loretta E. Lynch August 29, 2016
Page 2

respective repertoires. From the word “perform,” the DOJ  extrapolates  an  obligation  that  was never in the contemplation of the parties to the consent decrees and that  runs  counter  to longstanding industry expectations.  Consent decrees are not  statutes to be construed based  solely  on their text. Instead, consent decrees are to be construed under the ordinary rules of contract interpretation. They should be  interpreted  in the  context  of the  lawsuits  from which  they  arise and in light of the expectations of the parties to those  lawsuits.  See  US. v. ITT  Continental  Baking Co., 420 U.S. 223, 237 (1975) (when interpreting a  consent  decree,  it  is  proper  to  consider “the circumstances surrounding the formation of the consent” decree); US. ex rel. Anti­ Discrimination Ctr. of Metro N Y , Inc. v. Westchester County, 712 F.3d 761, 767 (2d Cir. 2013) (reasoning that a consent decree should be read “in the light of the . . . intention of the parties as manifested” by the decree). There is no indication that these consent decrees were intended to  address the issue of full-work licenses or that full-work licenses were even at  issue  in  the  underlying litigation. The DOJ’ s conclusion is based on a technical construction of the  decrees’  terms rather than a contextual understanding of the  decrees’  role  in  resolving  discrete  legal  claims that had nothing to do with the full-work license issue. It is well-settled law that consent decrees of this nature should be given a narrow construction  See Perez  v. Danbury  Hosp.,  347 F.3d 419, 424 (2d Cir. 2003). The decrees in these cases are  susceptible  to  alternative interpretations, and they should be construed narrowly  to impose  only the obligations anticipated  by the parties to the  decrees.

Even if the plain language of the consent decrees did clearly impose an obligation to grant full­ work licenses, which it does not, the decrees  should  be  amended  to  recognize  and  legitimize BMI’ s and ASCAP’s current practice of fractional  licensing.  The DOJ  has  refused  to  agree  to any such amendment, claiming that it would not be in the public interest. The DOJ claims that permitting BMI and ASCAP to offer fractional licenses  would  impair the  function  of the market for public performance licensing and could  result  in  certain  music  not  being  played  by  users. But as previously noted, fractional licensing represents the status quo, and most music users recognize this fact. It is the  DOJ’ s new  interpretation  of the  consent  decrees that  would  disrupt the market, not fractional licensing. An amendment modifying the consent decrees to expressly permit fractional licensing  is in the public  interest,  and the DOJ  should reconsider  its opposition  to  such an amendment.

Thank you for your thoughtful consideration of these concerns. If you have any questions about this matter, please contact Brendon Anthony, Director of the Texas Music Office, at
(512) 463-6666.

Sincerely,

Greg Abbott
Governor