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100% Licensing a-OK with DOJ
July 6, 2016

The U.S. Department of Justice is one chill cat. With lobbyists and industry execs swarming outside its doors, the DOJ stood it’s ground and declared they would not be amending ASCAP and BMI’s royalty collecting consent decrees.

They also tacked on to their decision that, oh, by the way, you just need one copyright owner’s consent to license 100% of a song.

Or put another way, DOJ “decided” they’re not touching this hot potato.

As far as the DOJ is concerned, once you snag licensing from one rights holder (a writer or publisher listed on the musical work), you can negotiate 100% licensing of the rights in that agreement. No need to go chase rights agreements from the other stake holders — they have to take the deal you struck with Party #1.

Publishing companies are freaking out because they were hoping the DOJ would let them break digital rights off from the overall performance rights bundle that goes with their music when it gets licensed out by PRO(s).

“This decision will create a clusterf_ck of epic proportions for the U.S. music publishing industry,” said one music-publishing exec., per Billboard.

However, with the 100% licensing restriction in place, smaller independent artists and publishers will be protected from royalty rate standards — rates that only make sense for bulk-licensing — which could be manipulated by the big-wig publishing houses.

Those Big Guns still pack a boom, though — only time will tell whether they will start hiring out their wares with PROs that pay more on digital performances than ASCAP and BMI have traditionally doled out (especially measly are their payouts on digital performances in advertisements).

One major label has already jumped from ASCAP to SESAC, in hopes of both better digital rates and the ability to unbundle their digital rights overall, since SESAC is not under the DOJ’s consent decrees that govern ASCAP and BMI’s actions.

Which brings up another point: ASCAP and BMI aren’t actually bound to the DOJ’s decision (despite what this guy says). No one is, really.

Even prior to the DOJ’s decision, you could license 100% of the rights of a work from one rights holder. It’s just not typically done, because a) it’s a dick move, and b) when you’re licensing for a TV show, movie or film, who wants to attract a stink from a song’s rights holder because you opted to ask permission from Dad but not Mom. (You know Mom will always find out.)

Plus, ASCAP and BMI have already implied that they’re going to appeal/litigate the bejezus out of the DOJ’s decision to not decide. And there’s the review by the rate courts.

There is one downside, however, if the DOJ’s decision becomes the law of the land: a whole new drive-the-price-down option opens up for licensors.

Say a song’s writer belongs to ASCAP, and their co-writer belongs to SESAC, and a licensor wants to use that tune. That licensors can now haggle between the PROs to see who’ll give them the lowest royalty rate.

Blanket licenses included.

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