Meredith Corp. v. Sesac LLC (1 F. Supp. 3d 180, 2014)

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge.

This lawsuit is the latest in a line dating to the 1940s that have challenged, under federal antitrust law, the practices of performing rights organizations (“PROs”) that issue collective (or “blanket”) licenses to the rights to perform the copyrighted music of their members or affiliates. In the United States, there are three such PROs. For more than 50 years, the licensing practices of the two largest — the American Society of Composers, Authors and Publishers (“ASCAP”), and Broadcast Music, Inc. (“BMI”) — have been subject to consent decrees entered into with the United States Department of Justice (“DOJ”) following antitrust litigation. These decrees have imposed significant restrictions on these PROs. These include establishing a “rate court” to set reasonable fees for performance licenses when the PRO and the licensee cannot agree; requiring that the PRO’S right to issue performance licenses to its members’ music be non-exclusive; and requiring that alternatives means of licensing such music be made realistically available to would-be licensees. These terms have factored prominently in the court decisions that, since 1950, have uniformly rejected antitrust challenges to ASCAP’s and BMI’s use of blanket licenses.

This case involves the third, and smallest, PRO: SESAC LLC (“SESAC”). Unlike ASCAP and BMI, SESAC has never been subject to a consent decree. However, in the years leading up to 2008, SE-SAC’s latitude to set the terms of music licenses was otherwise limited: first by a series of industry-wide agreements it negotiated with the television broadcast industry; later, for the period April 2005 through December 31, 2007, by a contractual duty that bound SESAC to arbitrate its disputes with licensee stations. Since January 2008, however, SESAC’s range of motion has no longer been thus inhibited. SESAC has been free unilaterally to set the terms on which it will issue licenses to perform the music of its more than 20,000 affiliated composers.

The issue in this putative class action is whether SESAC’s licensing practices since 2008 have violated federal antitrust law. Plaintiffs are groups of local television stations. They sue SESAC and 50 of its affiliated composers, who are named as “John Doe” defendants. The plaintiffs allege that, in practice, they must obtain licenses for some music in SESAC’s repertory. That is because SESAC’s repertory is large and includes works so ubiquitous that some are inevitably embedded in shows that the stations acquire and wish to air.

Plaintiffs contend that, since 2008, SE-SAC, with its affiliates’ assent, has taken steps to make illusory any alternative to the blanket license it sells, which conveys the right to play the music of all SESAC affiliates. Having insulated this product from competition and forced local television stations to acquire it, plaintiffs allege, SESAC has set an exorbitant price for that “all or nothing” license, even though stations have no interest in buying the rights to the entirety of SESAC’s repertory. Plaintiffs assert that SESAC and its affiliates have thereby violated § 1 of the Sherman Act, 15 U.S.C. § 1, by combining to unlawfully restrain trade; and § 2 of the same Act, 15 U.S.C. § 2, by conspiring to monopolize the market for the performance rights to the musical works within SESAC’s repertory. Plaintiffs also assert a monopolization claim against SESAC under § 2.

Discovery is now complete. SESAC moves for summary judgment. For the reasons that follow, that motion is denied as to all three counts, save that, on the § 1 claim, the Court grants summary judgment to defendants in two ways that narrow that claim. Specifically, the Court rejects plaintiffs’ (1) per se theory of liability; and (2) claim of an agreement to restrain trade among all 20,000-plus SE-SAC affiliates, as opposed to among only the far smaller subset (under 1%) of affiliates who were party to a supplemental affiliation agreement with SESAC.

I. Background

A. Facts

This case involves the process by which local television stations acquire the performance licenses necessary to permit them lawfully to broadcast programs containing copyrighted music. Plaintiffs claim antitrust violations arising out of the terms under which SESAC has aggregated such licenses and offered then for sale. To understand these claims and SESAC’s defenses, it is necessary to explain the means by which music performance licenses are sold to such stations, both in general and by SESAC specifically.

1. Television Stations’ Need for Music Performance Licenses

Almost all television programs contain music, whether as the central focus of a feature performance, as theme music played at the program’s opening and closing, or as interspersed or interstitial background music used “to underscore or heighten certain moods, change the pace- or otherwise enhance the desired effect of the program.” United States v. ASCAP, No. 13 Civ. 95(WCC)(MHD), 1993 WL 60687, at *2 (S.D.N.Y. March 1, 1993). Most such music is copyrighted under federal copyright law, see 17 U.S.C. § 501 et seq. Def. 56.1 ¶¶ 1-2; PI. Resp. to Def. 56.1 ¶¶ 1-2; Hochstadt Decl. Ex. 1 (Expert Report of Adam B. Jaffe (“Jaffe Rep.”)) 10-11. To comply with that law, a station that seeks to broadcast programs containing copyrighted music must first obtain a license from the copyright holder to public-lyperform it. Def. 56.1 ¶¶ 3-4; PI. Resp. to Def. 56.1 ¶¶ 3-4; Jaffe Rep. 10.

As a practical matter, a television station cannot negotiate separately with the holder of the rights to each copyrighted work within each of its programs. Among other reasons, there are far too many musical works contained within these programs to make it realistic to undertake individual negotiations; and as to some works, the copyright holder may not be identified easily.

Instead, for many years, for most music that they have broadcast, local stations have obtained performance licenses from PROs. Def. 56.1 ¶ 18; PI. Resp. to Def. 56.1 ¶ 18; Am. Compl. ¶ 10. The PROs affiliate with numerous composers and music publishers, and assist these rights holders in various ways. These include serving as a clearinghouse for the licensing of public performance rights, monitoring performance of members’ works, assuring that users pay for such performances, and distributing royalties to the rightsholders. On their members’ behalf, the PROs sell-to TV stations and others that wish to perform such work-performance licenses that cover, generally on an aggregated, or blanket, basis, the musical works of their respective affiliates. Def. 56.1 ¶ 19; PI. Resp. to Def. 56.1 ¶ 19.

As noted, in the United States, there are three such PROs: ASCAP, BMI, and SE-SAC. Def. 56.1 ¶¶ 18-19; PI. Resp. to Def. 56.1 ¶¶ 18-19. SESAC, a private for-profit corporation owned by investors, is the smallest. Def. 56.1 ¶¶ 21-23; PI. Resp. to Def. 56.1 ¶¶ 21-23. The three PROs have repertories of copyrighted music that are exclusive of one another. Together, the PROs’ repertories account for virtually every copyrighted musical composition in the United States and its territories. Def. 56.1 ¶ 20; PL Resp. to Def. 56.1 ¶ 20.

2. Locally-Produced and Third-Party Produced Television Programs

Programming by local television stations falls broadly into two categories: those locally produced and those produced by third parties. Def. 56.1 ¶ 5; PI. Resp. to Def. 56.1 ¶ 5. A station’s need to obtain performance licenses from PROs is particularly acute in connection with third-party programming. Locally-produced programs, including local news programming, are produced by the station itself. Def. 56.1 ¶ 6; PI. Resp. to Def. 56.1 ¶ 6. As to such programs, local stations can, with minor exceptions, determine for themselves what music they wish to include. Def. 56.1 ¶ 7; PI. Resp. to Def. 56.1 ¶ 7. A station eould, therefore, largely avoid music in the repertory of a particular PRO in its own locally-produced programming, albeit with considerable effort. Def. 56.1 ¶ 8; PL Resp. to Def. 56.1 ¶ 8.

With respect to third-party programming, however, local television stations lack latitude to control music content. Third-party programming includes syndicated series or shows, such as “Seinfeld,” “House,” or “Wheel of Fortune,” movies, most sporting events, commercials, and infomercials, Def. 56.1 ¶ 9, 10; Pl. Resp. to Def. 56.1 ¶ 9, 10; Jaffe Rep. 9, 12, all of which may be critical to the station’s success. These programs are produced by outside persons or entities, and come to the local station complete or “in the can”; the stations do not control, nor can they alter, the music embedded therein. Def. 56. 1 ¶ 10, 11; PL Resp. to Def. 56.1 ¶¶ 10, II.

A station that broadcasts a copyright-protected performance of a musical work without permission faces the threat of statutory penalties for copyright infringement that can be as high as $150,000 per infringement. 17 U.S.C. § 504(c). For a number of practical reasons, to assure that it has the legal right to broadcast all the music contained in its third-party programs and commercial announcements, a local station generally must acquire licenses from all three PROs. Def. 56.1 ¶ 18; PI. Resp. to Def. 56.1 ¶ 18.

For one, the sheer volume of music broadcast by a station across its third-party programs makes it likely that this music will draw upon the repertories of ASCAP, BMI, and SESAC. For another, stations are contractually prohibited from altering, removing, or substituting alternatives for, the music embedded in third-party programming. Def. 56.1 ¶ 11; PI. 56.1 Resp. ¶ 11; Jaffe- Rep. 12, 53. A station cannot strip out, or excise, music contained within the repertory of a PRO with whom it wishes not to contract. It also may be difficult, or even impossible, for a station to identify, at the time it buys the rights to air a program, all music embedded in that program, let alone the PRO to whose repertory each musical work belongs. Def. 56.1 ¶¶ 11-12; PI. Resp. to Def. 56.1 ¶¶ 11-12. Finally, the alternative sales channel for music performance rights that conceivably might have developed — in which the right to perform embedded music would be secured by the producer and sold to the station along with the third-party program — has not so developed. Most rights the station needs to lawfully air the program, including rights relating to the script, visual images, acting, and direction, are typically conveyed along with the program itself. Def. 56.1 ¶ 14; PI. Resp. to Def. 56.1 ¶¶ 14, 16. But, as a matter of what plaintiffs call “longstanding industry practice,” performance rights to embedded music are generally not conveyed along with the program. Am. Compl. ¶ 7. The stations must separately secure such rights. Def. 56.1 ¶¶ 14, 16; PI. Resp. to Def. 56.1 ¶ 16.

For years, therefore, local stations overwhelmingly have obtained, from each PRO, music performance licenses that cover the PRO’s entire repertory. Def. 56.1 ¶ 18; PI. Resp. to Def. 56.1 ¶ 18. In negotiations with the PROs regarding performance rights, the stations have been represented by a non-profit association, the Television Music License Committee (“TMLC”). Def. 56.1 ¶ 26; PI. Resp. to Def. 56.1 ¶26. TMLC, in turn, has co-founded Music Reports, Inc. (“MRI”), which provides music rights administration services, including per-program license reporting services, to television stations in the United States. Def. 56.1 ¶ 28; PI. Resp. to Def. 56.1 ¶28.

3. Types of Licenses Available— and ASCAP’s and BMI’s License Terms.

There are several types of music performance licenses that a user, such as a television station, may obtain: blanket licenses, per-program licenses, direct licenses, and source licenses.

a. Blanket licenses: Blanket licenses authorize a station to perform all compositions in a given PRO’s repertory, and to do so an unlimited number of times; for this right, the station pays a fixed fee. Def. 56.1 ¶¶ 29-32; PL Resp. to Def. 56.1 ¶¶ 29-32; Jaffe Rep. 17-18. Historically, local stations have acquired blanket licenses from all three PROs to assure that they obtained the public performance rights necessary for all of their programming. Def. 56.1 ¶ 31; PI. Resp. to Def. 56.1 ¶ 31; Jaffe Rep. 17-18. Because each blanket license covers all music in that PRO’s repertory, this practice allows the stations to air programming without any risk of music copyright infringement. Def. 56.1 ¶ 33; PI. Resp. to Def. 56.1 ¶ 33.

b. Per-program licenses: Like a blanket license, a per-program license (“PPL”) allows a station to perform any composition in a PRO’s repertory. Unlike a blanket license, however, a PPL’s fee is variable; it depends on how many programs broadcast by the station contain music in a given PRO’s repertory for which the station has not independently obtained a direct license. See Def. 56.1 ¶¶ 37-39; PI. Resp. to Def. 56.1 ¶ 38; Jaffe Rep. 27-29. A station must pay the PRO only for any program that it broadcasts that contains one or more instances of that PRO’s music, and then only if the station does not already have the required license for that music from another source, in the form of a direct or source license (discussed below). Otherwise, the station need not pay the PRO. See Def. 56.1 ¶¶ 38-39; PI. Resp. to Def. 56.1 ¶¶ 38-39; Jaffe Rep. 27-28. In other words, the PPL provides stations that independently obtain licenses a discount off the blanket license, and thus an incentive to seek out licenses by other means.

ASCAP and BMI offer PPLs. See Def. 56.1 ¶ 37; PI. Resp. to Def. 56.1 ¶37. They are required to do so pursuant to consent decrees those entities entered into, decades ago, with DOJ, following antitrust litigation. See, e.g., United States v. ASCAP, No. 41-1395, 331 F.2d 117, at 124, 1950 U.S. Dist. LEXIS 4341, at *10-* 11 (S.D.N.Y. Mar. 14, 1950) (ASCAP Consent Decree Amended Final Judgment or “AS-CAP AFJ”); United States v. BMI, No. 64 Civ. 3787, 1994 WL 901652, at *2-3, 1966 U.S. Dist. LEXIS 10449, at *7-*8 (S.D.N.Y. Dec. 29, 1966) (“BMI Consent Decree”); see also BMI v. DMX, Inc., 683 F.3d 32, 36 (2d Cir.2012) (tracing history of consent decrees); Jaffe Rep. 28, 30. ASCAP is also required to use a specific formula to determine the PPL fee. See United States v. ASCAP, 1993 WL 60687, at *52-*78; see also Jaffe Rep. 28 n. 31. It is undisputed, and expert economists for both sides have opined, that ASCAP and BMI’s PPLs are economically viable and offer a “genuine alternative to the blanket license for many stations.” Jaffe Rep. 28; see PI. Br. 2.

c. Direct licenses: A direct license is a license for performance rights sold directly by the copyright holder (“the rights holder”) to a television station. Def. 56.1 ¶ 69; PI. Resp. to Def. 56.1 ¶ 69. Under their consent decrees, ASCAP and BMI are required to permit stations to obtain direct licenses from rightsholders. See United States v. BMI (In re AEI Music Network, Inc.), 275 F.3d 168, 176 (2d Cir.2001) (“AEI”) (discussing ASCAP’s and BMI’s obligations under their respective consent decrees).

d. Source licenses: A source license is a license for performance rights to the music in a particular television program that a television station obtains from the program’s producer, as opposed to from a PRO. Def. 56.1 ¶ 57; Pl. Resp. to Def. 56.1 ¶ 57; Jaffe Rep. App. C at 2. Various plaintiff stations have executed direct and source licenses in the past. Pl. 56.1 ¶ 196, Def. Resp. to Pl. 56.1 ¶ 196.

e. The rate court: The consent decrees with ASCAP and BMI each also create a rate court, situated in this District. Under specific circumstances, where ASCAP or BMI cannot reach agreement with a music user, the user may ask the rate court to set a “reasonable fee” for a license. See, e.g., BMI, 683 F.3d at 37; ASCAP v. Showtime/The Movie Channel, Inc., 912 F.2d 563 (2d Cir.1990) (“ASCAP v. Showtime”) (affirming fee set by rate court for blanket license, following dispute between ASCAP and operator of cable television networks).

4. SESAC and its Negotiations through 2007 with Local Television Stations

Founded in 1932, SESAC for years focused on narrow sectors of the music performance market (e.g., religious and European concert and stage music). Def. 56.1 ¶ 41-42; Pl. 56.1 ¶ 125; see Affiliated Music Enters., Inc. v. SESAC, Inc., 160 F.Supp. 865, 867, 870 (S.D.N.Y.1958) (“AME v. SESAC”). In 1992, after a change of ownership, SESAC expanded its repertory. It did so in part by recruiting from ASCAP and BMI high-profile composers and publishers, including ones whose music was embedded in syndicated television programs. Pl. 56.1 ¶ 125; Def. Response to Pl. 56.1 ¶ 125. SESAC currently licenses more than 20,000 composer and publisher rightsholders. Pl. 56.1 ¶ 124; Def. Resp. to Pl. 56.1 ¶ 124; Def. 56.1 ¶ 41; Pl. Resp. to Def. 56.1 ¶41. SE-SAC pays royalties to these affiliates, generally on the basis of when, how, and how frequently their works are performed, although certain affiliates receive “advances” or guaranteed royalties. Def. 56.1 ¶¶ 43-45; Pl. Resp. to Def. 56.1 ¶¶ 43-45.

SESAC has never been subject to a consent decree. No rate court is in place to resolve disputes between SESAC and potential licensees. Pl. 56.1 ¶¶ 161-162; Def. Resp. to Pl. 56.1 ¶ 161.

Prior to 1995, SESAC had negotiated directly with local television stations regarding its licenses. Def. 56.1 ¶ 89; Pl. Resp. to Def. 56.1 ¶ 89. In 1995, the TMLC approached SESAC to negotiate an industry-wide license. Def. 56.1 ¶ 90; Pl. Resp. to Def. 56.1 ¶ 90. Thereafter, SE-SAC negotiated a five-year blanket license with the TMLC that spanned October 1, 1995 (retroactively) through December 31, 2000. Def. 56.1 ¶ 91; Pl. Resp. to Def. 56.1 ¶ 91. The parties were able to negotiate another industry-wide blanket license, through settlement of arbitration, for the 2001-2004 period. Def. 56.1 ¶ 92; Pl. Resp. to Def. 56.1 ¶ 92. That agreement also provided that, should the parties prove unable to agree on terms for a subsequent license period, SESAC could elect to arbitrate. Def. 56.1 ¶ 93; Pl. Resp. to Def. 56.1 ¶ 93. In that case, the stations would have the right to obtain a PPL from SESAC, under terms set by the arbitrators. Id.

The negotiations between SESAC and the TMLC for a license covering the 2005-2007 period were unsuccessful; SESAC thereafter exercised its option to proceed to arbitration. Def. 56.1 ¶ 94; Pl. Resp. to Def. 56.1 ¶ 94. An independent panel of arbitrators set an industry-wide blanket license fee of $16 million for the year 2005, $17.6 million in 2006, and $19.3 million in 2007. Def. 56.1 ¶ 95; Pl. Resp. to Def. 56.1¶ 95. They also set the terms of the first SESAC PPL, which covered the period between April 1, 2005 and December 31, 2007. Def. 56.1 ¶40; Pl. Resp. to Def. 56.1¶ 40; Pl. 56.1 ¶¶ 170-71. For the same period, the arbitrators, in 2006, set some rate terms for SESAC’s PPL, and SESAC and TMLC agreed on others. Def. 56.1 ¶ 96; Pl. Resp. to Def. 56.1 ¶ 96; Pl. Resp. to Def. 56.1 ¶ 40.

In July 2007, SESAC and the TMLC began to negotiate an industry-wide license for the period beginning January 1, 2008. Def. 56.1 ¶ 97; Pl. Resp. to Def. 56.1¶ 97. After four months of negotiations, the negotiations broke down, without an agreement. Def. 56.1 ¶ 98; Pl. Resp. to Def. 56.1 ¶ 98. SESAC thereafter began dealing with the stations on an individual basis. Def. 56.1 ¶ 99; Pl. Resp. to Def. 56.1¶ 99.

5. The 2008-2012 Period and the Present

On November 27, 2007, SESAC sent offers for new licenses for the period between 2008 and 2012 to individual stations and station groups, including the plaintiff stations. Def. 56.1 ¶ 99; Pl. Resp. to Def. 56.1¶ 99; Pl. 56.1 ¶ 180. SESAC’s offers increased its blanket licensing rates by 10% over the prior license period, despite what plaintiffs assert was an overall decline in demand for SESAC’s music on local television during the prior license period. Pl. 56.1 ¶¶ 176,181-82.

For the period between 2008 and 2012, SESAC also modified the PPL formula. Several modifications, plaintiffs claim, substantially increased the cost of that license so as to diminish (if not eliminate altogether) its utility. These included the addition of an “Incidental Ambient Use Fee,” and increases in an administrative fee and in a “default multiplier” applied to certain programs. Pl. 56.1 ¶¶ 255-58, 270. These changes are discussed in more detail infra Part IV.D.l.

Since SESAC modified the PPL in these ways, no station has operated on a PPL, and SESAC has not been paid any PPL fees. Pl. Resp. to Def. 56.1 ¶37; Jaffe Rep. 74-79; Transcript of 10/7/13 Oral Argument (“Tr.”) 27 (Dkt. 138). By contrast, in 2005, 180 stations had utilized SESAC’s PPL on a retroactive basis, saving a total of approximately $575,000 out of the total blanket license fee of some $16 million; in 2006, 185 stations took the PPL, saving slightly under $1 million, out of a total blanket license fee of $17.6 million; and in 2007, 248 stations took the PPL, saving approximately $2 million out of the overall blanket license fee of $19.3 million. Pl 56.1¶ 250. A disputed issue in this case is whether SESAC’s current PPL provides an economically viable alternative to the blanket license. Compare Def. Reply Br. 20-22 with Pl. Resp. to Def. 56.1 ¶ 37; Pl. 56.1¶¶ 249-270; Pl. Br. 22-24, 42-43. Plaintiffs’ claim that the pricing and restrictive terms associated with SESAC’s PPL from 2008 forward “render it commercially infeasible,” as reflected in the lack of use of this license. Pl. Br. 22; see infra Part IV.D.l.

During the period 2008 forward, as before, each SESAC affiliate has been subject to a standard affiliation agreement. Def. 56.1 ¶ 49; Pl. Resp. to Def. 56.1 ¶49. The agreement makes SESAC the “sole and exclusive [PRO] to represent the affiliate,” see, e.g., Hochstadt Decl. Ex. 115, but it does not restrict direct licensing by the affiliate, and is silent as to the terms of the licenses SESAC will offer, Def. 56.1 ¶¶ 49, 70-71; Pl. Resp. to Def. 56.1 ¶¶49, 70-71. For between 99.5% and 99.7% of SESAC’s affiliates, the standard affiliation agreement is the only agreement with SESAC. Def. 56.1 ¶ 72; Pl. Resp. to Def. 56.1 ¶ 72.

Each of the remaining 0.3% to 0.5% of affiliates has entered into a supplemental affiliation agreement with SESAC. These add terms to those in the standard agreement. The supplemental agreements give the affiliate an advance or an otherwise guaranteed amount of money, sometimes well over $1 million a year. See, e.g., Kohlmann Decl. Exs. 98, 135; Hochstadt Decl. Exs. 131-133. However, they expose the affiliate to large monetary penalties for issuing a direct license. For one composer, the penalty is $500,000 for the first direct license to be issued, with penalties for issuing additional direct licenses escalating to $1 million and the termination of all royalty payments, see Kohlmann Decl. Ex. 135; other affiliates are required promptly to forfeit to SESAC the entire sales price obtained for the direct license, see, e.g., id. Exs. 81, 97, 98; Hochstadt Decl. Exs. 132-134. The effect of these terms, plaintiffs argue, is to eliminate any imaginable incentive for the affiliate to issue such a license. The agreements also require that the affiliate refer any request for a direct license to SESAC; and allow the affiliate to issue a direct license only if SESAC does not reach an agreement with the affiliate, and then only “at a rate no less than SESAC’s current licensing rates.” See Def. 56.1 ¶¶ 73-74, 79; Pl. 56.1 ¶¶ 19, 226-227, 243; see also infra Part IV.C.2.

The music of the affiliates subject to these supplemental agreements is, characteristically, in high demand by television stations, including because it is embedded in popular programs; between 2007 and 2011, the music of six such affiliates together accounted for between 43% and 50% of SESAC’s royalty distributions. Pl. Resp. to Def. 56.1 ¶ 73; Def. Reply 56.1 ¶ 73; Pl. 56.1 ¶¶ 131-138, 219. Such agreements are in place with, among others, for 2005 through 2016, the composer of music embedded in the programs “Seinfeld,” “Will & Grace,” “Less than Perfect,” and “Reba,” Pl. 56.1 ¶¶ 134, 226; for 2007 through 2013, the composer of music embedded in the programs “Grey’s Anatomy,” “Boston Legal,” “Ally McBeal,” “The Good Wife,” and “The Bachelor,” Pl. 56.1 ¶ 245; for 2007 through 2011, the composer of music embedded in the programs “Ugly Betty,” “In Plain Sight,” “Monk,” “GCB,” and “Medium,” Pl. 56.1 ¶ 132; and for 2007 through 2011, two composers of music embedded in the programs “Entertainment Tonight,” “Dr. Phil,” “Rachel Ray,” and “The Insider,” Pl. 56.1 ¶¶ 133-136; see, e.g., Hochstadt Decl. Exs. 131-134; Kohlmann Decl. Exs. 81, 97, 98, 107, 134-37. Clauses in the supplemental agreements require the affiliates to keep their terms confidential. Def. 56.1 ¶ 56; Pl. Resp. to Def. 56.1 ¶ 56. As to source licenses, in 2009, MRI, acting on behalf of the TMLC and local stations, attempted to secure source licenses for local stations. Def. 56.1 ¶ 59; Pl. Resp. to Def. 56.1 ¶ 59; Pl. 56.1 ¶¶ 197, 200. MRI’s efforts to obtain source licenses for music in SESAC’s repertory were unsuccessful. Def. 56.1 ¶¶ 59, 64, 66; PL Resp. to Def. 56.1 ¶¶ 59, 64,66; Pl. 56.1 ¶ 202.

During negotiations for the 2008-2012 license period, SESAC issued interim licenses to some local stations or station groups, Def. 56.1 ¶¶ 102, 105, 107, 110; Pl. Resp. to Def. 56.1 ¶ 102, including plaintiff stations associated with the Meredith, Scripps, and Hoak organizations, Def. 56.1 ¶¶ 104-110. To stations that had not yet signed licenses, SESAC sent cease-and-desist letters, threatening, upon the expiration of the interim licenses, to sue these stations for copyright infringement if the stations continued to broadcast programs containing music from SESAC’s repertory. Pl. 56.1 ¶ 189; Hochstadt Decl. Ex. 114; see also Hochstadt Decl. Exs. 50, 104. According to representatives of many stations, they eventually felt compelled to capitulate to SESAC’s demands and to take the blanket license, lest they face copyright infringement actions. Pl. Br. 21; Pl. 56.1 ¶¶ 189-93.-

Some stations and station groups were able to obtain discounts on the blanket license: Groups operating three or more stations were offered a discount based on the magnitude of the stations groups’ SE-SAC fees, Def. 56.1 ¶ 112; Pl. Resp. to Def. 56.1 ¶ 112; stations that had recently reduced their broadcasts of programs with SESAC music were offered a “programming discount,” Def. 56.1 ¶ 113; Pl. Resp. to Def. 56.1 ¶ 113; and stations that had recently dropped SESAC’s music from their local news were offered a “news music adjustment,” Def. 56.1 ¶ 114; Pl. Resp. to Def. 56.1 ¶ 114. Plaintiffs, however, characterize these discounts as “de minim-is,” leaving the licenses “vastly inflated over reasonable rates.” Pl. 56.1 ¶ 186. Plaintiffs also note that the discounts did not reduce increases to their base license rates for later years, and that as condition of taking the discounts, SESAC required stations to forego the opportunity to use the PPL option during the five-year license term. Id.

6. DOJ’s Investigation of SESAC

During 2008, while negotiations over the 2008-2012 license period were taking place, several TMLC representatives, including one associated with plaintiff Meredith, and plaintiffs’ expert, Professor Adam Jaffe, met with the Antitrust Division of the DOJ. Def. 56.1 ¶¶ 117-18; Pl. Resp. to Def. 56.1 ¶¶ 117-18. The TMLC representatives encouraged the DOJ to sue SESAC for antitrust violations, and drafted a complaint for the DOJ to file against SESAC. Def. 56.1 ¶ 120; Pl. Resp. to Def. 56.1 ¶ 120. The DOJ closed its investigation without taking action. Def. 56.1 ¶¶ 121-22; Pl. Resp. to Def. 56.1 ¶¶ 121-22; Kohlmann Decl. Ex. 16 (Deposition of Willard Hoyt) at 280-81.

B. Allegations of the Amended Complaint

On November 4, 2009, plaintiffs filed an initial Complaint, Dkt. 1, and on March 18, 2010, an Amended Complaint, Dkt. 25 (“Am. Compl.”).

In essence, the Amended Complaint alleges that, in practice, local television stations cannot avoid songs in the SESAC repertory. And, it alleges that, since 2008, SESAC has taken steps to make its “all or nothing” blanket license the only viable option for a station to obtain the performance rights to the music of SESAC’s affiliates, see Am. Compl. ¶¶ 24-28, and has charged a supra-competitive price for that license, one unrelated to stations’ actual usage of compositions in SESAC’s repertory, id. ¶ 34.

The Amended Complaint identifies various techniques that SESAC has allegedly used to close off to stations alternative or less expensive sources of performance rights. These include, (1) removing the incentive for a station to acquire a direct license by offering no fee credit against the cost of its blanket license for music the licensee has separately acquired from the copyright owner, id. ¶ 24; (2) making its PPL economically non-viable by revising the formula by which the cost for that license is calculated so that it invariably exceeds the cost of the blanket license, id. ¶¶ 26-27; and (3) promising its key affiliates-composers whose music is so ubiquitous that a station effectively cannot avoid-large upfront payments, and in return requiring these affiliates to enter into supplemental agreements that effectively bar them from offering direct licenses, id. ¶ 30. The Amended Complaint alleges that SE-SAC has threatened to withhold access to any part of its repertory, id. ¶ 29, and refused to disclose the full contents of its repertory, to impede stations from making independent licensing arrangements, id. ¶ 32.

The Amended Complaint contrasts SE-SAC’s practices with those of ASCAP and BMI. Among other things, it notes, these PROs, under their consent degrees, must issue a performance license to a station promptly upon request and at a “reasonable” rate subject to judicial review, and credit licensees for direct licenses they acquire. Id. It alleges, too, that SESAC has “strategically raided” ASCAP and BMI to recruit key composers whose musical work is essentially impossible for stations to avoid. Id. ¶ 30.

C. Procedural History

On May 17, 2010, defendants moved to dismiss the Amended Complaint. Dkt. 26-27. In a Memorandum & Order dated March 9, 2011, 2011 WL 856266, the Hon. Naomi Reice Buchwald, to whom this case was then assigned, denied the motion to dismiss, holding that plaintiffs had plausibly alleged violations of §§ 1 and 2 of the Sherman Act. See Dkt. 33 (“MTD Op.”).

On March 23, 2011, defendants answered the Amended Complaint, Dkt. 35; on April 13, 2011, they amended their answer, Dkt. 38. The case then proceeded to discovery.

On September 28, 2011, the case was reassigned to this Court. See Dkt. 45, 47. On June 14, 2013, following the close of fact discovery and in keeping with the schedule stipulated to by the parties and endorsed by this Court, see Dkt. 114, defendants moved for summary judgment. Dkt. 130. On August 2, 2013, plaintiffs submitted an opposition to that motion. Dkt. 132. On August 30, 2013, defendants submitted a reply in support of the motion. Dkt. 135.

On October 7, 2013, the Court heard argument on the motion for summary judgment, and reserved decision. See Dkt. 138.

II. Overview of the Motion for Summary Judgment and the Court’s Holdings

In moving for summary judgment, SE-SAC challenges the adequacy of the evidence as to multiple elements of liability on plaintiffs’ § 1 and § 2 claims.

As to § 1, SESAC disputes that there is proof of concerted action among its affiliates, and in any event of concerted action constituting an unreasonable restraint of trade. SESAC also argues that a PRO’S offer of a blanket license to the music of its affiliates or members is not, as a matter of law, subject to per se condemnation under § 1. As to rule of reason review, SESAC argues that plaintiffs have not established the requisite harm to competition, for two reasons: First, SESAC argues, the relevant market is not, as plaintiffs claim, the market for all works in SESAC’s repertory. Rather, it argues, musical works are not interchangeable with one another; each musical work must be taken as its own market, and SESAC’s practices do not harm competition in these narrowly drawn markets. Second, SESAC argues, the pro-competitive benefits of its blanket license product, like those of ASCAP and BMI, outweigh any anti-competitive aspects. As to § 2, SESAC disputes both that it possessed monopoly power in a relevant market and that it willfully acquired or maintained that power through exclusionary or otherwise improper means.

The Court has carefully reviewed the evidence in the summary judgment record and the parties’ arguments as to that evidence. For the reasons that follow, the Court holds, on all three claims, that the record evidence is sufficient to support a verdict in plaintiffs’ favor, although, as to the § 1 claim, the Court rejects as a matter of law plaintiffs’ theories of liability per se and of a conspiracy so broad as to embrace all SESAC affiliates.

Specifically, the Court, applying the rule of reason to the § t claim, holds that the relevant market is fairly defined as that for performance licenses of the music in SESAC’s repertory, as plaintiffs propose. This market definition has a solid basis in the evidence. The evidence would also comfortably sustain a finding that SESAC, once freed in 2008 from the duty to arbitrate its disputes with the stations, engaged in an overall anti-competitive course of conduct designed to eliminate meaningful competition to its blanket license. SE-SAC’s steps toward that end are persuasively chronicled in the report of plaintiffs’ expert, Professor Adam Jaffe, as developed below. Whether this course of conduct resulted from concerted action, as required by § 1, presents a more difficult question, however. There is a substantial argument that any restraint of trade was imposed solely by SESAC itself. Based on its review, the Court holds that the evidence does not support plaintiffs’ claim of a broad conspiracy to restrain trade among all of SESAC’s more than 20,000 composer and musician affiliates, but that the evidence does permit, although does not compel, a finding of a much narrower such conspiracy among SESAC and the subset of affiliates who executed supplemental affiliation agreements. That is because those agreements effectively eliminated direct licensing as a means by which stations could license these affiliates’ music. A finder of fact could reasonably conclude that these affiliates entered into these agreements with SESAC with the intention of insulating SESAC’s blanket license product from competition. The Court also denies defendants’ motion for summary judgment as to plaintiffs’ monopolization and conspiracy-to-monopolize claims, brought under § 2.

The analysis below proceeds as follows. The Court first reviews the history of antitrust litigation involving the PROs’ licensing practices. These precedents supply a critical framework for evaluating the arguments here. The Court then considers the § 1 claim, assessing whether (1) the conduct plaintiffs assail is amenable to per se condemnation; (2) there is adequate evidence of concerted action among SESAC’s affiliates to restrain trade; and (3) the evidence would support a conclusion that the anti-competitive effects of SESAC’s conduct outweighed its pro-competitive tendencies, ie., whether a jury could find harm to competition. The Court then considers the § 2 claims, addressing first the monopolization claim and then the claim of a conspiracy to monopolize.

The Court’s review of SESAC’s motion has been governed by familiar standards. As movant, SESAC must “show[] that there is no genuine dispute as to any material fact and [that it] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). SESAC bears the burden of demonstrating the absence of a question of material fact. In making this determination, the Court must view all facts “in the light most favorable” to plaintiffs, as the non-moving parties. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also Holcomb v. Iona Coll, 521 F.3d 130, 132 (2d Cir.2008). To survive a summary judgment motion, plaintiffs must establish a genuine issue of fact by “citing to particular parts of materials in the record.” Fed.R.Civ.P. 56(c)(1)(A); see also Wright v. Goord, 554 F.3d 255, 266 (2d Cir.2009). Plaintiffs “may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment.” Hicks v. Baines, 593 F.3d 159,166 (2d Cir.2010) (internal quotation marks and citation omitted). “Only disputes over facts that might affect the outcome of the suit under the governing law will preclude a grant of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether there are genuine issues of material fact, the Court is “ ‘required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.’ ” Johnson v. Killian, 680 F.3d 234, 236 (2d Cir.2012) (quoting Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir.2003)).

III. Prior Antitrust Litigation Involving PROs

The conduct of the PROs in general, and ASCAP’s and BMI’s use of a blanket licenses in particular, has been much litigated, including in the Supreme Court and the Second Circuit. These precedents set a framework for, and inform the Court’s assessment of, the claims and defenses here. The Court, accordingly, begins by reviewing these prior decisions.

A. Early ASCAP Litigation

In 1941, the DOJ filed a complaint against ASCAP. It alleged that ASCAP’s blanket license was an illegal restraint of trade under § 1 of the Sherman Act, eliminating competition among ASCAP’s member-affiliates and allowing them to fix prices for their music. See Complaint, United States v. ASCAP, Civ. No. 13-95 (S.D.N.Y.1941). Shortly after the Complaint was filed, the case was settled by a consent decree. Although liability was not conceded, the decree imposed extensive restrictions on ASCAP. These required ASCAP to (1) offer a PPL, in addition to the blanket license; (2) license broadcasters upon request; and (3) allow membership to any composer of at least one work. See United States v. ASCAP, 1940-1943 Trade Cases ¶ 56, 104 (S.D.N.Y.1941).

The next year, the operators of 200 movie theaters sued ASCAP. See Alden-Rochelle, Inc. v. ASCAP, 80 F.Supp. 888 (S.D.N.Y.1948). After trial, the district court held that ASCAP’s activities in licensing movie theaters violated §§ 1 and 2 of the Sherman Act. The agreements at issue between ASCAP and its members barred the members from assigning performing rights to movie producers at the same time they assigned recording rights; required producers to reserve for ASCAP alone the right to license performing rights; and provided that the movie distributors and exhibitors would allow a film to be shown for profit only in theaters with an ASCAP license. Id. at 894. The court stated that although each ASCAP member “is granted by the copyright laws a monopoly in the copyright work, it is unlawful for the owners of a number of copyrighted works to combine their copyrights by any agreement or arrangement,” id. at 893; in effect, ASCAP could not use its members’ individual copyright monopolies “to create another monopoly,” id. at 894 (internal quotation marks and citation omitted). The court held that ASCAP had violated § 1 by agreeing with the rightsholders to restrain trade, so as to prevent competition among members, and had violated § 2 by monopolizing the market for music used in movie production. Id. at 893-94. Although the ALden-Rochelle court found that plaintiffs had not proven monetary damages, id. at 896-98, it awarded injunc-tive relief, id. at 898-900 & n. 2.

That same year, a Minnesota district court reached a similar result, to wit, that ASCAP’s licensing practices with regard to movie theaters violated §§ 1 and 2, although the case arose in a different posture. See M. Witmark & Sons v. Jensen, 80 F.Supp. 843 (D.Minn.1948). The plaintiffs were ASCAP members who sought damages from certain movie theater owners for allegedly infringing their copyrights by showing films without first obtaining an ASCAP license; they sought an injunction restraining future violations of their copyrights. That court denied relief on the equitable ground that the ASCAP-member plaintiffs themselves were violating the antitrust laws. Id. at 850. Granting relief, the court stated, “would tend to serve the plaintiffs in their plan and scheme with other members of A[SCAP] to extend their copyrights in a monopolist control beyond their proper scope.” Id.

In 1950, in response to those two decisions and to other complaints, the 1941 ASCAP consent decree was amended and expanded. See United States v. ASCAP, No. Civ.A. 42-245, 1950 WL 42273,1950-1951 Trade Cases ¶ 62,595 (S.D.N.Y. July 17, 1950). The amended consent decree required ASCAP to offer an economically viable alternative to the blanket license and allow its members to license their works directly — ASCAP could not demand that members license their works exclusively through it. The amended consent decree also extended its protections to television broadcasters and provided that, if ASCAP and a putative licensee could not reach an agreement, the licensee could apply to a “rate court” to set a reasonable fee, with ASCAP bearing the burden of proof as to the reasonableness of its rate.

B. Early BMI Litigation

BMI evolved along a largely parallel path. In 1966, the DOJ filed a complaint against BMI. It alleged that BMI constituted a combination both to restrain trade and to monopolize, and was thereby able to artificially depress rates and coerce composers to join BMI, harming competition. In 1966, BMI and the DOJ settled the case with the entry of a consent decree. See United States v. BMI, 1966 Trade Cases ¶ 71,941 (S.D.N.Y.1966). It prohibits BMI from prohibiting composers from entering into direct licenses, requires BMI to grant PPLs, and requires BMI to admit any writer with at least one published work. Since 1994, BMI has also been subject to an amended consent decree and the jurisdiction of a rate court, to which users or BMI may apply to determine a reasonable fee. See United States v. BMI, No. 64 Civ. 3787, 1994 WL 901652, 1996-1 Trade Cases ¶ 71, 378 (S.D.N.Y. Nov. 18, 1994).

C. Early SESAC Litigation

Before this action, SESAC’s licensing practices had only once been considered in a private antitrust suit. In Affiliated Music Enterprises, Inc. v. SESAC, Inc., a court in this district described SESAC’s practices as “the classic pooling of rights and sharing of revenue struck down as violative of § 1 of the Sherman Act in Aldenr-Rochelle, Inc. v. A.S.C.A.P., D.C., 80 F.Supp. 888, and Witmark & Sons v. Jensen, D.C., 80 F.Supp. 843.” 160 F.Supp. 865, 875 (S.D.N.Y.1958). The court held that SESAC’s agreements restrained competition between the copyright owners, allowing them to “agree on a fixed price and share in the common profits” and making SESAC “too effective in resisting competition from unaffiliated copyright owners.” Id. Such “pooling agreements” were, in that court’s view, “per se violations of the antitrust laws.” Id. However, because the plaintiff in that case was a competitor to SESAC (in fact, an affiliate of BMI, which had funded the litigation) and had not proven antitrust injury as a competitor under § 4 of the Clayton Antitrust Act, the court dismissed the complaint. Id. at 876-77. The Second Circuit affirmed the dismissal. See 268 F.2d 13, cert. denied, 361 U.S. 831, 80 S.Ct. 82, 4 L.Ed.2d 74 (1959).

D. BMI v. CBS (1979) and CBS Remand (1980)

In 1975, Columbia Broadcasting System (“CBS”) brought suit against ASCAP, BMI, and their members and affiliates, for violations of §§ 1 and 2 of the Sherman Act. After an eight-week bench trial, Judge Lasker upheld the blanket license against this challenge, finding that CBS had not demonstrated that it was compelled to take a blanket license, or that no feasible alternatives existed. See CBS v. ASCAP, 400 F.Supp. 737, 780-81 (S.D.N.Y.1975) (Lasker, J.). On appeal, the Second Circuit reversed, holding that the blanket license was, per se, illegal price fixing. See 562 F.2d 130 (2d Cir.1977).

The Supreme Court granted certiorari, see 439 U.S. 817, 99 S.Ct. 77, 58 L.Ed.2d 107 (1978), and reversed, holding that the blanket licensing system was not price fixing “per se unlawful under the antitrust laws.” BMI v. CBS, 441 U.S. 1, 4, 7, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979). The Court explained that whether an agreement or practice is so inherently anti-competitive as to be condemned as unlawful per se, or whether it instead must be evaluated under the rule of reason, “must focus on ... whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output, and in what portion of the market, or instead one designed to ‘increase economic efficiency and render markets more, rather than less, competitive.’ ” Id. at 19-20, 99 S.Ct. 1551 (quoting United States v. U.S. Gypsum Co., 438 U.S. 422, 441 n. 16, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978)). Courts should classify a business practice as per se unlawful only after “considerable experience” with that practice. Id. at 9, 99 S.Ct. 1551 (internal quotation marks and citation omitted); see also id. at 19 n. 33, 99 S.Ct. 1551.

Applying that principle, the Court noted that judicial experience with blanket licenses in particular did not favor finding such blanket licenses per se unlawful. Id. at 9, 99 S.Ct. 1551. The Court reviewed the history of antitrust litigation against PROs, and other factors, including the Justice Department’s view that such blanket licenses are not per se unlawful and may sometimes be reasonable restraints of trade (e.g., where constrained by consent decrees, as with ASCAP and BMI). Id. at 10-15, 99 S.Ct. 1551. The Court identified redeeming benefits that may be achieved by blanket licenses to perform the music of multiple artists. Such an aggregate license, the Court noted, responded to “the practical situation in the marketplace,” in which there are “thousands of users, thousands of copyright owners, and millions of compositions,” and where “[m]ost users want unplanned, rapid, and indemnified access to any and all of the repertory of compositions, and the owners want a reliable method of collecting for the sales of their copyrights.” Id. at 20, 99 S.Ct. 1551. A PRO’S blanket license stood to promote “the integration of sales, monitoring, and enforcement against unauthorized copyright use.” Id. The Court further stated that “a bulk license of some type is a necessary consequence of the integration necessary to achieve these efficiencies,” and that the PRO set a price for this blanket license did not make it unlawful per se, because “a necessary consequence of an aggregate license is that its price must be established.” Id. at 21, 99 S.Ct. 1551. Further, “[t]he individual composers and authors have neither agreed not to sell individually in any other market nor use the blanket license to mask price fixing in such other markets.” Id. at 23-24, 99 S.Ct. 1551. Accordingly, the Court held, the ASCAP and BMI blanket licenses were not unlawful per se, but were to be subjected “to a more discriminating examination under the rule of reason.” Id. at 24-25, 99 S.Ct. 1551.

On remand, the Second Circuit affirmed Judge Lasker’s ruling, finding th'e blanket license lawful under a rule-of-reason analysis. See CBS v. ASCAP, 620 F.2d 930, 934 (2d Cir.1980) (“CBS Remand” ) On that question, the Second Circuit held, “the opportunity to acquire a pool of rights does not restrain trade if an alternative opportunity to acquire individual rights is fully available.” Id. at 936. The court sustained Judge Lasker’s finding that feasible alternative options to the blanket license existed for CBS, including obtaining PPLs and direct licenses. Id. at 933. The Second Circuit held that the blanket license, therefore, did not unreasonably restrain trade and did not violate § 1. Id. at 939.

E. Buffalo Broadcasting v. ASCAP (1982)

Soon thereafter, the Second Circuit considered blanket licenses again, this time, in the context of a suit brought by a class of local television stations. See Buffalo Broad. Co., Inc. v. ASCAP, 744 F.2d 917 (2d Cir.1984) (“Buffalo Broadcasting”). The district court, after a bench trial, had held that the blanket license unreasonably restrained trade. It enjoined ASCAP and BMI from, inter alia, granting blanket licenses to such stations. Buffalo Broad. Co., Inc. v. ASCAP, 546 F.Supp. 274 (S.D.N.Y.1982). The Second Circuit reversed. It identified as the critical question whether a “real” alternative existed to the blanket license. Buffalo Broadcasting, 744 F.2d at 925-26. Closely analyzing the factual record, the Second Circuit rejected the district court’s finding that there was no such alternative, concluding that, for the stations, PPLs, source licenses, and direct licenses were viable alternatives to the blanket license. Id. at 926-932. The blanket license, therefore, did not violate § 1. Id. at 933.

F. National Cable Television Ass’n, Inc. v. BMI (1991)

Most recently, in 1991, a' federal district court in the District of Columbia examined the blanket license, in the context of a challenge by representatives of cable program services and cable television system operators. Nat’l Cable Television Ass’n, Inc. v. BMI, 772 F.Supp. 614 (D.D.C.1991). Like the Second Circuit in CBS Remand and Buffalo Broadcasting, the court focused on whether there were realistic alternatives to the blanket license. Id. at 626-28. It held that “plaintiffs, especially the cable programmers, do have a choice when it comes to obtaining music performing rights for the syndicated programming they transmit,” id. at 628, including source licensing, per-program licensing, and direct licensing, id. at 628-36.

In so holding, the court rejected plaintiffs’ claims that such alternatives were “illusory because, as a practical matter, the existence of the blanket license and the industry practices that have grown up around it[ ] serve as insurmountable obstacles to obtaining performing rights licenses through other avenues.” Id. at 636. That program syndicators did not offer performing rights to stations was not a permanent condition — if the stations demanded such rights, “the syndication market would provide them to avoid the risk of losing sales.” Id. at 637. That the music in syndicated programming came to stations pre-selected (“in the can”) did not deprive the stations market power to control the price demanded for licenses. Id. at 638. Rather, “publishers work in a highly competitive market,” and would want both to avoid the ill-will generated by coercive negotiating tactics and “to obtain as much exposure for the compositions in their catalogs as possible.” Id. And the cable stations had economic power in the marketplace, including the power to exert “considerable leverage in any negotiations” with BMI. Id. at 640. Finally, the court stated, even had it treated the blanket license as a restraint, the restraint would have survived an inquiry under the rule of reason. Id. at 641-42.

IV. Plaintiffs’ Section 1 Claim

A. Section 1: Elements and Principles

Section 1 of the Sherman Act outlaws “[e]very contract, combination ..., or conspiracy, in restraint of trade or commerce among the several States.” 15 U.S.C. § 1. A violation of § 1 requires joint or concerted action: “Independent action is not proscribed.” Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984); see also Am. Needle Inc. v. Nat’l Football League, 560 U.S. 183, 189-90, 130 S.Ct. 2201, 176 L.Ed.2d 947 (2010); Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 767-68, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984); Starr v. Sony BMC Music Entm’t, 592 F.3d 314, 321 (2d Cir.2010). An antitrust plaintiff must therefore show: (1) “a combination or some form of concerted action between at least two legally distinct economic entities” and (2) “that the agreement constitute^] an unreasonable restraint of trade either per se or under the rule of reason.” Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537, 542 (2d Cir.1993).

As to the agreement prong, “[t]o survive a motion for summary judgment ..., a plaintiff seeking damages for a violation of § 1 must present evidence that tends to exclude the possibility that the alleged conspirators acted independently.” Matsushita Electric Insus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation marks and citation omitted). “The antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.” Monsanto, 465 U.S. at 764, 104 S.Ct. 1464 (internal quotation marks and citation omitted); see also Am. Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946) (“Where the circumstances are such as to warrant a jury in finding that the conspirators had a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement, the conclusion that a conspiracy is established is justified.”).

“Although parallel business behavior ‘is admissible circumstantial evidence from which the fact finder may infer agreement,’ it does not itself constitute a violation of the Sherman Act, because it is ‘consistent with conspiracy, but just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market.’ ” Starr, 592 F.3d at 321 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553-54, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Therefore, “courts have held that a plaintiff must show the existence of additional circumstances, often referred to as ‘plus’ factors, which, when viewed in conjunction with the parallel acts, can serve to allow a fact-finder to infer a conspiracy.” Apex Oil Co. v. Di-Mauro, 822 F.2d 246, 253-54 (2d Cir.1987). These plus factors include: “a common motive to conspire, evidence that the parallel acts were against the apparent economic self-interest of the individual alleged conspirators; or evidence of a high level of interfirm communications.” In re Publication Paper Antitrust Litig., 690 F.3d 51, 62 (2d Cir.2012).

The agreement must also have been to an “unreasonable restraint! ].” Leegin Creative Leather Prods., Inc. v. PSKS, 551 U.S. 877, 885, 127 S.Ct. 2705, 168 L.Ed.2d 623 (2007); see also Bus. Elects. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723, 108 S.Ct. 1515, 99 L.Ed.2d 808 (1988) (“Since the earliest decisions of this Court interpreting [§ 1], we have recognized that it was intended to prohibit only unreasonable restraints of trade.”). A restraint may be shown unreasonable in one of two ways. First, a limited number of categories of agreements that “would always or almost always tend to restrict competition and decrease output” have been deemed illegal per se, eliminating “the need to study the reasonableness of an individual restraint in light of the real market forces at work.” Leegin, 551 U.S. at 886, 127 S.Ct. 2705 (internal quotation marks and citation omitted). Such agreements are “ ‘so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality.’ ” Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006) (quoting Nat’l Soc’y of Prof l Engineers v. United States, 435 U.S. 679, 692, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978)). Among these are horizontal agreements among competitors to fix prices and agreements'to divide particular markets. Leegin, 551 U.S. at 886, 127 S.Ct. 2705.

Application of the per se rule, however, is “appropriate only after courts have had considerable experience with the type of restraint at issue, and only if courts can predict with confidence that it would be invalidated in all or almost all instances under the rule of reason.” Id. at 886-87, 127 S.Ct. 2705 (internal citations omitted). Accordingly, courts are “reluctan[t] to adopt per se rules with regard to restraints imposed in the context of business relationships where the economic impact of certain practices is not immediately obvious.” State Oil Co. v. Khan, 522 U.S. 3, 10, 118 S.Ct. 275, 139 L.Ed.2d 199 (1997) (internal quotation marks and citation omitted).

For most antitrust claims, courts instead apply the “ ‘rule of reason,’ according to which the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint’s history, nature, and effect.” Id.; see Copperweld Corp., 467 U.S. at 768, 104 S.Ct. 2731 (rule of reason requires “an inquiry into the market power and market structure designed to assess [the] actual effect” of the restraint on trade). The rule of reason seeks to “distinguish[] between restraints with anti-competitive effect that are harmful to the consumer and restraints stimulating competition that are in the consumer’s best interest.” Leegin, 551 U.S. at 886, 127 S.Ct. 2705. Under it, “the plaintiffs bear an initial burden to demonstrate the defendants’ challenged behavior had an actual adverse effect on competition as a whole in the relevant market.” Geneva Pharms. Tech. Corp. v. Barr Labs., Inc., 386 F.3d 485, 506-07 (2d Cir.2004) (internal quotation marks and citation omitted) (emphasis in original). Where plaintiffs sustain that burden, “the burden shifts to the defendants to offer evidence of the pro-competitive effects of their agreement. Assuming defendants can provide such proof, the burden shifts back to the plaintiffs to prove that any legitimate competitive benefits offered by defendants could have been achieved through less restrictive means. Ultimately, the fact finder must engage in a careful weighing of the competitive effects of the agreement— both pro and con — to determine if the effects of the challenged restraint tend to promote or destroy competition.” Id. at 507 (internal citations omitted).

B. Plaintiffs’ Claim of Liability Per Se

Plaintiffs claim here that SESAC and its affiliates have agreed with one another to unreasonably restrain trade through “agreements to fix, peg, raise, stabilize, effect, and tamper with market prices for licenses for copyrighted musical compositions in the SESAC Repertory,” in particular, SESAC’s blanket license. Am. Compl. ¶¶ 78-79. Plaintiffs claim that this conduct is per se anti-competitive, truncating the § 1 inquiry. SESAC counters that the case law, notably the Supreme Court’s decision in BMI v. CBS, 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979), makes per se liability inapplicable to concerted action consisting of the offer by a PRO of a blanket license aggregating its members’ performance rights. For the reasons that follow, on this point, SESAC is plainly correct: If SESAC is to be found liable on the § 1 claim, such liability must derive from application of the rule of reason.

Plaintiffs identify two sets of agreements that, they claim are unlawful per se.

The first involves SESAC’s offer of blanket licenses. Plaintiffs argue that a jury could find that SESAC, with its affiliates’ agreement and consent, “issues competition-foreclosing blanket licenses,” PL Br. 27, and that these licenses have eliminated competition over the licensing of performing rights to the works in SESAC’s repertory. Plaintif