Feds to Review Agreements Governing Music Licenses

WASHINGTON (CN) - In a move the industry has long been anticipating, the Justice Department announced Wednesday it will conduct a review of the decades-old consent decrees that determine how the country’s two largest musical performing rights organizations license music.

The federal government first entered into consent decrees with the American Society of Composers, Authors and Publishers, or ASCAP, and Broadcast Music Inc., abbreviated as BMI, in 1941 and it has been nearly two decades since one of the agreements were modified.

On Wednesday, the Justice Department said it would look into whether the decrees "should be maintained in their current form, modified or terminated" to respond to changes in the music industry.

"The ASCAP and BMI decrees have been in existence in some form for over 75 years and have effectively regulated how musicians are compensated for the public performance of their musical creations," Makan Delrahim, assistant attorney general for the Justice Department's Antitrust Division, said in a statement. "There have been many changes in the music industry during this time and the needs of music creators and music users have continued to evolve."

ASCAP and BMI are the two largest organizations in the United States that license music and the consent decrees they first entered into during World War II set the rules for how they go about their business.

The decrees allow a federal court to set a licensing rate when one of the organizations and a prospective licensee cannot reach an agreement on price, and require the organizations to grant a non-exclusive license to all of their music to any entity that asks. As currently constructed, the consent decrees do not have an end date.

ASCAP's decree was last updated in 2001, while BMI has been under the same agreement since 1994. In an open letter published in February, the groups said they anticipated the Justice Department would soon review the consent decrees and expressed cautious optimism about the potential results.

The groups said the current decrees should be changed so that they someday expire, while also advocating for other changes to how the decrees operate.

In a statement Wednesday, ASCAP CEO Elizabeth Matthews welcomed the review of the consent decrees, saying it presents the chance to "reimagine the music marketplace in today's digital age." 

"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," Matthews said. "A free market would level the playing field, encourage competition and allow us to innovate on behalf of music creators and licensees alike, while ensuring fair compensation for songwriters."

BMI called the review a chance to "modernize music licensing."

"We look forward to working with the DOJ, licensees and other music partners to help ensure a smooth process that safeguards a vibrant future for music," BMI said in a statement.

The Justice Department has opened up a public comment period for the review of the consent decrees that will remain open until July 10. The agency conducted a similar review of the consent decrees in 2014.

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