From left, Shelly Peiken, Michelle Lewis and Kay Hanley are members of the advocacy group Songwriters of North America. Credit Coley Brown for The New York Times
A federal judge on Friday rejected a recent Justice Department ruling on music licensing in a move that was immediately hailed by the music industry as a major victory.
In his decision, Judge Louis L. Stanton of the United States District Court in Manhattan said the Justice Department erred last month when it issued a detailed interpretation of a regulatory document known as a consent decree. The document has long governed Broadcast Music Inc. (BMI), a licensing agency that collects money whenever songs are publicly performed, including on the radio, on streaming services and in public places like restaurants and retail stores.
After a two-year investigation, the antitrust division of the Justice Department decided that BMI and its rival performing-rights society, the American Society of Composers, Authors and Publishers (Ascap), were required to issue so-called 100 percent licenses for the millions of songs in their catalogs. That means that even if BMI or Ascap represented only one of multiple writers of a song, the organization must be able to offer performance licenses for the whole song.
The case concerns the side of the music business that deals with songwriters and publishers — not record companies and performers, whose work is covered by separate copyright laws.
The Justice Department’s decision was seen as a victory for broadcasters and for digital music providers like Google and Pandora. But music industry groups argued that it would result in tumult throughout the business. BMI challenged the interpretation, and this week a group of songwriters filed a separate suit over the issue.
In his ruling, Judge Stanton — who monitors BMI and its compliance with its consent decree, which dates to 1941 — was unequivocal that the interpretation of the Justice Department’s antitrust division was incorrect.
“Nothing in the consent decree gives support to the division’s views,” Judge Stanton wrote.
It was not immediately clear what effect the ruling would have in the long term. In a statement, BMI said that Judge Stanton’s order was now the controlling interpretation of its decree. But the Justice Department can appeal the decision, and a spokesman said that the agency was reviewing the order.
Also unclear was the decision’s impact on Ascap, which is governed by a separate consent decree and is monitored by a different judge.
As news of Judge Stanton’s decision spread throughout the songwriting world on Friday, it brought a sense of relief for a side of the business that has been buffeted by the industry’s move to streaming. Among the many concerns expressed about the Justice Department’s statement were that songwriters would be forced to change their writing habits based on the affiliations of their collaborators — the nightmare scenario, they said, was that an Ascap writer and a BMI writer would now face perplexing hurdles to working together.
If Judge Stanton’s ruling stands, it should put those fears to rest, Michael O’Neill, the chief executive of BMI, said in an interview on Friday.
“Now songwriters can go into writing rooms,” Mr. O’Neill said, “not feeling like they have to bring lawyers with them.”
By Ben Sisario
[Thank you to Alex Teitz, http://www.femmusic.com, for contributing this article.]A version of this article appears in print on September 19, 2016, on page B4 of the New York edition with the headline: Judge Rejects Justice Dept. Decision on Music Licensing. Order Reprints| Today’s Paper|Subscribe
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Songwriters Sue Justice Department Over Licensing Rules
When Michelle Lewis, a Los Angeles songwriter, gets her quarterly royalty statements from Ascap, she receives a stark reminder of how songs are valued in the digital age. The tunes she writes for TV shows like Disney’s “Doc McStuffins” bring in thousands of dollars, but streaming outlets like Pandora and Spotify yield less than $100 combined.
“The honest truth is that if it weren’t for the TV stuff, I’d be working at Starbucks,” said Ms. Lewis, who has writing credits on pop hits by Cher, Little Mix and Katharine McPhee. “There is no way I could afford to be a songwriter just on streaming and digital radio.”
As the reach of streaming music has grown, songwriters — an essential but often invisible part of the music world — have become increasingly vocal about their unhappiness with the amount of compensation they receive from digital outlets. Those complaints have reached a peak since last month, when the Justice Department ruled that Ascap and BMI, the two largest royalty clearinghouses, must change their licensing procedures to comply with federal regulations.
On Tuesday, Ms. Lewis and Songwriters of North America, an advocacy group she helped found a year ago, sued the Justice Department, saying that the agency overstepped its authority and that its ruling violated the property rights of songwriters by potentially nullifying private contracts between writers who have worked on the same song. The suit is the latest step in an extensive campaign by the music industry to fight the ruling, but it is the first organized response by songwriters.
In the suit, Ms. Lewis was joined by two other songwriters with extensive résumés: Tom Kelly, who helped write hits like “True Colors” and “Like a Virgin,” and Pam Sheyne, who was a writer on Christina Aguilera’s hit “Genie in a Bottle.”
“Songwriters want to have a seat at the table,” said Dina LaPolt, an entertainment lawyer who is advising Songwriters of North America on its suit.
The Justice Department declined to comment on the lawsuit.
Last month’s ruling by the Justice Department has to do with one of the most complex — and most bitterly disputed — issues in music copyright. For songs to be played on the radio, on streaming services or even in public places like restaurants and retail stores, performing rights organizations like Ascap and BMI collect royalties for songwriters and music publishers. In the United States, these fees amount to more than $2 billion a year.
But the music industry has long been unsatisfied by the rates paid by online companies, and two years ago Ascap and BMI asked the Justice Department for changes to the regulatory agreements that have governed the organizations for decades. Last month, the agency declined those requests, and instead ruled that to comply with their existing rules, Ascap and BMI must institute what is known as 100 percent licensing: When a song has multiple writers, the organizations must have the legal clearance to represent the entire song or remove it from their catalogs.
Broadcasters and digital companies hailed the ruling as a cleareyed application of copyright law. But music industry groups said it would disrupt decades of practice and cause tumult throughout the business. (Songwriters don’t always belong to the same rights organization, meaning broadcasters and digital outlets would have to have deals in place with various groups.) BMI has said it will challenge the rule in federal court, with a hearing expected on Friday.
The lawsuit by Songwriters of North America contends that the Justice Department’s ruling on 100 percent licensing violates the property rights of songwriters, since it would mean that private contracts among songwriting collaborators — a common arrangement — might not comply with the new rule. In its announcement last month, the Justice Department suggested that writers with such agreements would need to renegotiate those deals.
The songwriters’ lawsuit argues that this change violates the Fifth Amendment by removing property rights without due process and seeks a declaration that the new rule is unlawful. In addition to the Justice Department itself, the suit names as defendants Attorney General Loretta E. Lynch and Renata B. Hesse, who oversees the agency’s antitrust division.
“The 100 percent mandate,” the suit says, “is an illegitimate assertion of agency power in gross violation of plaintiffs’ due process rights, copyright interests and freedom of contacts, and needs to be set aside.”
In preparing its suit, Songwriters of North America was also advised by Jacqueline C. Charlesworth, a former general counsel of the United States Copyright Office, which has argued that 100 percent licensing would conflict with copyright law. The songwriters are represented in their suit by Gerard P. Fox, a Los Angeles lawyer known in music circles for representing the Isley Brothers when they successfully sued Michael Bolton for copyright infringement in the 1990s.
Mr. Fox is representing Songwriters of North America on a pro bono basis, Ms. Lewis said. The organization has about 200 members, and it began with a meeting early last year when Ms. Lewis and other writers, confused and exasperated by their minuscule online royalties, asked Ms. LaPolt to explain to them the complex system of online copyright licensing.
Ms. Lewis said she hoped the lawsuit would reveal more about the lives of songwriters, who, even when they write major hits, are often little known to the public.
“We are the worker bees churning out the songs,” Ms. Lewis said.
By Ben Sisario
Sept. 13, 2016
http://www.nytimes.com/2016/09/14/business/media/songwriters-sue-justice-department-over-licensing-rules.html?_r=1
A version of this article appears in print on September 14, 2016, on page B2 of the New York edition with the headline: Songwriters Challenge a Ruling on Licensing.