U.S. conserving music licensing decrees that assist Spotify, others
© Reuters. A smartphone is seen in front of a screen projection of Spotify logo, in this picture illustration
WASHINGTON (Reuters) – The U.S. Justice Department’s top antitrust official said on Friday the administration won’t scrap decades-old agreements with music licensing groups ASCAP and BMI that hold down costs for Spotify (NYSE:) and others.
The department’s review of the matter had been closely watched since scrapping the 1941 consent agreements could upend the business of licensing music to online companies like Spotify and Pandora (OTC:) as well as movie companies, commercials, bars and restaurants.
Without the decrees, companies of any size seeking to play music would have to negotiate rights in a chaotic transition while also facing the prospect of price hikes, said the MIC Coalition, whose members include the Brewers Association and National Restaurant Association.
Makan Delrahim, the head of the Justice Department’s Antitrust Division who steps down next week, said in speech that the “investigation period” was closing.
“The ASCAP and BMI consent decrees should be reviewed every five years, to assess whether the decrees continue to achieve their objective to protect competition and whether modifications to the decrees are appropriate in light of changes in technology and the music industry,” Delrahim added in a speech to Vanderbilt Law School.
The Digital Media Association, which represents Amazon (NASDAQ:), Pandora and Spotify, welcomed the department’s decision to maintain the status quo, at least for now.
“Music licensing is complex, but throughout their existence the decrees’ protections have fostered an efficient marketplace that in turn has been critical to the resurgence and growth of the music industry,” said the group’s President Garrett Levin in a statement.
In the complicated world of music royalties, songwriters and publishers hire the two organizations to license their songs to digital streaming services such as Pandora and Spotify, radio and television stations and other music users.
Spokespeople for ASCAP and BMI did not immediately respond to a request for comment.
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