Arguing that its own viability is at stake, the American Society of Composers Authors and Publishers spelled out on Monday the basis for its appeals of two federal court rulings in its bitter legal dispute with internet radio company Pandora.
ASCAP filed the legal brief last week and a redacted version was unsealed in federal court on Monday.
At stake for the music industry are two enormous issues: the federally-regulated rates that the Internet's leading radio service must pay to songwriters and publishing companies, and possibly the very future of the performance rights organizations which have collected and distributed performance royalties for over 100 years.
ASCAP is seeking to overturn the lower court's ruling that publishing companies must enter into all-or-nothing licensing deals. Major publishers pursued withdrawing their digital rights in order to privately negotiate more favorable deals with Pandora.
And ASCAP is also seeking to overturn the rate court's ruling that Pandora must pay 1.85 percent of its revenue to the performance rights organization's member songwriters and publishers. ASCAP sought a high-end payment of 3 percent of Pandora's revenues.
ASCAP minced no words in the brief, beginning its argument in dramatic fashion.
"This is an appeal from two district court decisions that, if not reversed, threaten the viability of (ASCAP), this nation's oldest and largest performing rights organization," ASCAP argued in the brief. "Such an outcome would have a profoundly negative effect on songwriters, music publishers and music users themselves, disrupting the marketplace for the licensing of music performing rights that has functioned for many decades as a result of the well-established efficiencies provided by an ASCAP license."
During a brief period when some publishers withdrew just their digital licensing rights from ASCAP, the companies were able to negotiate more favorable deals with Pandora. But the federal court ruled that such a move was banned by the federal consent decrees that govern how ASCAP and Broadcast Music Inc. operate.
ASCAP, along with BMI in a similar but separate lawsuit, argued that such negotiations proved that the federally mandated rate is too low.
Sony/ATV told its songwriters in a letter last month that it would consider complete withdrawal of its rights from ASCAP and BMI if it is not able to negotiate privately with Pandora and other digital music companies.
In the meantime, the Department of Justice is undergoing a review of the ASCAP and BMI consent decrees, with a deadline of this week to submit public comments. Publishers and songwriters are also pushing for the consent decrees to expressly allow for the partial withdrawal of rights.
If the songwriters and publishers lose on both the appeal and on the consent decree process, it's unclear what the impact will be should major companies like Sony/ATV decide to pursue a complete withdrawal.
In its appeal, ASCAP argues that the lower court misinterpreted the spirit of copyright law, which is intended to allow rights holders to protect their works and have control over how their works are used.
"The district court's ruling is also at odds with the history of ASCAP's consent decree, which shows that ASCAP and the Department of Justice deliberately removed from the decree the very prohibition on members reserving exclusive rights for themselves that the district court imposed," ASCAP argued in its brief.
Pandora argued that if major publishing companies are able to partially withdraw digital rights it could lead to collusion - a claim multiple media outlets reported the DOJ is looking into during its review of the consent decrees. The rate court rulings did not find that the publishers were colluding in order to negotiate better rates.