Restaurant, Bar, Venue Lobbyists Stupidly Applaud DOJ Decision

David Lowery examines how such an unpopular decision as the 100% licensing decree handed down by the Department of Justice came to pass with a little help from Google, and how it could negatively impact the ability of venues to license music.

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By musician and artist advocate David Lowery of The Trichordist

(Performing rights organizations or PROs are unions of songwriters. They are also licensing organizations that peform a valuable service to the public. They allow a quick way for any business big or small to get a license to play music. You’ve heard of BMI, ASCAP right? These are the main two PROs. There are also two other smaller ones SESAC and GMR. But most of this blog concerns the DOJ rules that govern BMI and ASCAP).

I’m gonna make this very easy for everyone to understand. These are the companies and organizations that make up the MIC-Coaltion. As a venue or restaurant your interests in music licensing are represented by National Restaurant Association, Alcohol Beverage Licensees or National Retail Federation. They are all members of this group.

As far as we can tell this was the only group (along with Google) that was pushing the DOJ to change song licensing from the historical and internally accepted standard of fractional licensing to “100% licensing.” Or forcing a single co-writer to license the song for everyone else.

Google (the de facto leader of the MIC Coalition) especially wanted songs to be licensed this way because of the threatened lawsuit above. See Google could get a license to many of Pharrell (and other GMR artists’) songs, by getting DOJ to force his BMI and ASCAP co-writers to license songs. Clever right? That’s why Google formed this coalition right about the time this dispute began. And let’s not kid ourselves, Google formed this coalition and drove the entire lobbying effort.

Google to restaurants and venues: “Kumbaya, Let’s all work together to keep our songwriter royalty rates low.”

Translation: “Hey restaurants, bars and venues want to be human shields?”

Yes, in reality Google was simply using these other organizations as human shields. It was quite predictable that restaurants, bars and venues would end up as collateral damage. Google doesn’t care about anyone but Google.

This is Renata Hesse. She is the Acting Assistant Attorney General of US. She oversees DOJ Antitrust Litigation Section III that has decided to meddle relentlessly in music licensing space. She also represented Google when she was in private practice right before she (re) joined the DOJ. She has been the DOJ point person on this issue. She even met with songwriters to explain to them why this new rule would be good for them! How nice!

Too bad she should have recused herself from this matter because she worked for Google on Antitrust issues before coming back to DOJ. Can you say conflict of interest? She also violated Obama administration ethics rules by getting involved in this.

Shortly before the MIC Coaliton was formed the DOJ put forth this proposal to radically change how music is licensed. Odd timing? Did Mic Coalition leader Google know it was coming?

Many people in the music industry (both creators of music and users of music) were perplexed by the DOJ sudden fixation on the issue. Until the DOJ put forth this bizarre “fix” for something that wasn’t broke, no one in the industry (music creators or users) questioned the fractional licensing of songs. It was so perplexing my own congressman Doug Collins asked the Register of Copyrights to explain (see above).

And this is the response from the Register of Copyrights. In the recent Copyright Office music licensing consultation, NO ONE asked to change music licensing from fractional to 100% licensing (see above). The Copyright Office makes it unequivocally clear. So who supported and pushed this change? How did it emerge as an idea from the dark Googley recesses of the DOJ?

Even though this was a change that no one but Google seemed to want, the DOJ with former Google lawyer Renata Hesse leading the charge went ahead and initiated the rule.

Above is the US Constitution. Songwriters have constitutional rights (although lately I’ve come to doubt it). For instance we have a right to make legal private contracts with our co-writers without the federal government later making them illegal. In order for Renata Hesse and the rest of the can’t-shoot-straight DOJ antitrust gang to institute this new rule without violating existing private contracts between songwriters, the final rule is incredibly complex. Unless hundreds of thousands of songwriters (or their estates) go back and modify co-writing agreements with hundreds of thousands of co-writers, hundreds of thousands of songs (maybe millions) will no longer be available for licensing. This rule change requires a vast re-ordering of the music licensing system that will likely take decades.

Now as a restaurant or venue owner how does this affect you?

First you know how you obtain the right to publicly perform music for the public in your establishment, right? From your ASCAP, BMI and SESAC licenses! The very licenses the DOJ (apparently at the behest of Google) has just obliterated.

Currently these are blanket licenses. You don’t have to keep track of what songs the bands are playing and what songs the DJs are spinning. You don’t have to check the band's setlist before they go on stage or dig through the DJ's crate of albums and note which albums are not licensed and forbid DJs to play these songs. That is the beauty of the songwriter rights organizations. They create efficiency. It’s a win-win. Venues are shielded from infringement claims. Songwriters get paid. Without these blanket licenses a bar, restaurant and venue would literally have to license each song directly from every music publisher and songwriter.

Will it stay this way? It is highly unlikely. A significant number of songs will be unavailable for licensing and you will have to negotiate and obtain many more licenses from many more organizations to have the same coverage you have now. You may even be required to negotiate directly with an individual writer depending on the song.

“Hi this is John from the Red Dog Saloon outside North Platte Nebraska. I’d like to talk to Max Martin about licensing that Taylor Swift Song”

Above you can see what BMI wrote to the Judge Stanton who oversees BMI’s consent decree (the rule DOJ changed). A significant portion of songs especially songs with foreign writers or cowriters, (and works with samples) become “stranded.” Same thing would happen to ASCAP. So because of the new DOJ rule, certain songs become “incapable of being performed in this country.” Suddenly your BMI and ASCAP licenses are not “blanket licenses.” Don’t believe BMI? What does the US Copyright Office say?

The copyright office said the same thing last year when they warned against changing this rule. See above. “…might well result in a sharp decrease in repertoire available through these PRO’s blanket licenses.” Now that we’ve seen the actual text of the DOJ rule we see the Copyright office was correct in its prediction.

Even the Department of Justice admits in their own brief (above) that this new rule will require removing songs from BMI and ASCAP “blanket” licenses.

Further order that BMI and ASCAP identify the songs no longer allowed in the blanket licenses. The expenses associated with this Sisyphean task (new songs constantly created) will come out of songwriter royalties or higher licensing fees to venues. That’s right lower royalties, higher costs for venues and fewer songs available. Doesn’t this violate the entire antitrust division mandate.

How many fewer songs available?

A shitload. Think about this for a minute. ASCAP and BMI are tasked with reviewing tens of millions of songs, contacting and getting responses from hundreds of thousands if not millions of songwriters, who then in turn need to review co-writer arrangements with co-writers and execute new agreements and get back to BMI and ASCAP.

In one year.

Hahahahahahahahahahahahahahaahaha

Pure comedy gold.

It seems reasonable to say that this is an impossible verification task and the resulting database of unlicenseable songs will be in the millions. Tons of work. Less songs. Massive inneficiency that benefits no one except Google (they can always rely on the DMCA safe harbor and let users upload unlicensable songs a bar can’t).

Guess what venue, restaurant and bar owners? You’ve been fucked. By your own public policy folks and Google through your membership in the MIC-Coalition.

“You see what happens when you find a stranger in the alps? ”

Looks like restaurants, venues and bar owners WILL be asking bands and DJs which songs they will be playing and checking the setlist against some sort of database.

Oh and this pretty much makes your BMI/ASCAP/SESAC licenses considerably less valuable. They are no longer blanket assurances that you won’t get sued by some gold digging lawyer with a few song copyrights. And with millions of “stranded” songs floating around it’s inevitable. But you’ll still be paying for your PRO licenses. Because some significant portion of the songs will still be in BMI and ASCAP.

And the DOJ went along with this idiotic rule. Despite the fact the US Copyright office warned them this would happen.

This is completely batshit crazy.

This is one of the most powerful departments of the US government Staffed with lawyers from elite institutions like Yale, Harvard and Berkeley. (Hmm maybe that’s the problem!). How did they fuck things up this bad. I mean shouldn’t these people be fired? At least investigated for corruption? Sadly corruption or lose-your-law-license incompetence are the two most plausible explanations.

My bet is on corruption. I mean doesn’t it seem a more than a little odd that this rule benefits no one but Google and it was pushed through by a DOJ official that used to work for Google?

Yet looks like the public policy folks that should be looking out for the interests of bar, restaurant and venue owners are applauding this decision. Apparently they were too lazy to read the actual rule. Or too stoopid to understand the implications clearly spelled out.

Look what theABL president says:

“ABL also welcomes DOJ’s confirmation of ‘full-work’ licensing, which means that the blanket licenses offered by Performing Rights Organization’s (PRO’s) provide licensees with the right to use all the works in that PRO’s repertoire without risk of copyright infringement.”

Either he is conveniently leaving out the fact that potentially millions of songs will be removed from those blanket licenses. Or he doesn’t understand what he is celebrating. Before all of this venue owners were pretty much insulated from random copyright infringement with the blanket licenses. Now by the admission of the DOJ they won’t. Songs will be removed from those repertoires!!!

Stoopid.

Restaurant and venue owners should ask their public policy folks exactly why they supported a rule that clearly will make licensing music less efficient,more expensive or even impossible?

If they can’t give you a straight answer?

Fire their asses as well.

BTW the solution is incredibly simple. Withdraw the rule. Continue with the old system of fractional licensing. It was working just fine. And in the previous 80 years no one objected.