FOR IMMEDIATE RELEASE

HON. Janet T. Neff order -

Judges Order September 26, 2016

Lease America receives favorable decision over Rowe/AMI and the AMOA

Judges Decision September 26, 2016

Justice prevails for Music Artist and the Music Industry.


Thursday, August 4, 2016

Justice Department Completes Review of ASCAP and BMI Consent Decrees, Proposing No Modifications at This Time ASCAP and BMI Licenses Must Continue to Allow Music Users to Publicly Perform All Works Held by Each Organization The Department of Justice announced today the conclusion of its investigation into proposed modifications to antitrust consent decrees binding the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), determining that no modifications are warranted at this time. The investigation by the department’s Antitrust Division also confirmed that the consent decrees require each organization to offer “full-work” licenses that convey to radio stations, television stations, bars, restaurants, digital music services, and other music users the right to publicly perform, without risk of copyright infringement, all works in ASCAP’s and BMI’s repertories. The Antitrust Division explained the bases for its conclusions in a detailed statement available at https://www.justice.gov/atr/antitrust-consent-decree-review-ascap-and-bmi-2015.

The Antitrust Division opened its investigation in 2014 following requests by ASCAP and BMI that the Antitrust Division join them in proposing modifications to the court-ordered consent decrees. The Antitrust Division met and spoke with dozens of industry stakeholders on numerous occasions during the course of its investigation, and obtained the input of industry participants and members of the public through public comment solicitations in June 2014 and September 2015. The Antitrust Division considered the views of all of these stakeholders before reaching its conclusions.

ASCAP and BMI are performing rights organizations that license public performance rights in compositions held by their hundreds of thousands of songwriter and publisher members. Since 1941, when the United States originally brought civil antitrust lawsuits against ASCAP and BMI, both organizations have been subject to consent decrees, which are designed to prevent anticompetitive effects arising from their collective licensing of music performance rights. Both consent decrees have been amended periodically since their entry. The ASCAP consent decree was last amended in 2001 and the BMI consent decree was last amended in 1994. ASCAP and BMI Licenses Must Continue to Allow Music Users to Publicly Perform All Works Held by Each Organization

Justice Department Completes Review
Antitrust consent Decree Review
Final Decision

Memorandum of Decision

Official Public Document - MARCH 31, 2014

Jukebox Dealer Sues Industry Group

WBJournal -MARCH 4, 2013 Edition MATT PILON

If a recently filed lawsuit has any truth to it, the jukebox business is decidedly cutthroat.

Lease America — a Shrewsbury company that sells and leases jukeboxes and other equipment to restaurants and bars — has filed suit in Worcester District Court, alleging that an industry association engaged in anticompetitive behavior by pressuring one of the largest jukebox makers to cancel its supplier relationship with Lease America.
The alleged collaboration effectively drove Lease America out of business," the suit said. The reason for the alleged squeeze? Lease America sold jukeboxes direct to venues, which is less profitable.

The Ownership Model
Venues that own instead of leasing a jukebox have more control over pricing and content and generally save money, the Jan. 22 suit says.

Timothy Sanford, executive editor of the Vending Times, a New York-based trade publication, said the coin machine industry developed in the post-World War II years as a "concession model" in which manufacturers sell to distributors, who sell to regional operators who place the machines in various venues. The venue owner would not have to purchase or maintain the machine, but would get a cut of the profits for allowing it to be placed on his or her property.

The model makes sense, Sanford said, because the machines require maintenance, and the operators could turn to the distributors for parts or repair advice.

Buying a jukebox has always been possible, he said, but distributors have been reluctant to sell the machines because local operators might resent it and prefer to do business with a different distributor.
Additionally, the arrangement may cause headaches: A venue owner who cancels his operator's contract, buys a jukebox and then realizes it needs more maintenance than expected may end up calling the operator and asking for the contract to be reinstated.

"This is where the existing prejudice against 'location-owned equipment' comes from, and it was not an irrational prejudice," Sanford said. "The extent to which that three-tiered service model applies today is, perhaps, arguable. But businesses in general tend to suppose that the conditions that prevailed during their formative years are, somehow, part of the natural law."

The Accusation
Founded in 2007, Lease America said AMI Entertainment Network and its subsidiary, Rowe International Corp., cancelled their supplier relationship with Lease America after being pressured by the Amusement and Music Operations Association (AMOA), a Texas-based trade group that represents manufacturers and distributors of jukeboxes, vending machines and other devices.

The suit claims AMOA told Rowe that AMOA members would boycott the jukebox manufacturer if it continued to allow Lease America to sell jukeboxes directly to end users.

Announcement Raised Hackles
After announcing his plans to direct sell, Lease America's owner, Charles Pietrewicz, was allegedly approached by a fellow jukebox operator at an industry conference in Las Vegas who told him: "The hole is already dug for you."

The suit alleges that AMOA leadership convened a meeting in early 2009 at which it hatched a plan to threaten to boycott Rowe unless it terminated its arrangement with Lease America. The suit states that an attendee at the meeting later told Pietrewicz about it.

Rowe allegedly gave in to AMOA's demand, remotely shutting off Lease America's jukeboxes in March 2009 with no prior warning, the suit states.

The suit describes the arrangement between the trade association and Rowe as "brazenly anticompetitive" and said it impacted consumers' ability to obtain digital jukeboxes under better terms.
Calls seeking comments from AMOA and from Rowe and AMI's attorney were not returned.
Pietrewicz deferred comment to his Los Angeles-based attorney, Jordan Ludwig of Blecher & Collins.
Ludwig said Rowe's decision to shut off Lease America's jukeboxes "crippled" the business, which the suit said had been growing until that moment.

"What customers are going to buy a jukebox that doesn't work, or stay with Lease America when they can't get working jukeboxes?" Ludwig said.

The company's website contains an announcement about the lawsuit.
The suit claims Pietrewicz received permission for the direct-sell arrangement from a top AMI executive on the condition that neither would disclose it to other parties.
"The typical operator community and trade associations frown very heavily on it," Ludwig said of direct selling.
Lease America estimates its "loss of going concern" value exceeds 10 million. The company has requested a jury trial.
AMI, Rowe and AMOA have until late March to file official responses to the suit, according to court records.



AMI, AMOA Named in Antitrust Lawsuit

Instant Replay Magazine (Posted February 21, 2013 -- 11PM)


A Massachusetts company, Lease America.org, which was engaged in selling digital jukeboxes to locations and then providing those businesses with music via the AMI music network, has filed a lawsuit against AMI and the Amusement and Music Operators Association alleging the two conspired in violation of federal and state antitrust laws. The lawsuit names both AMI and Rowe in reference to that firm's Internet jukebox business.

Lease America also claims tortious interference of its contractual relationships with AMI and existing and future locations.

The suit seeks unspecified damages, although Lease America estimates its damages to exceed $ 10 million. Antitrust law provides for what are called "treble damages" in some circumstances, meaning a successful plaintiff can possibly receive three times actual damages. Plaintiffs can also recover attorney fees.

"This is a paradigm case involving a restraint of trade in an industry that is in a constant struggle to maintain the status quo," the lawsuit claims. "Lease America offered to sell digital jukeboxes in a manner that was more favorable to consumers than the traditional method. Its business model was a direct threat to the conventional distribution channels that have been standard in the industry for decades. Lease America's competitors are openly hostile to Lease America's method of doing business, and defendants AMOA and Rowe worked together in concert to prevent progressive change in the jukebox operator industry. This suppression would ensure that the traditional model could remain unrivaled and no one would have to innovate to compete or survive."

Both AMI and AMOA declined to discuss the matter. "AMOA denies the validity of all claims made in the suit and we plan to vigorously defend ourselves in this matter," the association told RePlay via email. AMI CEO Mike Maas, contacted by phone, said he could not comment on the pending litigation.

Lease America claims that AMOA threatened a boycott of AMI's jukebox services if the latter did not put a stop to Lease America's practice of selling jukeboxes to locations (while retaining a nominal ownership interest in the machine) and then providing music as a reseller of the AMI network to those locations. Lease America claims AMI had approved a confidential exemption to certain provisions of its standard operator agreement thus allowing this non-traditional business model.

However, AMI allegedly withdrew from this agreement in 2009 under pressure from AMOA. "The AMOA, backed by the power of strength in numbers, threatened a boycott against Rowe if Rowe continued to supply jukeboxes to Lease America," the lawsuit claims. "Unwilling to risk losing a substantial portion of its customer base and further angering a powerful trade association, Rowe acquiesced to the AMOA and remotely disabled all of Lease America's jukeboxes without any prior notice, providing only vague and pretextual reasons for doing so."

The lawsuit goes on to say that AMI counsel told Lease America that it disconnected the location-owned jukeboxes because they were in violation of the standard operator agreement.

According to Lease America, AMOA held a meeting in early 2009 at which those present decided to boycott AMI "if it continued allowing Lease America to sell direct."

Federal antitrust laws prohibit agreements or arrangements that unreasonably restrain competition to the detriment of consumers.

The Lease America lawsuit cites multiple statements by AMOA in various online media condemning direct sales. Lease America contends that AMOA was under pressure by operators and other associations to do something in the wake of the Jukes Direct controversy, which involved a firm reportedly selling Ecast-enabled jukeboxes directly to locations.

"Rowe's disabling of Lease America's jukeboxes was the killing blow to Lease America's direct sell business model," the lawsuit concluded. "The AMOA, acting as a combination of its members, responded to its members' complaints by bullying Rowe -- through threats of boycotting Rowe -- to eliminate Lease America as a competitor. The AMOA's threat against Rowe was successful; Lease America was forced out of the market, and consumers were deprived of an alternative choice to the status quo for acquiring or purchasing jukeboxes."

AMOA maintains an antitrust policy, regularly providing copies to members and leaders. The policy prohibits members from discussing "boycotts or agreements not to deal with competitors, customers or suppliers."

Lease America's lawsuit was filed in U.S. District Court for the District of Massachusetts. Neither AMI nor AMOA has yet responded with a formal answer to the court, but those will likely be forthcoming.


Complaint Filed Over Alleged Restraint Of Trade In Jukebox Industry

Vending times Vol. 53, No. 3, March 2013, Posted On: 2/19/2013

Nick Montano
Nick@vendingtimes.net


WORCESTER, MA -- A complaint has been filed in the U.S. District Court for the district of Massachusetts that alleges Rowe International Corp. (AMI Entertainment Network Inc.), a jukebox manufacturer, and the Amusement and Music Operators Association, which represents vending operators, are involved in restraint of trade.

Shrewsbury, MA-based Lease America, or Lease America.org Inc., filed the complaint in January accusing AMOA of pressuring Rowe not to supply jukeboxes to Lease America, which sells amusement equipment to locations.

The complaint charges that in early 2009 AMOA advised the manufacturer that its operator members would no longer use Rowe jukeboxes if it allowed Lease America to sell its jukeboxes directly to locations. According to the complaint, Rowe terminated its agreement with Lease America March 10, 2009, and remotely disabled Lease America's jukeboxes without warning.

As a result, Lease America said it has suffered financial injury, and is seeking damages, which it wants the court to determine. To date, the company estimates that its losses are more than million. The plaintiff also demands a jury trial.

The complaint, which alleges violations of the Sherman Act, unfair business practices under Massachusetts's general law and several types of tortious interference, says coconspirators also are involved in the purported restraint of trade, but it did not say who they are.

The complaint mentions two other direct-selling organizations that it asserts have experienced similar pressures. San Francisco-based Ecast Inc., a jukebox music provider that shut down a year ago, supplied software and content to both operations, which earned the disapproval of the Amusement and Music Owners Association of New York.

Overall, Lease America's claim argues that the coin machine industry's supply chain -- manufacturer, distributor and operator -- is struggling to preserve a tradition, which it says inhibits innovation and competition.

A spokesman for Chicago-based AMOA told VT that the allegations made against the association in the complaint are baseless and that it is ready to challenge those claims in the legal system.


Rental and Leasing Programs Are Center Of Jukebox Controversy

Vending Times Vol. 49, No.4, April 2009, Posted On: 4/10/2009

NEW YORK CITY -- The Amusement and Music Operators Association, a national trade group, and the Amusement and Music Owners Association of New York have strongly criticized Power House Vending of Laguna Niguel, CA, for a direct-to-location, nationwide rental program. The jukeboxes run on the Ecast network.

Some operators have threatened to boycott Ecast unless the San Francisco-based music provider takes action to stop Power House's jukebox program, which allegedly challenges a long-established operator-owned equipment business model.

According to an April 3 statement by Chicago-based AMOA, an unnamed company -- clearly Ecast -- is supporting what the trade group called a jukebox "rental scheme," which "attempts to undermine, threaten or otherwise circumvent the coin machine operator."

The AMOA statement continued: "This is the same firm that was the target of nearly identical operator opposition during the Jukes Direct scenario a couple of years ago."

However, AMOA was careful not to name Ecast explicitly, nor censure the jukebox media company outright. Its statement conceded that "sometimes, it's hard to figure out who is to blame" in these situations. While Ecast has not yet officially commented on the matter, it has reportedly informed both associations that it believes it has no choice but to continue to honor its standard operating agreement with Power House Vending, and that nothing in its operator agreement forbids the Power House pricing structure.

At the center of the storm are several pages on the California vendor's website that outline a jukebox rental offer. The website text reads, in part: "Welcome to Power House Vending's music division. We are the solution to renting a digital, downloadable jukebox and maintaining the support of a national, experienced operator."

Power House Vending is a high-end operating company that serves 17 states. Its principals, Stephen Bennett and Richard Wolfen, also own and operate a family entertainment center in Long Beach, CA, called The Power House. The executives could not be reached for comment.

The Power House site markets two digital jukebox models -- the J380 and Icon -- that are offered for $ 119 a month, plus a percentage of the cashbox, under a 39-month rental contract.

Power House's website also contains language that has clearly ruffled the feathers of AMOA's leadership and AMOA-NY's operators. "With our unique rental program and fantastic percentage programs you will keep more of the gross income," the site says, adding, "You have the keys and control the cash."

The response from the national operator association was simple. AMOA said it "condemns the practice," which it termed a "rental scheme." Comments by AMOA-NY were considerably less restrained. In a letter dated March 27, the state association blasted Ecast in scathing language. It implied that the Power House rental offer amounted, in effect, to a camouflaged "lease-to-buy" arrangement. In the letter, AMOA-NY executive director Danny Frank warned Ecast that many operators are not interested in hearing legalisms or other excuses.

The communication from the New York trade group, addressed to Ecast chief executive John Taylor, broadly hinted that some operators have privately threatened to boycott Ecast if it continues to feed service to Power House for its new location rental program.

AMOA's statement also alluded to this hazard, albeit in vague language. According to the national group, "attempts have been made to ratchet up the pressure on the manufacturer [and] content provider [that] is supplying the units and music to ‘cut off' this particular customer."

The Ecast chief executive has reportedly informed both trade associations that the company's attorneys have advised that its hands are tied in the matter. According to the national association, "This company [Ecast] has told AMOA and others that there is nothing in its operator agreement that can be invoked to rectify this situation -- and cites a consent decree that governs some of its business policies."

In 2005, Ecast consented to an agreement with the U.S. Department of Justice to ensure fair competitive practices. The consent decree followed a DOJ investigation into possible violations of antitrust law, and stipulated that Ecast would end its noncompete agreement with NSM Music Group, a manufacturer of commercial jukeboxes. Under that deal, NSM had agreed in effect to market Ecast jukeboxes rather than build and sell its own competing digital music platform, which DOJ said could have furthered competition and reduced prices to the operator.

AMOA-NY apparently heard the same line of reasoning from Taylor, and is not impressed. The March 27 letter from Frank said the AMOA-NY membership believes Ecast's 2005 DOJ consent decree is irrelevant to the current Power House situation.

In March, AMOA-NY began an industrywide movement to build awareness about online marketplace businesses selling, leasing or renting jukeboxes and other commercial equipment to locations. The association contends that the practice conflicts with the "operator" agreements between the jukebox companies that provide digital music services and professional vending companies which deploy their products.

Shrewsbury, MA-based Lease America, which specializes in leasing coin-operated amusement equipment, also appeared on the association's radar. The company's line includes Rowe and Merit jukeboxes that run on the AMI Entertainment Network.

According to an announcement posted on Lease America's website, AMI on March 10 discontinued music services supporting Lease America's jukeboxes. The leasing company said it is pursuing legal action against Rowe and AMI, and is "gearing up for its own Internet jukebox and music server," which it claims is in the final stages of development.

Former vending operator Allan Z. Gilbert observed that manufacturers and distributors have always sold to any customers willing to pay them. "They try to keep this information from operators, for obvious reasons, but it does go on," said Gilbert, who is also VT's financial editor. "It's also interesting to consider the wide variety of commercial vending and amusement machines that is sold by such giant retailers as Sam's Club and BJ's Wholesale Club," he added.

"The only leverage an operator has is to boycott the suppliers who do it too egregiously," Gilbert said. "Remember how much market share Seeburg lost when it started demonstrating its new jukeboxes directly to bars? And it wasn't even trying to sell them directly. They would put the business through a local operator. Even so, the operators resented them for forcing them to buy new equipment."

Additionally, a rental or leasing business can easily be construed as another way of operating equipment, Gilbert explained. In the full-line vending segment, this is known as cooperative service vending, a program in which the location participates in the service and collection of the machines. "The equipment can be owned by the location, rented from the operator and be managed several different ways. Cooperative service is even more common in the office coffee service segment," he said. "Operators need to justify their place in the channel of distribution by offering some value in the transaction that the direct sale supplier cannot," Gilbert said.


Lease America Wholesale Membership