Mergers & Antitrust Law News

Justice Department Reviewing Music Rights Licensing Decrees (1)

June 5, 2019, 8:52 PMUpdated: June 5, 2019, 10:32 PM

The Justice Department is reviewing whether to continue its 78-year-old settlement with two music rights groups that require them to license music for public performances on equal, court-determined prices and terms.

The June 5 announcement by the DOJ’s antitrust division comes after the two groups—the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI)—urged the department to create new rules that would allow them to secure fairer terms from broadcasters and other public venues.

“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,” Makan Delrahim, the department’s antitrust chief, said in a statement. “It is important for the Division to reassess periodically whether these decrees continue to serve the American consumer and whether they should be changed to achieve greater efficiency and enhance competition in light of innovations in the industry.”

The department said it will weigh whether the current decrees should be “maintained in their current form, modified, or terminated.”

ASCAP and BMI collect music copyrights from composers and songwriters and collectively license public performance rights to broadcasters, concert halls, bars, restaurants and streaming services. They license performance rights to about 90 percent of music in the U.S.

Under the DOJ’s consent decrees, ASCAP and BMI are required to issue licenses to broadcasters and venue operators on request. If they can’t reach an agreement on pricing, a U.S. district judge can set it.

BMI and ASCAP both praised the move.

“Thanks to the DOJ’s review, we now have the unique opportunity to reimagine the music marketplace in today’s digital age,” ASCAP Chief Executive Officer Elizabeth Matthews said in a statement.

The National Music Publishers Association, which represents record labels, also welcomed the move and hoped it would lead to a “better, fairer climate” for people to create music.

The MIC Coalition, which represents restaurants, bars, radio stations, and other entities that play music, opposes eliminating the decrees. The group, in a letter to Delrahim, said doing so “would be nothing short of a nightmare scenario for the functioning of the music marketplace.”

The decrees “provide essential protections from anti-competitive behaviors,” the coalition told Delrahim. Consolidation of the music industry, allowed in part because of the decrees, makes them even more necessary to keep prices reasonable and “address the inherent anti-competitive harm of collective licensing,” it said.

(Updated with additional reporting; corrects age of settlement in first paragraph)

To contact the reporters for this story: Roger Yu in Washington at ryu@bloomberglaw.com; Kyle Jahner at kjahner@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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