U.S. considers updating music licensing accords with ASCAP, BMI

Reuters News
Posted: Jun 04, 2014 12:06 AM

WASHINGTON (Reuters) - The U.S. Department of Justice is considering changing or scrapping agreements it reached with two music licensing giants more than 70 years ago to freshen them up for the Internet age, the department said in a statement.

The move follows a push from the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc (BMI), which license about 90 percent of music heard on online services, in movies, televisions and restaurants.

ASCAP represents artists including Beyonce, Billy Joel, Katy Perry and Hans Zimmer while BMI is home to Lady Gaga, Willie Nelson, Carlos Santana, Rihanna and others.

Songwriters use music publishers to promote their works, and to do certain licensing tasks - for example, the licensing of "mechanical" rights, for the sale and distribution of recordings.

Publishers and songwriters typically use BMI and ASCAP, both not-for-profit entities, to collectively license works for public performance to major music users like Pandora Media Inc, the Internet radio service.

Currently, any dispute over the cost of a license goes to "rate courts," which are based in the U.S. District Court for the Southern District of New York.

And publishers must have an all-or-nothing relationship with BMI or ASCAP - they cannot use the services for performance licenses to some clients but not others, for example.

The rate courts were established by 1941 consent decrees between ASCAP and BMI and the Justice Department which at the time were not given an expiration date. Generally, consent decrees expire after five or seven years.

In the long run, BMI and ASCAP would like to see the slow, expensive rate courts replaced by arbitration. And they would like to see publishers given more flexibility in contracting with BMI and ASCAP to negotiate on their behalf with some music users but not all, ending the "all-or-nothing" relationship, according to executives with both organizations.

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The Justice Department said in a statement that it was interested in receiving comments on both the question of arbitration and whether to keep the "all or nothing" relationship.

ASCAP distributed $851.2 million to its 500,000 members in 2013. BMI has 600,000 members and distributed $814 million in the 2013 fiscal year.

(Reporting by Diane Bartz; Editing by Ros Krasny and Eric Walsh)