The Justice Department will review the rules that determine how much services like Pandora and Google Music must pay to license music, the start of a process that could make those sites cheaper or more expensive for customers.
Pandora has loudly criticized the current system, saying that it pays out an overbearing 49 percent of its revenue for licensing costs. Meanwhile, ASCAP and BMI, the two major licensing groups that dominate the industry, say that rules written in 1941 restrict their ability to collect fair rates for digital services. ASCAP and BMI collect about $2 billion in royalties a year.
The music industry is happy about the review
The Justice Department will open a 60-day public comment period after which it may recommend changes to the regulation. Those recommendations will be reviewed by a panel of judges in New York, where ASCAP and BMI are based.
The review will specifically address "the operation and effectiveness of... consent decrees,” requirements that state that ASCAP and BMI cannot refuse to grant music licenses to outlets that request them.
Consent decrees were put in place to offset the near-monopoly held by ASCAP and BMI. The music licensing groups are optimistic about the upcoming review, while Pandora had no comment.