U.S. Declines Sony, Universal Bids on Music Royalty Accordsby
Ascap, BMI deals shouldn’t change, Justice Department says
Pandora shares close higher after music royalties decision
U.S. antitrust officials declined to rewrite decades-old agreements governing songwriter royalties in a blow to music publishers including Universal Music Publishing Group and Sony/ATV Music Publishing.
The Justice Department’s antitrust division said Thursday that it wouldn’t seek changes to the agreements following a two-year investigation, saying the terms benefit music listeners and ensure that songwriters are compensated. Music publishers had argued that the rise of digital offerings like Pandora Media Inc.’s streaming music service demanded revisions.
“The division’s investigation confirmed that the current system has well served music creators and music users for decades and should remain intact,” the department said.
The Justice Department announced in 2014 that it was reviewing the consent decrees with two songwriter groups: the American Society of Composers, Authors and Publishers, known as Ascap; and Broadcast Music Inc., known as BMI. Ascap and BMI asked for the review after court battles with Pandora over royalty payments.
Ascap and BMI represent songwriters, composers and publishers, and the consent decrees cover payments made to songwriters whenever works are played on formats including radio, television, live performances and digital outlets. Publishers like Sony/ATV wanted the agreements modified to allow publishers to “partially withdraw” from Ascap and BMI, so that individual performance licenses could be negotiated directly with service providers like Pandora. Pandora, the world’s largest online music service, opposed that change.
Pandora, which stands to gain from the decision, didn’t have an immediate comment. The company’s shares climbed 1 percent to close at $13.82 in New York. Shares of Sony Corp., which are traded in the U.S. as American depository receipts, rose 0.8 percent to $32.60. Sony agreed in March to buy full control of Sony/ATV from the estate of Michael Jackson.
Ascap and BMI said they would challenge the Department of Justice’s interpretation of the consent decrees. BMI will go to court, while Ascap will pursue a "legislative solution," they said in a statement.
“The DOJ’s interpretation of our consent decree serves no one, not the marketplace, the music publishers, the music users, and most importantly, not our songwriters and composers who now have the government weighing in on their creative and financial decisions,” said Mike O’Neill, the chief executive officer of BMI.
Sony/ATV’s chief executive officer, Martin Bandier, called the decision “misguided," while the National Music Publishers’ Association, a trade group for music publishers and songwriters, called the Justice Department decision “disastrous.”
“The department ignored the voices of copyright experts, members of Congress and thousands of songwriters and delivered a huge gift to tech companies who already benefit from egregiously low rates,” the organization’s chief executive officer, David Israelite, said in a written statement.
Pandora won’t be immediately affected by the decision because it has entered in multi-year deal with publishers, said Susquehanna analyst Tom Claps. Still, when those agreements expire it will be in a better negotiating position, he said.
The government’s move was lauded by some. Public Knowledge, a Washington-based policy group, said that leaving the consent decrees as they are protects the market from industry consolidation. The Computer and Communications Industry Association, a trade group for computer and Internet companies, including Pandora, also backed the decision.
"Keeping the current protections against anticompetitive behavior is important," said CCIA Chief Executive Officer Ed Black. "This is an important decision that will help promote competition and protect users and consumers of music."