DOJ Consent Decree Comment Part 2: What Happened to the Bundle of Rights?

This is the second installment of my comments to the Department of Justice review of the ASCAP and BMI consent decrees (see Part 1 here):

What Happened to the Bundle of Rights?

It is axiomatic that under the 1976 Copyright Act, copyright is a bundle of rights.[1]  Copyright owners are largely free to exploit their rights or subdivisions of copyright in whole or in part.[2] This is arguably the fundamental reason why PROs exist—to administer the performance right[3] subdivision of the bundle.

Methods of monetizing songs have evolved with technology as the marketplace identifies new methods of exploitation. Generally speaking, promoting licensing of these new methods seems to be the broad policy goal of the consent decrees. The government has also determined that promoting licensing is so important that it effectively trumps the songwriter’s right to say “no,” a provision of the consent decrees that the regulated PROs were required to agree.

After the last Pandora decision in the ASCAP rate court,[4] it appears that the consent decree is being interpreted to require that copyright owners withdraw from ASCAP altogether in order to enjoy the right to license a subdivision of their bundle of exclusive rights, replacing the songwriter’s decision with the Court’s own interpretation of the government’s requirements. (The same applies to BMI.)

Respectfully, I fail to see the logic, utility or authority for the government establishing an arbitrary bright line limit on how far the copyright bundle can be subdivided.

If the government permits copyright owners to license all of the performance right through regulated PROs, why should the government take a songwriter’s right to license a subdivision of the performance right outside of the consent decree?[5] This is particularly true of digital performance rights that were barely commercialized or did not exist at all at the time of the last modifications of the respective consent decrees.

I understand why the music users would like us to believe that the government intended to regulate uses that did not exist at the time of the modifications, but I hope you can empathize with songwriters who find this rather stunning logic and take a contrary view.

This arbitrary limitation on the statutory right to subdivision essentially dares copyright owners to disassociate themselves from the regulated PROs, a course that I fully believe they will eventually follow. If enough copyright owners are effectively forced to withdraw from the regulated PROs in order to enjoy an actual free market for subdivisions of their rights permitted by the Copyright Act, both ASCAP and BMI surely will be diminished to the great disadvantage of songwriters.

I suggest that the market should be trusted to do a better job of creating licensing opportunities as likely would occur if copyright owners were free to decide how to license their property. The rate courts’ position seems at odds with the elegance of the bundle of rights solution that underpins our private property traditions of personal liberty.

[1] See 17 U.S.C. Sec. 106.

[2] See 17 U.S.C. Sec. 201(d)(2) (“…Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred…and owned separately”(emphasis added)); see also New York Times Co. v. Tasini, 533 U.S. 483 (2001) (“The 1976 [Copyright] Act recast the copyright as a bundle of discrete ‘exclusive rights,’ § 106, each of which ‘may be transferred…and owned separately….’ § 201(d)(2),” at 484.)

[3] See 17 U.S.C. Sec. 106(4) (“[T]he owner of copyright under this title has the exclusive rights

to do and to authorize…in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly”.)

[4] In re Petition of Pandora Media Inc., 12-cv-08035, U.S. District Court, Southern District of New York (Manhattan)

[5] “[A] private property right includes the right to delegate, rent, or sell any portion of the rights by exchange or gift at whatever price the owner determines.” Armen A. Alchian, Property Rights available at (emphasis added).