Pandora suit may reshape the music industry’s century old royalty rules

As the music industry races toward a future of digital streams and smartphone apps, its latest crisis centers on a regulatory plan that has been in place since “Chattanooga Choo Choo” was a hit.

Since 1941, Ascap and BMI, the two giant licensing organizations that dominate music publishing, have been governed by consent decrees with the Justice Department. These agreements were made to guarantee fair royalty rates for songwriters and for the radio stations, television networks and even restaurants and retail shops that play their music.

But with the industry struggling to make money from digital music, this system has come under attack. The streaming service Pandora is squaring off against Ascap in a closely watched trial over royalty payments. Big music publishers like Sony/ATV and Universal are calling on the government to overhaul the system, and technology companies are accusing the publishers of trying to skirt federal rules meant to protect them.

The outcome could reshape the finances of a large part of the industry.

Another potential game changer for an already disrupted market.