Will Music Modernization Act Precipitate The Decline Of BMI, ASCAP, SESAC?

All week long week we've been exploring the The Music Modernization Act  currently before Congress.  One consequence could be a significant decline in the importance of PROs like BMI, ASCAP, GMR and SESAC

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Guest post by Chris Castle of Music Technology Policy

It seems like every time I read the controversial Music Modernization Act (“MMA”) I run across a loose end or unintended consequence–and here’s another one.  Many of us–myself included–argued for years that PROs like ASCAP, BMI, GMR and SESAC should be allowed to license both the performance right and the mechanical reproduction right for streaming uses.  (Recall that the consent decrees prevent this efficiency in licensing for ASCAP and BMI.)

Mechanical rates could continue to be set in the normal course of the absurdly cumbersome Copyright Royalty Judges and the performance rates could continue to be set in the normal course of the absurdly cumbersome rate courts for ASCAP and BMI–but the one-stop licenses could be issued by PROs for their respective writers’ contributory shares of their songs.  But–these appeals to efficiency were made in the absence of a mechanical collecting society in the U.S.  The MMA changes those arguments.

Let’s be honest–there are plenty of tech folk who despise the PROs and there’s at least one Congressman–James Sensenbrenner–who sure looks like he does, too.  Would any of them shed a tear if the PROs just went away?  Rep. Sensenbrenner’s Transparency in Music Licensing and Ownership Act which we heavily criticized certainly appeared to have the destruction of PROs in mind.

Enter the MMA and its proposal to establish a quango-like mechanical collective.  Without accepting or rejecting the proposed bill (which we are still digesting), I think it’s worth pointing out that there’s an interesting twist here when you consider the longevity of the PROs.

Recall that the Antitrust Division of the Department of Justice invited a legislative solution to continued consent degree regulation of ASCAP and BMI in its 2016 statement closing the Division’s review of the consent decrees:

[T]he Division recognizes the incongruity in the oversight over the licensing of performance rights and other copyrights in compositions and sound recordings and believes that the protections provided by the consent decrees could be addressed through a legislative solution that brings performance rights licensing under a similar regulatory umbrella as other rights. The Division encourages the development of a comprehensive legislative solution that ensures a competitive marketplace and obviates the need for continued Division oversight of the PROs.

In a post MMA world, why would the argument for one stop licensing for at least streaming not simply be flipped from the PROs administering streaming mechanical licenses to the MMA mechanical collective administering both streaming mechanical licenses and the performance rights in a new form of one-stop blanket license?  Why have the PROs at all if you have a massive government mandated collective that enjoys an antitrust exemption for compulsory licenses?  And if you have a government mandated one-stop shop in a future version of the MMA, would such a ruling trump any private contracts to the contrary between songwriters and their PRO?

Giving PROs a legislated push toward oblivion would certainly check a box at the Digital Media Association (if not cross one off the bucket list) as well as the MIC Coalition–and possibly be very satisfactory to Mr. Sensenbrenner.  Not to mention that it would arguably follow the Antitrust Division’s guidance.

Personally, I think that outcome would be terrible for songwriters, but there are no assurances in the MMA that it can’t happen that I have found so far.  And that may be the left cross to follow if the Transparency in Music Licensing and Ownership Act is not withdrawn–and by the way there are no guarantees of the withdrawal of that loose end either, at least not so far. 

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