U.S. Justice Department to review 1941 ASCAP, BMI consent decrees

WASHINGTON (Reuters) - The U.S. Justice Department said Wednesday it would review two consent decrees reached with music licensing groups ASCAP and BMI in 1941, a decision that could upend the business of licensing music to online companies, movie companies, commercials, bars and restaurants.

FILE PHOTO: A flag flies from the Department of Justice in Washington, U.S., March 24, 2019. REUTERS/Joshua Roberts

The department said it planned to review settlements reached with the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc (BMI) to set how the organizations, which license most music in the United States, must operate.

Companies that license music have worried about a sharp increase in costs if the system is changed because ASCAP and BMI license about 90 percent of music.

In the complicated world of music royalties, songwriters and publishers hire the two organizations to license their songs to digital streaming services such as Pandora and Spotify Technology SA, radio and television stations and other music users.

Under the consent decrees, the two organizations are required to license to anyone upon request, with pricing disputes settled by a judge.

The consent decrees may remain as they are, or be changed or scrapped altogether, the department said.

“There have been many changes in the music industry, ... and the needs of music creators and music users have continued to evolve,” said Makan Delrahim, head of the Justice Department’s Antitrust Division, in a statement Wednesday.

Under Delrahim, the department is reviewing old consent decrees, many of which do not have an expiration date, with an eye toward dropping those which are out of date.

The MIC Coalition, which represents groups whose members include streaming companies like Spotify and Pandora, argued that the consent decrees were needed, despite their age, because BMI and ASCAP control so much music.

“The decrees have helped mitigate anti-competitive behavior, while also ensuring songwriters and creators get paid when their music is played in the millions of American venues,” the coalition said. “The modification, elimination or even the possible sunset of the decrees at the present time would lead to chaos for the entire marketplace.”

The Justice Department will accept comments on the matter through July 10.

ASCAP and BMI said in statements that the review would allow for an update of the music licensing business.

“A more flexible framework with less government regulation will allow us to compete in a free market, which we believe is the best way for our music creators to be rewarded for the value of their music,” ASCAP CEO Elizabeth Matthews said in an statement.

BMI said the review was “long anticipated” and said it looked forward to a “smooth process that safeguards a vibrant future for music.”

Reporting by Diane Bartz; Editing by Richard Chang and James Dalgleish