The US music publishing community has welcomed the US Copyright Office's firm position on the risks posed by the concept of "100-percent licensing" that would allow a party - a publisher, an individual rights holder or a collective management organisation - to grant full performance rights to a co-written song without fully owning the rights to the track.
The idea of 100% licensing came about at the end of last year in the context of the review by the US Department of Justice of the Consent Decrees ruling performance rights organisations (PROs) ASCAP and BMI. The DoJ has asked stakeholders if PROs could license 100% of the rights required to publicly perform any musical work in their respective repertoire regardless of whether the work is wholly or partially owned by the members of the PRO.
In a 29-page response to an inquiry from Doug Collins, a member of the House of Representatives' Committee on Judiciary, on the issue of the licensing of jointly-owned works by the PROs, US Register of Copyrights Maria Pallante wrote that the DoJ's system would “present a host of legal and policy concerns.” She added: "In sum, an interpretation of the consent decrees that would require 100-percent licensing or removal of a work from the ASCAP or BMI repertoire would appear to be fraught with legal and logistical problems, and might well result in a sharp decrease in repertoire available through these PROs’ blanket licenses.”
Pallante’s position paper did not go un-noticed in the music publishing community, which has been concerned that the DoJ’s views on fractional licensing would have an impact on their ability to license repertoire, especially in the context of publishers cutting direct deals with licensors.
A source at one of the largest music publishing company told Music Week that "from where we sit it is hugely significant because it is totally contrary to the DOJ’s view on 100% licensing.” The source added that the USCO’s comments would set a benchmark for judges asked to rule on such issues. "Even if the DOJ disagreed with what the Copyright Office has said you can’t imagine Judges would ignore their view,” said the source.
David Israelite, president and CEO of the Washington, DC-based National Music publishers’ Association, commented: "The foremost expert on copyright law has now gone on the record as saying that forced 100% licensing is a grave departure from what the law allows and what industry practice has been for decades. My hope is that the Copyright Office's esteemed opinion on this matter is given the weight it deserves when determining the fate of the consent decrees that affect thousands of hard working songwriters and the licensing of their compositions.”
In her comments, Pallante noted that in a recent study on licensing undertaken by the USCO, "the fractional licensing of jointly owned musical works - a longstanding practice of the music industry - went unquestioned as a background fact by the many stakeholders who participated, including both licensors and licensees.” Pallante also noted that in 2014, 93 of the top 100 charting songs in the US had co-writers and that 64 or more of those songs were registered with more than one PRO.
She added: "The Office believes that an interpretation of the consent decrees that would require these PROs to engage in 100-percent licensing presents a host of legal and policy concerns. Such an approach would seemingly vitiate important principles of copyright law, interfere with creative collaboration s among songwriters, negate private contracts, and impermissibly expand the reach of the consent decrees. It could also severely undermine the efficacy of ASCAP and BMI, which today are able to grant blanket licenses covering the vast majority of performances of musical works - a practice that is considered highly efficient by copyright owners and users alike.”
Pallante pointed out that if adopted by the DoJ, the 100% licensing would create a whole range of issues between ASCAP and BMI and foreign authors and their respective PROs. "A regime that compels ASCAP and BMI to issue 100-percent licenses when their songwriter and publisher members have transferred only partial rights to them would abrogate rights afforded to other authors under the Copyright Act, as well as rights of foreign authors under foreign law,” she said, adding that a 100% licensing rule would create "a de facto compulsory license that would subject non-members of ASCAP and BMI to rates, terms, and distribution policies to which they never agreed.” This, continued Pallante, would "be inconsistent with foreign law as many foreign jurisdictions require the consent of all co-owners to license jointly created works."
ASCAP and BMI did not respond to requests for comments.