Similar to compulsory licenses, established over 100 years ago to prevent monopolies of songs with piano roll companies, consent decrees for ASCAP and BMI have been in place now for almost 75 years, and were perhaps originally instituted for reasons which are no longer relevant in today’s market. Debates related to the current need, and whether these decrees are serving their original purpose, are heating up as Congress is in the midst of an overall copyright law review.
To better determine what position you might take in these debates, let’s look back into history to see why consent decrees were established in the first place.
ASCAP was founded on February 13, 1914 by some very prominent writers of the day, including Victor Herbert, John Philip Sousa, Irving Berlin, and Otto Harbach, as a way to protect performance rights of writers. ASCAP established blanket licenses for live music, including music halls and movie theaters. Now remember, at that time, all music performances were live. There were no commercial radio stations or other commercial broadcast methods. Even movie theaters showed silent pictures, and live musicians would accompany these films as they were being shown. Only in the 1920’s did music performances shift to being broadcast on commercial radio and recorded on soundtracks for movies, which ASCAP also began to provide licenses for.
By the mid-1930’s, shortly after SESAC had been formed, it was estimated that ASCAP represented over 80% of all music performed on radio. This caught the attention of the U.S. Justice Department, which considered ASCAP’s size and practices as a restraint of trade and actually illegal under the Sherman Anti-Trust Act, a federal statute passed in 1890 for the purpose of preventing monopolies and anti-competitive practices. So the Justice Department sued ASCAP in 1937, although they ended up dropping that particular suit.
The situation heated back up a couple of years later when ASCAP tried to double their license fees in 1939. The broadcasters were fed up with ASCAP’s license practices and established BMI (Broadcast Music, Inc.) as a third performing rights organization to license alternative content, which allowed them to boycott ASCAP. For a period of almost a year in 1940, NBC, CBS and other radio stations, refused to pay for ASCAP’s blanket licenses and did not broadcast any ASCAP songs. Instead, they used alternative music from regional artists, as well as country and rhythm & blues music, represented by BMI, types of music which had been pretty much ignored by ASCAP.
The Justice Department took notice again and sued ASCAP a second time. Essentially, ASCAP was the big bully of the day, apparently trying to force higher fees with broadcasters and theaters through their blanket licenses, and the broadcasters and Justice Department were determined to put them in their place. However, the Justice Department similarly sued BMI for comparable reasons since they also only offered “blanket licenses.” The speedy settlements of these two separate suits were “consent decrees,” which are voluntary agreements between parties to resolve a legal dispute.
ASCAP and BMI each have separate consent decrees, which have been modified a few times through the years as the industry changes. While the overall intent of the two consent decrees is similar, the terms are indeed unique. The BMI terms, which many suggest are not as restrictive as ASCAP’s terms, specifically state that the judge involved with BMI’s agreement cannot be the same judge as the one involved in ASCAP’s agreement, and further, that no reference of any issues should be made between the two.
We’ll get into some of the specifics and more prominent terms of these consent decrees in Part 2 of this article. We’ll also explore whether or not they are still serving their original intent.
John Barker is President & CEO of ClearBox Rights, LLC, an independent rights managements company based in Nashville, TN. He is also Chairman of the Copyright Society of the South. John publishes a blog related to songwriting, publishing and copyright issues which can be found at http://clearboxrights.wordpress.com or www.clearboxrights.com.