What are the ASCAP and BMI Consent Decrees?
ASCAP and BMI consent decrees are federal antitrust rules regulating how PROs license music to businesses. This prevents unfair pricing on over 80% of commercial songs. If the DOJ weakens these decrees, licensing costs could spike.
Custom Channels Pushes Back on Potential Music Licensing Cost Increases
Businesses already face rising costs and regulations. Now they may face another one: higher music licensing fees. ASCAP and BMI have asked the Department of Justice to scrap or modify antitrust protections. These protections have stood for nearly 80 years. ASCAP and BMI consent decrees are federal antitrust rules regulating how PROs license music to businesses. This prevents unfair pricing on over 80% of commercial songs. If the DOJ weakens these decrees, licensing costs could spike.
How Did Custom Channels Push Back?
To push back against such a move, Custom Channels filed comments recently with the DOJ. We argued against dismantling the consent decrees. These enable small businesses to afford licenses to legally play music in retail stores, bars, restaurants, salons, hotels, and dentist offices alike. Earlier this summer, the DOJ started a review of these decades-old antitrust decrees. Additionally, they asked for comments from both music users like Custom Channels and music-makers like songwriters and composers. The intent was to determine whether the consent decrees should be continued, modified, replaced, or scrapped altogether.
“Music licensing is extraordinarily complex, and most businesses have no clue how it works,” said Custom Channels co-founder and president David Rahn. “But without obtaining the proper licenses to play—or ‘publicly perform’—music to the public, businesses run the risk of copyright infringement and potentially crippling fines.” The music in question could be from any source — background music, a DJ, live musicians, radio or TV, YouTube, even karaoke. As a result, businesses wanting to learn more can read our Licensing Basics 101 for more information on how music licensing works.
Businesses where music is heard need public performance licenses through Performing Rights Organizations (“PROs”). ASCAP and BMI combined repertoires account for over 80% of commercially released songs. These blanket licenses protect the business from allegations of copyright infringement. This is true so long as the business follows certain rules and pays license fees that compensate songwriters and publishers. Custom Channels’ business customers automatically have these important licenses covered as part of their music for business subscription with us.
What are the Antitrust Consent Decrees?
Government antitrust consent decrees have restricted ASCAP and BMI since 1941. They stop the PROs from charging whatever they want. They also let music users, including businesses and radio stations, take a dispute to rate court. At court, they go before a district judge if the sides cannot agree on a fair price for the licenses. The regulations were put in place to make sure the PROs dealt fairly with both music users (like businesses) and the songwriters they represent. So they could not wield “monopoly” power or discriminate against certain users or songwriters.
“Not surprisingly, ASCAP and BMI are arguing for less government regulation and a sunsetting of the current rules to be replaced by a more free-market approach,” said Rahn. “This sounds reasonable until you realize the impossible task of negotiating individual licenses with multiple owners of millions of songs just to play background music in your business. This could result in chaos with dramatic increases to the costs of music licensing for ordinary businesses and limitations on what songs are available to be played in bars, restaurants, stores, gyms, and other places where music is heard.”
Does Custom Channels Provide Music Licensing?
Custom Channels automatically provides customized streaming music playlists designed for businesses. These include the PRO license fees as part of a subscription. “Music Licensing is our single biggest hard cost to providing services to our customers. We’re happy to pay the PROs on behalf of our business customers because it’s important to us that the writers and composers that create the music are well-paid and our customers are fully protected; it’s a win-win. If regulators relax or eliminate the consent decrees’ protections, costs could increase dramatically. Even worse, this could mean large catalogs of music are simply not available for licensing by anyone except the largest players like Apple Music, Spotify, or Amazon Music.”
What is the Problem with This Potential Ruling?
Custom Channels sees this as a real risk for the industry. More businesses may skip licensing entirely and simply risk it to avoid higher costs. A recent study by Nielsen estimated that over 70% of businesses do not use a licensed service like Custom Channels. That number that could easily jump higher if the costs of licensed services increase.
“We’re a small business, too,” said Rahn. “We’re looking out not just for ourselves, but also for our customers as well. We don’t want to have to raise prices, but we — and other music-for-business suppliers like Muzak / Mood Media, SiriusXM for Business, Cloudcover Music, Soundtrack Your Brand, or Rockbot — will have no choice but to do so if the license fees increase significantly.”
Custom Channels filed comments with the DOJ arguing for the continuation of the current consent decrees. But also for an expansion of the regulations to cover other, smaller PROs that are not currently subject to the consent decree. In that scenario, these smaller PROs could employ “take it or leave it” pricing. Custom Channels’ comments to the DOJ can be found here.
Read More About This Topic:
- DOJ Starts Review of BMI and ASCAP Consent Decrees – Exploring the Background of the Issues
- Music User Groups Warn DOJ Abandoning Consent Decrees ‘Would Be a Public Policy Error of the Highest Order’
Protecting Small Businesses and Fair Access to Music
Custom Channels continues to advocate for fair, transparent, and affordable music licensing that keeps businesses legal, musicians paid, and customers happy. As a company built to serve businesses, we will continue to support our clients through every change in the music industry. You’ll receive the same level of service, guidance, and expertise that has made us a trusted partner for music for business.
To learn more about licensed background music for your business, contact us directly.
Written by: Joe Comer, CEO, Custom Channels
