DOJ To Review PRO Rules

The DOJ will review the regulations, or consent decrees, that govern ASCAP and BMI. The agency will take public comment for 60 days and possibly recommend changes to the regs, which would be reviewed by U.S. District Court judges in Manhattan.

The two performing rights organizations act as a clearinghouse of sorts for licensing of published music, from radio stations to bars to doctors’ offices.

Billions of dollars in royalties are at stake, and the review will likely be the catalyst for massive lobbying by streaming giants like Pandora and Google.

The PROs say the consent decrees are outdated and hamper their ability to collect fair rates for music in the digital age. The consent decrees were instituted in 1941 after a federal antitrust investigation, according to the New York Times.

The rules prohibit them from refusing licenses to music outlets, and subject agreements to approval by two federal judges in a rate court.

In recent years, ASCAP/BMI has lost licensing cases, including a rate-setting trial with Pandora this year in which several major music publishing execs were criticized by the judge, according to the paper.

Major publishers like Sony/ATV and Universal have reportedly threatened withdrawal from ASCAP and BMI, a move that would serve to not only weaken the PROs, but further complicate licensing. ASCAP, BMI and their publisher clients are expected to ask for arbitration to replace the rate courts, as well as to make the whole process more flexible.

In a recent filing unrelated to the upcoming review, ASCAP said “the antiquated ASCAP and BMI consent decrees must be updated, if not eliminated,” according to the Times.

With use of streaming audio and Internet “radio” on the rise, and at much lower royalty rates, the review is expected to set up something of a clash of the titans between the PROs and streaming services.

The DOJ published on its website a list of specific questions it seeks public comment on, including whether the consent decrees continue to serve important competitive purposes, if transparency requirements and public performance rights should be modified, and rate courts vs. arbitration, among others.

But it’s believed the biggest issue for federal regulators may be of the ultimate cost of music to consumers and listeners.

Pandora recently raised the price of its subscription service, citing rising licensing costs. The DOJ asks that comments be emailed to the agency by Aug. 6, to an address linked through its website where they will be publicly available. They may also be sent by courier or overnight service.