DOJ Deals Music Industry A Setback

The Justice Department dealt a blow to the music industry this week when it declined to change the longstanding regulatory agreements that govern ASCAP and BMI, two of the industry’s oldest and largest clearinghouses for royalties, according to The NY Times.

The two agencies have argued that modifying their consent decrees, which have been in place since 1941 and have not been updated in more than a decade, was urgently needed to adapt to the new world of online music, and the agencies’ petitions followed several years of conflict and litigation with Pandora Media over royalty rates.

Music publishers have warned that the streaming era has led to a precipitous decline in songwriters’ income, with the consent decrees partly to blame.

Although the Justice Department’s recommendation carries great weight, any alterations to the consent decrees must be approved by two federal judges overseeing the cases, and the performing rights organizations could object to the changes in court.

After a two-year review, the Justice Department this week denied a series of requests by ASCAP and BMI, including the ability for publishers to have more control over licensing their music to digital services. And in a move that has caused widespread worry throughout the music publishing world — the side of the business that deals with the lucrative copyrights for songwriting — the government has also said that, according to its interpretation of the consent decrees, the music agencies must change a major aspect of how they license music.

The agencies must now adopt a policy known as “100 percent licensing,” which means that any party who controls part of a composition can issue a license for the whole thing. In the case of major pop hits, which tend to have many songwriters, there can sometimes be a dozen or more parties involved.