The music-publishing arms of Sony Corp. and Universal Music Group are being investigated by the U.S. Justice Department for alleged price coordination, according to two people familiar with the matter.
The probe also includes the American Society of Composers, Authors & Publishers, a rights-management company that collects fees on behalf of music publishers and the songwriters they represent, said the people, who asked not to be named because details of the probe aren’t public.
The Justice Department’s inquiry into price coordination in music licensing is part of a wider examination of how the industry operates as consumers shift toward music streaming and rights holders battle Internet radio firm Pandora Media Inc. in court over licensing fees.
The Justice Department’s antitrust division said in June it was reviewing decades-old agreements with Ascap and Broadcast Music Inc. that govern songwriter royalties. The review could lead to changes in how much Pandora, the leader in Internet radio, pays songwriters when their works are played.
Ascap and BMI, both based in New York, represent hundreds of thousands of songwriters, composers and publishers. They’ve argued in court disputes with Pandora that the agreements with the Justice Department don’t take into account the rise of digital media.
BMI also received a civil investigative demand, which is similar to a subpoena, from the Justice Department seeking information about the agreements being reviewed, which are known as consent decrees, one of the people said. BMI was asked about coordination among Ascap, Sony and Universal Music, the person said.
“We are looking forward to engaging with the DOJ on the consent decree,” BMI said in a statement. “It was last modified in the mid-1960s and then the mid-1990s -– before the advent of the Internet, satellite radio, and the growth of cable and other modern music delivery platforms.”
Sony said last week it may drop out of Ascap and BMI, depending on the outcome of the department’s review.
Sony/ATV Music Publishing LLC, jointly owned by the company and Michael Jackson’s estate, said in a statement it welcomed the department’s review of the agreements and looks forward to working with it “to bring the music licensing system in line with today’s digital music marketplace.”
Emily Pierce, a spokeswoman for the Justice Department, declined to comment. Will Tanous, a spokesman for Universal Music, didn’t respond to a request for comment.
Ascap said it is cooperating with the Justice Department.
“Ascap’s hope is that this investigation, combined with the DOJ’s ongoing review of its consent decree, will lead to meaningful changes in the marketplace for Ascap and its more than 500,000 songwriter, composer and publisher members,” it said.
Billboard magazine earlier reported the pricing investigation.
The consent decrees, reached in antitrust cases against the groups, require broadcasters and performing rights organizations to seek license rate determinations from the New York federal court if they can’t negotiate an agreement.
Pandora, based in Oakland, California, sued Ascap in 2012 to seek “reasonable” license fees to play Ascap songs on its service. In March, a federal judge in Manhattan ruled that Pandora must pay 1.85 percent of revenue to Ascap from 2011 to 2015, a higher rate than Pandora had proposed.
In her decision, Judge Denise Cote cited “troubling coordination” between Sony, Universal Music and Ascap.
“What is important is that Ascap, Sony, and UMPG did not act as if they were competitors with each other in their negotiations with Pandora,” the judge said, referring to Universal. “Because their interests were aligned against Pandora, and they coordinated their activities with respect to Pandora, the very considerable market power that each of them holds individually was magnified.”