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Capítulo IV: Análisis de Alternativas

4.04. Análisis de la Matriz del Marco Lógico

a.

ThePROs

Asmentionedabove,althoughmusicalcompositionswereexpresslymadesubjectto copyrightprotectionstartingin1831,Congressdidnotgrantmusiccreatorsthe exclusiverighttopubliclyperformtheircompositionsuntil1897.108 Thoughthisright

representedanewwayforcopyrightownerstoderiveprofitfromtheirmusicalworks, thesheernumberandfleetingnatureofpublicperformancesmadeitimpossiblefor copyrightownerstoindividuallynegotiatewitheachuserforeveryuse,ordetectevery caseofinfringement.109 ASCAPwasestablishedin1914,followedbyotherPROs,to

ofitsprovisionsregardingtemporarycopiesandrecognitionthatinteractivestreaminginvolves themakingofDPDs. Id. at1277‐81.

105See Reforming Section 115 of the Copyright Act for the Digital Age: Hearing Before the Subcomm. on

Courts, the Internet, and Intell. Prop. of the H. Comm. on the Judiciary,110thCong.4(2007) (“Reforming Section 115 Hearing”)(statementofRep.HowardCoble).

106See generally Copyright Office Views on Music Licensing Reform: Hearing Before the Subcomm. on

Courts, the Internet, and Intell. Prop. of the H. Comm. on the Judiciary,109thCong.21‐36(2005) (“Copyright Office Views on Music Licensing Reform Hearing”)(statementofMarybethPeters, RegisterofCopyrights).

107Id. at5657(letterfromJonathanPotter,ExecutiveDirector,DiMA); id. at5960(letterfrom

StevenM.Marks,RIAA); id. at99(commentsofASCAP); id. at62‐64(commentsofNMPA).

108See SteveWilf, The Making of the Post‐War Paradigm in American Intellectual Property Law,31

COLUM.J.L.&ARTS139,176(2008);NoelL.Hillman, Intractable Consent: A Legislative Solution to the Problem of Aging Consent Decrees in United States v. ASCAP and United States v. BMI,8FORDHAM INTELL.PROP.MEDIA&ENT.L.J.733,737(1998).

109BMI v. CBS,441U.S.1,45(1979); see also Alden‐Rochelle, Inc. v. ASCAP,80F.Supp.888,891

addressthelogisticalissueofhowtolicenseandcollectpaymentforthepublic performanceofmusicalworksinawiderangeofsettings.110

Today,thePROsprovidevariousdifferenttypesoflicensesdependinguponthenature oftheuse. Anyonewhopubliclyperformsamusicalworkmayobtainalicensefroma PRO,includingterrestrial,satelliteandinternetradiostations,broadcastandcable televisionstations,onlineservices,bars,restaurants,liveperformancevenues,and commercialestablishmentsthatplaybackgroundmusic.

Mostcommonly,licenseesobtainablanketlicense,whichallowsthelicenseetopublicly performanyofthemusicalworksinaPRO’srepertoireforaflatfeeorapercentageof totalrevenues.111 Someusersoptforablanketlicenseduetoitsbroadcoverageof

musicalworksandrelativesimplicityascomparedtoothertypesoflicenses. Large commercialestablishmentssuchasbars,restaurants,concertvenues,stores,andhotels oftenenterintoblanketlicensestocovertheiruses,payingeitherapercentageofgross revenuesoranannualflatfee,dependingontheestablishmentandthetypeandamount ofuse.112 TerrestrialradiostationsobtainblanketlicensesfromPROsaswell,usuallyby

meansoftheRMLC.113 Manytelevisionstations,throughtheTMLC,alsoobtainblanket

licenses.114

Lesscommonlyusedlicensesincludetheper‐programorper‐segmentlicense,which allowsthelicenseetopubliclyperformanyofthemusicalworksinthePRO’srepertoire forspecifiedprogramsorpartsoftheirprogramming,inexchangeforaflatfeeora percentageofthatprogram’sadvertisingrevenue.115 Unlikeablanketlicense,theper

programorper‐segmentlicenserequiresmoredetailedreportinginformation,including programtitles,thespecificmusicselectionsused,andusagedates,makingthelicense moreburdensomeforthelicenseetoadminister.116

Userscanalsolicensemusicdirectlyfrommusicpublishersthroughadirectlicenseora sourcelicense. Adirectlicenseissimplyalicenseagreementdirectlynegotiated

110BMI v. CBS,441U.S.at45; see also Alden‐Rochelle,80F.Supp.at891. 111Meredith Corp.,1F.Supp.3dat190; BMI v. CBS,441U.S.at5.

112See KOHNat1263,127580. TheCopyrightActexemptsmanysmallcommercialestablishments

fromtheneedtoobtainapublicperformancelicense. See 17U.S.C.§110(5).

113DavidOxenford, What is the RMLC, And Why Should a Radio Station Pay Their Bill?,BROAD.L.

BLOG(Aug.24,2012),http://www.broadcastlawblog.com/2012/08/articles/what‐is‐the‐rmlc‐and‐

why‐should‐a‐radio‐station‐pay‐their‐bill.

114Meredith Corp.,1F.Supp.3dat18990.

115See generally LaurenM.Bilasz, Note: Copyrights, Campaigns, and the Collective Administration of

Performance Rights: A Call to End Blanket Licensing of Political Events,32CARDOZOL.REV.305,323& nn.111‐112(2010)(descriptionsofeachlicense).

betweenthecopyrightownerandtheuserwhointendstopubliclyperformthemusical work. Sourcelicensesarecommonlyusedinthemotionpictureindustry,becausethe PROsareprohibitedfromlicensingpublicperformancerightsdirectlytomovietheater owners.117 Instead,filmproducerslicensepublicperformancerightsforthemusicused

infilmsatthesametimeasthesynchronizationrights,andpasstheperformancerights alongtothetheatersthatwillbeshowingtheirfilms.118 Inthecontextofmotion

pictures,sourcelicensesdonottypicallyencompassnon‐theatricalperformances,such asontelevision. Thus,televisionstations,cablecompanies,andonlineservicessuchas NetflixandHulumustobtainpublicperformancelicensesfromthePROstocoverthe publicperformanceofmusicalworksintheshowsandmoviestheytransmittoend users.119

b.

AntitrustOversight

Basic Antitrust Principles

Unlikethemechanicalright,thepublicperformanceofmusicalworksisnotsubjectto compulsorylicensingundertheCopyrightAct. But,asdescribedbelow,ASCAPand BMIaresubjecttogovernmentantitrustregulationthroughlongstandingconsent decrees. AndwhileneitherSESACnorGMRissubjecttosuchdirectantitrust

regulation,each,ofcourse,mustabidebygenerallyapplicableantitrustlaw,whichis enforceablebythegovernmentorthroughprivatecausesofaction. SESAC,forexample, hasrecentlybeenthesubjectofprivateantitrustsuits,asdiscussedbelow. Adetailed explanationoftheantitrustrationalethatunderliesthePROconsentdecreesisbeyond thescopeofthisstudy. Butabriefdiscussionofsomebasicantitrustprinciplesmaybe helpfulinunderstandingthemotivationbehindthedecrees.

Section1oftheShermanAntitrustActprohibits“[e]verycontract,combinationinthe formoftrustorotherwise,orconspiracy,inrestraintoftradeorcommerceamongthe several[s]tates.”120 AstheSupremeCourthasopined,however,“Congresscouldnot

haveintendedaliteralinterpretationoftheword‘every,’”andasaresult,courts

117Thisprohibitionwasaresultofantitrustlitigationbroughtbymovietheaterownersinthe

1940s. Alden‐Rochelle,80F.Supp.888;see also ChristianSeyfert, Copyright and Anti‐Trust Law: Public Performance Rights Licensing of Musical Works into Audiovisual Media 6,20(Sept.1,2005) (unpublishedLL.M.thesis,GoldenGateUniversitySchoolofLaw), available at http:// digitalcommons.law.ggu.edu/theses/13at19.

118See id. at19.

119Id.; see also NetflixFirstNoticeCommentsat12; ASCAP Reports Increased Revenues in 2011,

ASCAP(Mar.8,2012),http://www.ascap.com/press/2012/0308_ascap‐reports.aspx(reflecting blanketlicenseswithNetflixandHulu). LicensingofperformancerightsfromSESACandGMR occurswithoutdirectantitrustoversight,andthosesmallerPROsmayrefusetolicensetheir repertoirestopotentiallicensees.

“analyze[]mostrestraintsundertheso‐called‘ruleofreason.’”121 Theruleofreasontest

requiresacourttonotonlyfindarestraintoftrade,butalsodeterminewhetherthat restraintisunreasonable.122 TheSupremeCourthasalsorecognized,however,that

“[o]nceexperiencewithaparticularkindofrestraintenablestheCourttopredictwith confidencethattheruleofreasonwillcondemnit,ithasappliedaconclusive

presumptionthattherestraintisunreasonable.”123 Thus,certainarrangements—

includingprice‐fixingagreements—aredeemedperseviolationsofsection1.124

A“tying”arrangementisanotherkindofbusinesspracticethatraisesantitrustconcerns. Atyingarrangementis“anagreementbyapartytoselloneproductbutonlyonthe conditionthatthebuyeralsopurchasesadifferent(ortied)product.”125 Such

arrangementsareunlawful“ifthesellerhas‘appreciableeconomicpower’inthetying productmarketandifthearrangementaffectsasubstantialvolumeofcommerceinthe tiedmarket.”126 ButastheFederalTradeCommission(“FTC”)observes,“[t]helawon

tyingischanging.”127 WhiletheSupremeCourt“hastreatedsometieinsasperseillegal

inthepast,lowercourtshavestartedtoapplythemoreflexible‘ruleofreason’toassess thecompetitiveeffectsoftiedsales.”128

Department of Justice Consent Decrees

Since1941,ASCAPandBMI’slicensingpracticeshavebeensubjecttoantitrustconsent decreesoverseenbytheAntitrustDivisionoftheDOJandenforcedbyfederaldistrict courtsinNewYorkCity.129 Thoseconsentdecreeswereimplementedinreactionto

allegedanticompetitivepracticesofASCAPandBMI. Specifically,whenoriginally formed,bothPROsacquiredtheexclusiverighttonegotiatemembers’public performancerights,andforbadetheirmembersfromenteringintodirectlicensing

121Arizona v. Maricopa Cnty. Med. Soc’y,457U.S.332,34243(1982). 122Associated Press v. United States,326U.S.1,27(1945).

123Arizona,457U.S.at34344. 124Id. at34445.

125N. Pac Ry. Co. v. United States,356U.S.1,5(1958).

126Eastman Kodak Co. v. Image Technical Servs., Inc.,504U.S.451,4662(1992).

127Tying the Sale of Two Products,FTC,http://www.ftc.gov/tipsadvice/competitionguidance/

guide‐antitrust‐laws/single‐firm‐conduct/tying‐sale‐two‐products(lastvisitedJan.26,2015).

128Id.

129See generally United States v. BMI,275F.3d168,17172(2dCir.2001)(describingthehistory); see

also Antitrust Consent Decree Review,U.S.DOJ,http://www.justice.gov/atr/cases/ascap‐bmi‐decree‐

arrangements. Additionally,bothofferedonlyblanketlicensescoveringallofthemusic intheirrespectiverepertoires.130

Inthe1930s,theDOJ’sAntitrustDivisioninvestigatedASCAPforanticompetitive conduct—specificallythatASCAP’slicensingarrangementsconstitutedprice‐fixing and/orunlawfultying.131 Thegovernmentsubsequentlyfiledfederalcourtactionsin

1934and1941,arguingthattheexclusiveblanketlicense—astheonlylicenseofferedat thetime—wasanunlawfulrestraintoftradeandthatASCAPwaschargingarbitrary pricesasaresultofanillegalcopyrightpool.132 Whilethefirstcasewasneverfully

litigatedafterthegovernmentwasgrantedamid‐trialcontinuance,thelatteractionwas settledwiththeimpositionofaconsentdecreein1941.133 Thatconsentdecreehasbeen

modifiedtwice,firstin1950andmostrecentlyin2001.134 TheUnitedStatesalso

pursuedantitrustclaimsagainstBMI,resultinginasimilarconsentdecreein1941.135

The1941BMIconsentdecreewassupersededbyanewdecreein1966,whichwaslast amendedin1994.136

AlthoughtheASCAPandBMIconsentdecreesarenotidentical,theysharemanyofthe samefeatures. Asmostrelevanthere,thePROsmayonlyacquirenonexclusiverightsto licensemembers’publicperformancerights;mustgrantalicensetoanyuserthat

applies,ontermsthatdonotdiscriminateagainstsimilarlysituatedlicensees;andmust acceptanysongwriterormusicpublisherthatappliestobeamember,aslongasthe writerorpublishermeetscertainminimumstandards.137

ASCAPandBMIarealsorequiredtoofferalternativelicensestotheblanketlicense. Oneoptionistheadjustablefeeblanketlicense,ablanketlicensewithacarve‐outthat reducestheflatfeetoaccountformusicdirectlylicensedfromPROmembers. Under theconsentdecrees,ASCAPandBMImustalsoprovide,whenrequested,“through‐to‐

the‐audience”licensestobroadcastnetworksthatcoverperformancesnotonlybythe networksthemselves,butalsobyaffiliatedstationsthatfurthertransmitthose

130ChristianSeyfert, Copyright and Anti‐Trust Law: Public Performance Rights Licensing of Musical

Works into Audiovisual Media at6,20; see also Wilfat177.

131Seyfert, Copyright and Anti‐Trust Law: Public Performance Rights Licensing of Musical Works into

Audiovisual Media at20‐21.

132BMI v. CBS,441U.S.at10.

133Seyfert, Copyright and Anti‐Trust Law: Public Performance Rights Licensing of Musical Works into

Audiovisual Media at20‐21.

134BMI v. CBS,441U.S.at11. 135BMI v. CBS,441U.S.at12n.20.

136Seyfert, Copyright and Anti‐Trust Law: Public Performance Rights Licensing of Musical Works into

Audiovisual Media at22; see also BMIConsentDecree.

performancesdownstream.138 ASCAPandBMIarealsorequiredtoprovideper

programandper‐segmentlicenses,asaredescribedabove.139

ASCAPisexpresslybarredfromlicensinganyrightsotherthanitsmembers’public performancerights(i.e.,ASCAPmaynotlicensemechanicalorsynchronization rights).140 AlthoughBMI’sconsentdecreelacksasimilarprohibition,inpracticeBMI

doesnotlicenseanyrightsotherthanpublicperformancerights.141

Finally,andperhapsmostsignificantly,prospectivelicenseesthatareunabletoagreeto aroyaltyratewithASCAPorBMImayseekadeterminationofareasonablelicensefee fromoneoftwofederaldistrictcourtjudgesintheSouthernDistrictofNewYork.142 The

ratecourtproceduresarediscussedingreaterdetailbelow.

InresponsetorequestsbyASCAPandBMItomodifycertainprovisionsoftheirdecrees, theDOJ’sAntitrustDivisionannouncedinJune2014thatitwouldbeevaluatingthe consentdecrees,andhassolicitedandreceivedextensivepubliccommentsonwhether andhowthedecreesmightbeamended.143 Specifically,bothASCAPandBMIseekto

modifytheconsentdecreestopermitpartialgrantsofrights,toreplacethecurrent ratesettingprocesswithexpeditedarbitration,andtoallowASCAPandBMItoprovide bundledlicensesthatincludemultiplerightsinmusicalworks.144 TheDOJhas

expresseditsintentto“examinetheoperationandeffectivenessoftheConsentDecrees,” particularlyinlightofthechangesinthewaymusichasbeendeliveredandconsumed sincethemostrecentamendmentstothosedecrees.145 Atthesametime,theDOJis

138ASCAPConsentDecree§V;BMIConsentDecree§IX.

139ASCAPConsentDecree§§II.JK,VII;BMIConsentDecree§VIII.B. Notethatunderthe

ASCAPconsentdecree,theper‐segmentlicensehasanumberofconditionsthatmustbemet beforeitcanbeused. ASCAPConsentDecree§VII.

140ASCAPConsentDecree§IV.A.

141See BMI,CommentsonDepartmentofCommerceGreenPaperat45(Nov.13,2013), available

at http://www.ntia.doc.gov/files/ntia/bmi_comments.pdf.

142ASCAPConsentDecree§IX;BMIConsentDecree§XIV.

143Antitrust Consent Decree Review,U.S.DOJ,http://www.justice.gov/atr/cases/ascapbmidecree

review.html(lastvisitedJan.26,2015).

144ASCAP,CommentsSubmittedinResponsetotheDOJ’sAntitrustConsentDecreeReviewat

18,22,31(Aug.6,2014), available at

http://www.justice.gov/atr/cases/ascapbmi/comments/307803.pdf(“ASCAPAntitrustConsent DecreeReviewComments”);BMI,CommentsSubmittedinResponsetotheDOJ’sAntitrust ConsentDecreeReviewat2(Aug.6,2014), available at http://www.justice.gov/atr/cases/ascapbmi/ comments/307859.pdf(“BMIAntitrustConsentDecreeReviewComments”).

145Antitrust Consent Decree Review,U.S.DOJ,http://www.justice.gov/atr/cases/ascapbmidecree

conductingarelatedinvestigationtodeterminewhethertherehasbeenacoordinated effortamongmusicpublishersandPROstoraiseroyaltyrates.146

Key Antitrust Cases

InadditiontotheDOJactionsthatledtotheadoptionoftheconsentdecrees,PRO practiceshavebeenthesubjectofprivateantitrustactions,includinganumberrelatedto theconsentdecrees. Thedecisionsinthesecasesservetohighlightcourts’approachto thecollectivelicensingofpublicperformancerightsandadministrationoftheconsent decrees.

Inthe1979SupremeCourtcaseofBMI v. CBS,CBShadsuedASCAPandBMI,alleging thattheblanketlicenseviolatedantitrustlawsbyconstituting“illegalpricefixing,an unlawfultyingarrangement,aconcertedrefusaltodeal,andamisuseofcopyrights.”147

Ratherthandeclaringtheblanketlicensesperseunlawful,theCourtheldthatthey shouldbeevaluatedundera“ruleofreason”test,observingthatablanketlicensecould beusefultoaddresstheproblemofnegotiatingthousandsofindividuallicenses. The Courtalsonotedasrelevantthefactthattherewereno“legal,practical,orconspiratorial impediment[s]”toobtainingdirectlicenses,indicatinglicenseeshavearealchoiceinthe directlicenseasanalternativetotheblanketlicense.148 Onremand,thecourtofappeals

upheldtheblanketlicenseundertheruleofreason,explainingthatitdidnot unreasonablyrestraincompetitionbecauseCBScouldfeasiblyobtaindirectlicenses fromcopyrightowners.149

AftertheBMI v. CBS litigation,anumberofothercourtsexaminedtheblanketlicense, andsustaineditagainstantitrustchallengesunderrule‐of‐reasonanalysis. InBuffalo Broadcasting v. ASCAP,theSecondCircuitconcludedthat,inthecontextoflocal televisionstations,theblanketlicensedidnotviolatetheShermanActbecauseper‐

programlicenses,directlicenses,andsourcelicenseswererealisticalternativestothe blanketlicense.150 AfederaldistrictcourtintheDistrictofColumbiareachedasimilar

conclusionwithrespecttocablestations.151

146EdChristman, Dept. of Justice Sends Doc Requests, Investigating UMPG, Sony/ATV, BMI and

ASCAP Over Possible “Coordination,BILLBOARD(July13,2014),http://www.billboard.com/biz/ articles/news/publishing/6157513/dept‐of‐justice‐sends‐doc‐requests‐investigating‐umpg‐

sonyatv. MembersoftheDOJAntitrustDivisionattendedandobservedtheOffice’sroundtables forthisstudyinNashvilleandNewYork.

147BMI v. CBS,441U.S.at6. 148Id. at24.

149CBS v. ASCAP,620F.2d930,93839(2dCir.1980).

150Buffalo Broad. v. ASCAP,744F.2dat92632; see also id. at934(Winter,J.,concurring)(“[S]olong

Morerecentlitigationhasinvolvedroyaltyratedisputes. In2012,theSecondCircuit addressedratedisputesinvolvingASCAPandBMI,ontheonehand,andDMX,a backgroundmusicservice,ontheother,regardingtheratetobepaidforanadjustable‐

feeblanketlicense.152 Inarguingforalowerrate,DMXpointedtodirectlicensesithad

enteredintowithanumberofcopyrightowners,mostofthemsmallerpublishers,on relativelyfavorabletermsforDMX.153 DMX,however,alsoreliedonadirectlicense

fromSony/ATV,amajormusicpublisher. ThatdealgaveSony/ATVaproratashareof thesameannualrateasothersmallerpublishers,butalsoprovidedSonya$2.4million advanceanda$300,000administrativefee.154 Thecourtfoundthisandtheotherdirect

dealsenteredintobyDMXtobepersuasivebenchmarksandthattheratecourts

reasonablyconsideredDMX’sdirectlicensesintheirratedeterminations. Althoughthe PROsarguedthatthesubstantialadvancepaidtoSony/ATVrenderedthatlicensean inadequatebasistosetratesfortheremainderofpublisherscoveredbyPROlicenses, thecourtofappealsaffirmedtheratesadoptedbytheratecourts.155

TherehasalsobeenrecentlitigationbetweenthePROsandPandora,theinternetradio

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