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Music Guild Settles Antitrust Allegations With DOJ, Pays $1.75M

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By Ephrat Livni, Esq. on May 18, 2016 6:53 AM

You probably don't know the American Society of Composers, Authors and Publishers (ASCAP), but your favorite songwriters may be members of the organization. This week, ASCAP entered into a settlement agreement with the Department of Justice, paying $1.75 million to resolve allegations that it was involved in anti-competitive practices.

The organization did not admit guilt, but it has promised to reform its ways. ASCAP was accused of signing exclusive contracts that interfered with the individual members' ability to directly license their songs in violation of a previous court order.

What's That?

The fact of the matter is that most of us don't care about ASCAP and don't connect these issues with our music. But to the people who make music, the ability to license and sell songs freely is of course important.

According to the DOJ, since 1941, ASCAP has been under a consent decree, or a court order, that restricts its ability to engage in anti-competitive practices. One prohibition is that ASCAP cannot demand exclusive contracts or impede its members' ability to directly sell and license their works. But that's what it was doing, says the DOJ, and that violates the consent decree.

In a statement regarding the settlement, Renata Hesse, head of the Justice Department's Antitrust Division, said, "The Supreme Court said that ASCAP's consent decree is supposed to provide music users with a 'real choice' in how they can access the millions of songs in ASCAP's repertory -- through ASCAP's blanket license or through direct negotiations with individual songwriters and publishers. Today's settlement restores that choice and thereby promotes competition among the songwriters, the publishers and ASCAP."

Conflict of Interest

In addition to resolving to reform and paying the settlement amount, ASCAP must also address a conflict of interest issue that the DOJ discovered during the investigation. Music publishers who were members of the ASCAP board of directors were on the one hand competing with the organization, and on the other hand ASCAP customers.

Because the music publishers seek to license their rights directly in some contexts, these board members also compete with ASCAP. But when trying to license performance rights from the organization, the publishers are its customers. As part of the settlement, ASCAP agreed to stop involving publisher board members with licensing activities.

So what does all of this mean to us? Not much. But this matter is important to those who write the songs that make the whole world sing, and we need them to feel inspired.

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