U.S. agency considers how it might implement new music royalty rules

WASHINGTON (Reuters) – As the Justice Department considers an overhaul of music royalties rules, its top antitrust enforcer said on Wednesday that regulators are considering how to minimize disruption for streaming services and other players if they move to a new system of compensating artists.

The Justice Department, as part of a larger review, is reviewing two consent decrees from the 1940s that determine what digital streaming services, radio and television stations, bars and others pay Broadcast Music Inc, or BMI, and American Society of Composers, Authors and Publishers, or ASCAP, to play music.

At a Senate sub-committee hearing, Senator Orrin Hatch pressed Makan Delrahim, head of the Justice Department’s antitrust division, to move cautiously if there was a decision to scrap the consent decrees, saying that abruptly cancelling them would be “a mistake.”

Delrahim, in response, said he recognized the potential problem. “We recognize the disruption and cost of just terminating without a proper transition period,” Delrahim told the antitrust panel of the Senate Judiciary Committee.

Currently, a rate court in New York sets the royalties that ASCAP and BMI, which represent artists and music publishers, are paid. Companies that license music have worried about a sharp increase in costs if the system is changed because ASCAP and BMI license about 90 percent of music heard online and in movies, TV shows and bars.

Delrahim said at an event last week, “Absolutely (I) think that the marketplace should determine how much an artist gets paid.”

On an unrelated matter, Delrahim and Joe Simons, the chairman of the Federal Trade Commission, expressed support for a bill that Senator Amy Klobuchar introduced last year that would raise fees companies pay for reviews of big mergers.

Klobuchar’s bill would raise the highest fee from $280,000 to $2.25 million. Smaller deals would see their fees cut.