Big Ruling For Royalties Distribution

The Justice Department has decided to not make changes to the regulatory agreements that govern ASCAP and BMI, much to the consternation of the two performing rights clearinghouses.  

BMI said it would challenge the decision in federal court while ASCAP said it would “explore legislative solutions,” according to the New York Times. The decision concludes a two-year investigation by the DOJ. ASCAP and BMI asked the DOJ to update consent decrees, which have been constant since 1941, claiming they needed to be updated for the digital age. The department disagreed but said ASCAP and BMI must offer “100 percent licensing” of their songs, according to the NYT.

In other words, because some songs have multiple songwriters, each one possibly repped by a different publishing group, ASCAP and BMI can only offer the song to radio or a digital platform if it provides legal clearance for it and is responsible for distributing the royalties.

Songwriters claim the new rule could increase caution when collaborating with an artist who is a member of a different rights organization. Meanwhile, radio stations and digital platforms could shop for the lowest deal on a song, according to the paper.

How this affects an unregulated competitor like Irving Azoff’s Global Music Rights is uncertain; the company, which reps songwriters like Pharrell Williams and Bruno Mars, could be undermined in its efforts to demand top dollar for its songs because a cowriter from ASCAP or BMI could lower the “100 percent licensing” rate.

However, Global Music Rights, SESAC or other unregulated groups could become more attractive for writers because of the new rules installed for ASCAP and BMI.