Monday, 07 May 2018
In February 1787, after winning a long and bloody war against the most powerful military of the time, the American Citizenry sent their 55 delegates back to Philadelphia to fix the Articles of Confederation, our first, and by all accounts, miserable excuse for a constitution.
After four hot and humid months of arguing, they drew the curtains, locked the doors and threw it away, eventually creating our U.S. Constitution. As a result of this bold step motivated by a profound understanding of history, human nature and the wisdom to create checks and balances while minimizing centralized power, this roughly 35-page document is arguably responsible for enabling the longest-standing, freest Republic in history.
If we could hear the contemporaries of such brilliant minds as James Madison, George Mason, and Roger Sherman speak, they might summarize our history since then as a race to create as many laws, regulations, and Federal Departments as possible. In many respects, the overreaching federal antitrust consent decrees created over the years are a textbook example of the problem at hand.
To this end, last Thursday the Department of Justice (DOJ) held a roundtable to review the nation’s 1,300 decrees. To be sure, a good portion of them are outdated, ineffective, and unnecessary. Without question, the Justice Department should roll that are no longer needed to protect competition back. But as a conservative and a music composer, I am troubled that Makan Delrahim, the head of DOJ’s Antitrust Division, reportedly suggested that the Department may remove consent decrees that restrain the two largest music performance rights organizations (PROs) from egregiously abusing their government-granted market share.
To the dismay of composers like me, there is no true free market in the songwriting realm. However, for the past 77 years, consent decrees have created some semblance of a market pricing structure that has protected both songwriters and small businesses from monopolistic abuse.
To become recognized by the public, musicians must license their songs through one of the PROs – normally ASCAP or BMI since they control roughly 90 percent of the licensing market – which grant gyms, bars, radio stations, and others the right to play finished compositions.
In the early days, these industry behemoths would collude and charge exorbitant sums for the playing rights of music because this is far from a competitive marketplace and there was nothing stopping them from doing so. The ASCAP and BMI consent decrees stopped this abuse of power by mandating the two PROs provide blanket song licenses at set rates for those who request them.
Has the music industry become a perfect utopia because of these decrees? Absolutely not. To this day, the PROs still appear to prioritize their interests over those of composers and the economy at large.
For example, After all these years, ASCAP and BMI still refuse to provide a comprehensive list of the 10 million-plus copyrights they own. This opaque measure coerces lawsuit-fearing establishments into purchasing blanket licenses from both companies rather than just one or the other. Meanwhile, ASCAP and BMI continue rigging the deck to favor the big music publishing houses over songwriters, paying the publishers undisclosed amounts and leaving the composers with crumbs.
With that being said, consider how much worse of a place the industry would be in now without the Justice Department’s imposed guardrails.
Recall that just two years ago, ASCAP paid $1.75 million in settlement fees for violating its consent decree when it prevented songwriters from licensing their compositions independently. Not long ago, the Justice Department also argued BMI was engaging in illicit activity by multiplying the number of licenses needed to play some compositions.
These PROs maintain the same monopoly power as they did in the 1940s. In the absence of these modest restraints from the DOJ, there would be more lawsuits, economic distress, and loss of songwriters’ rights because of uncontrolled corporate power and the monopolistic behavior that comes with it.
Let’s not forget that after reviewing these decrees for two full years, the DOJ in 2016 ruled that they “remain vital to an industry that has grown up in reliance on them.” The Justice Department got it right then and should not second-guess itself just because corporate lobbyists from vested financial interests are demanding a different answer.
Without these consent decrees, many up-and-coming songwriters will become embroiled in financial hardship. Should the semblance of free market prices that we once had diminish, newer composers will lose out as establishments play more songs from established artists and fewer songs from lesser-known figures. The PROs and music publishers will win from this protectionist measure at the expense of the music industry and American economy at large, and that is never a good thing.
Attorney General Jeff Sessions and the rest of the DOJ should not reward two of the most anti-free market institutions in history by relaxing their restraints – not today, not tomorrow, not ever.
Doing so would be antithetical to the law and order campaign promise of the president, as well as harmful to the American people whose lives depend on the law as it is currently written. The time is now to do the right thing.