Forget metrolagu: 10 Reasons Why You No Longer Need It Retain the BMI-ASCAP Consent Decrees: Irrespective of New Enginee

1. As online streaming video and music becomes more the dominant way Americans enjoy television and music, the Antitrust Division of the Department of Justice (DOJ) is understandably revisiting many of its consent decrees made for the entertainment industry. Many of these decrees date from 1940s, before the widespread advent of broadcast television and the 45 RPM record, much less the Netflix, YouTube, and Spotify. uncaptioned DOJ is considering lifting 1941 agreements with BMI and ASCAP. Together, these organizations collectively hold 90% of American "performance rights," the control under copyright law to license music for performance at department stores or other live venues or for broadcast over radio stations. The decrees, which were significantly revised in 1950 and have been periodically reviewed and updated since, restrict performance rights owners from excessively leveraging their copyright interests. For instance, these decrees forbid BMI and ASCAP from offering licenses to businesses on non-equivalent terms while forbidding BMI and ASCAP member companies from partially withdrawing portions of their rights to circumvent the decrees. Last fall, DOJ terminated the “Paramount Decrees,” which prohibited the legacy movie studios from a variety of vertical restraints related to movie theatres. This may seem like an omen that DOJ is ready to end the BMI and ASCAP decrees. But, it shouldn't. The legal and factual circumstances between the decrees significantly differ. Today In: Enterprise & Cloud DOJ explained that it lifted the Paramount Decrees for two major reasons. First, the motion picture industry has evolved. The movie studios play a smaller role and their market share has declined, while content is now also distributed through television and streaming services. Additionally, the Department observed how courts now view many vertical restraints to be neutral, and sometimes beneficial. I personally think the courts have gone too tolerant to the possibility of vertical foreclosure, which still can help entrench a monopolist’s market power. But, here, the threat of vertical foreclosure was diminished by the nature of the market, DOJ emphasized when terminating the decrees that “none of the Internet streaming companies – Netflix, Amazon, Apple and others – that produce and distribute movies are subject to the Decrees.” Thus, the decrees had absurd effect: They imposed stricter rules for theaters and studios, which are declining in market power than for Big Tech, which is ascendant. Thus, terminating the decrees helped to create a more level playing field, promoting competition. PROMOTED UNICEF USA BRANDVOICE | Paid Program How Parents Can Answer Kids’ Questions About Staying Safe Online Grads of Life BRANDVOICE | Paid Program Employee Training And Development: Investing In The Future Civic Nation BRANDVOICE

2. | Paid Program Why Student Parents Are More Likely To Attend Community College And Have A Higher GPA Than Their Childless Peers In contrast to Paramount and the video distribution business, the markets for music performance have not changed--nor has the need for the BMI-ASCAP consent decrees diminished. Of course, mp3s and online streaming have changed the music industry--but these new technologies have changed music distribution--not licensing of public performance rights. BMI and ASCAP still control 90% of the performance rights, just as they did in 1941. As evident through the DOJ’s recent intervention into the operating procedures of ASCAP, their anti- competitive effect remains the same today as it was then. Nor has the law shifted: the horizontal restrains BMI and ASCAP could impose if freed from the decrees are as illegal now as they were in the 1940s. While it is true that courts have weakened rules on vertical restraints, they have still emphasized that they are still harmful when it influences horizontal competition. For example, the Supreme Court’s noted in 2007’s Leegin Creative Leather Products, v. PSKS, which DOJ cited heavily when terminating the Paramount decrees, “while vertical agreements . . . can have procompetitive justifications, they may have anticompetitive effects in other cases; and unlawful price fixing, designed solely to obtain monopoly profits, is an ever present temptation.” And indeed, the initial 1941 complaint involved price fixing between BMI and ASCAP through their vertical restraints. And price fixing is hardly an unlikely result from lifting the decrees. It is a perennial problem, including the 1979 Supreme Court case ASCAP v CBS, where the Supreme Court held that the consent decree helped prevent BMI and ASCAP’s conduct from constituting unlawful price fixing. As recently as 2016, DOJ – after reviewing the decrees for two years – cited this case to reiterate the importance of the decrees to prevent metrolagu price fixing, writing, “the Supreme Court pointed to protections in the consent decree aimed at preventing ASCAP from interfering with direct licensing when it determined that ASCAP’s blanket licensing did not constitute per se unlawful price fixing.” While there may be some updates DOJ can make to the decrees to account for changing circumstances, it should not terminate or seriously alter the them, in a way which could allow this abusive conduct. Plus ça change, plus c'est la mêmechose may be cliché, but it aptly describes how the despite the changes to music distribution, the anticompetitive threats of the ASCAP-BMI performance licensing duopoly remain the same.