Trump vs. the Music Lobby's Monopoly

On November 8, billionaire music collectives received a wake-up call: Donald Trump is headed to Washington.  A decisive White House victory music collectives and lobbyists had not anticipated now promises to shake up the industry. 

By all media accounts, Hillary Clinton was the favored presidential nominee and was projected to win by a large margin, if not a landslide.  The music lobby, naturally fearing Trump's free-market instincts, backed Clinton not only vocally, but monetarily.  There was no confusion over whom music collectives wanted as president, and they were willing to pay dividends to ensure that the election swung in their direction to meet their regulatory goals.  Remember the free concerts at rallies in the closing days of the campaign? 

The two main performing rights organizations (PROs) in the industry are the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI).  These special interest groups collectively represent over one million songwriters, composers, and music publishers and control the rights to approximately 90 percent of all musical compositions.

Originally formed to protect music artists and producers by facilitating licensing deals between them and entities that play their music for the public, such as radio stations and restaurants, ASCAP and BMI have swiftly mutated into a government-recognized (and government-created) monopoly.

In an effort to curb the stifling intellectual property laws in the anti-free-market music industry, the federal government in 1941 imposed antitrust consent decrees on ASCAP and BMI, which allow the companies to continue operating as monopolists while also protecting consumers from fixed monopoly pricing.

Essentially, the antitrust consent decrees established a system that allowed the PROs to sell the songs in bulk at a fixed rate to businesses – as opposed to businesses working directly with the millions of individual copyright holders to any given song – while also ensuring that each individual owner of the song gets paid a fair and equitable amount.  It is important to note that there can be many copyright owners to each song, and most businesses need to clear the rights to millions of works to ensure that they do not get sued for copyright infringement.  Reversing this system of "full work" licensing would unleash havoc on both the music industry and millions of businesses across America that legally purchase music rights through ASCAP and BMI.

For example, before the consent decrees were put into place, ASCAP and its largest publishers began leveraging its market share, holding back music licenses to raise costs. One major publisher doubled its licensing fees, not because it improved its product, but because it threatened to sue. The courts stepped in and shut down this anti-competitive behavior, and DoJ even fined ASCAP for doing so earlier this year.

Of course, fractional licensing also creates litigation nightmares as well. Many songs have multiple copyright owners and some don't sprout up until after the fact. This will cause restaurants and bars to be on the losing end of legal disputes for issues that are out of their control.

And, the lack of transparency in the system opens the door to copyright trolls, who can shake businesses down for big paydays under the threat of litigation.

Despite booming revenues in excess of a billion dollars each for ASCAP and BMI, the PROs are not content and have waged a full-blown lobbying campaign to scale back the restrictions in the consent decrees.  ASCAP and BMI want to change the consent decrees and move to "fractional licensing," which would allow BMI and ASCAP to increase the prices they charge to those who license music, while effectively forcing businesses to negotiate licenses for millions of works many times over.  This process would be not only inefficient, but impossible.

Quite simply stated, if the PROs were to succeed, this would affect everyone from radio stations to restaurants to online music streaming services.  Music costs would dramatically increase, limiting many businesses from purchasing a wide array of songs and limiting consumer choice.  The shift to fractional licensing would intensify market power and threaten millions of businesses with heightened exposure to infringement lawsuits.  This is precisely the reason the Department of Justice imposed the antitrust consent decrees over 75 years ago: to protect the American consumer.  "Fractional licensing" is anti-competitive and monopolistic in the truest form of the words.

Over the past summer, and after a two-year review of the consent decrees governing the PROs, the Justice Department struck down the idea of "fractional licensing" and preserved the status quo for millions of businesses across the country.  Not willing to back down from the fight, in September, the music lobby achieved one small and fleeting victory.  They successfully convinced a federal judge in the state of New York to overturn the Justice Department's ruling on "fractional licensing" during a preliminary conference that entertained little testimony. 

Since it runs counter to consumers' interests and all legal precedent – all the way up to the Supreme Court – the Justice Department appealed the judge's decision less than two months later.

The music industry's lobby has many reasons to fear President-Elect Trump.  While Trump has not yet made a public stance on this antitrust matter, he is a staunch supporter of markets that benefit the American consumer.  He is ready to curb the monopolistic practices and advances from lobbyists and special interest groups.  Trump wants to "drain the swamp," not retain it.

Our country needs a president again who will fight to represent the best interests of small businesses and the American people.  This president-elect will trump the monopolistic predators to ensure that fair prices are maintained in the music industry.

Revised

On November 8, billionaire music collectives received a wake-up call: Donald Trump is headed to Washington.  A decisive White House victory music collectives and lobbyists had not anticipated now promises to shake up the industry. 

By all media accounts, Hillary Clinton was the favored presidential nominee and was projected to win by a large margin, if not a landslide.  The music lobby, naturally fearing Trump's free-market instincts, backed Clinton not only vocally, but monetarily.  There was no confusion over whom music collectives wanted as president, and they were willing to pay dividends to ensure that the election swung in their direction to meet their regulatory goals.  Remember the free concerts at rallies in the closing days of the campaign? 

The two main performing rights organizations (PROs) in the industry are the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI).  These special interest groups collectively represent over one million songwriters, composers, and music publishers and control the rights to approximately 90 percent of all musical compositions.

Originally formed to protect music artists and producers by facilitating licensing deals between them and entities that play their music for the public, such as radio stations and restaurants, ASCAP and BMI have swiftly mutated into a government-recognized (and government-created) monopoly.

In an effort to curb the stifling intellectual property laws in the anti-free-market music industry, the federal government in 1941 imposed antitrust consent decrees on ASCAP and BMI, which allow the companies to continue operating as monopolists while also protecting consumers from fixed monopoly pricing.

Essentially, the antitrust consent decrees established a system that allowed the PROs to sell the songs in bulk at a fixed rate to businesses – as opposed to businesses working directly with the millions of individual copyright holders to any given song – while also ensuring that each individual owner of the song gets paid a fair and equitable amount.  It is important to note that there can be many copyright owners to each song, and most businesses need to clear the rights to millions of works to ensure that they do not get sued for copyright infringement.  Reversing this system of "full work" licensing would unleash havoc on both the music industry and millions of businesses across America that legally purchase music rights through ASCAP and BMI.

For example, before the consent decrees were put into place, ASCAP and its largest publishers began leveraging its market share, holding back music licenses to raise costs. One major publisher doubled its licensing fees, not because it improved its product, but because it threatened to sue. The courts stepped in and shut down this anti-competitive behavior, and DoJ even fined ASCAP for doing so earlier this year.

Of course, fractional licensing also creates litigation nightmares as well. Many songs have multiple copyright owners and some don't sprout up until after the fact. This will cause restaurants and bars to be on the losing end of legal disputes for issues that are out of their control.

And, the lack of transparency in the system opens the door to copyright trolls, who can shake businesses down for big paydays under the threat of litigation.

Despite booming revenues in excess of a billion dollars each for ASCAP and BMI, the PROs are not content and have waged a full-blown lobbying campaign to scale back the restrictions in the consent decrees.  ASCAP and BMI want to change the consent decrees and move to "fractional licensing," which would allow BMI and ASCAP to increase the prices they charge to those who license music, while effectively forcing businesses to negotiate licenses for millions of works many times over.  This process would be not only inefficient, but impossible.

Quite simply stated, if the PROs were to succeed, this would affect everyone from radio stations to restaurants to online music streaming services.  Music costs would dramatically increase, limiting many businesses from purchasing a wide array of songs and limiting consumer choice.  The shift to fractional licensing would intensify market power and threaten millions of businesses with heightened exposure to infringement lawsuits.  This is precisely the reason the Department of Justice imposed the antitrust consent decrees over 75 years ago: to protect the American consumer.  "Fractional licensing" is anti-competitive and monopolistic in the truest form of the words.

Over the past summer, and after a two-year review of the consent decrees governing the PROs, the Justice Department struck down the idea of "fractional licensing" and preserved the status quo for millions of businesses across the country.  Not willing to back down from the fight, in September, the music lobby achieved one small and fleeting victory.  They successfully convinced a federal judge in the state of New York to overturn the Justice Department's ruling on "fractional licensing" during a preliminary conference that entertained little testimony. 

Since it runs counter to consumers' interests and all legal precedent – all the way up to the Supreme Court – the Justice Department appealed the judge's decision less than two months later.

The music industry's lobby has many reasons to fear President-Elect Trump.  While Trump has not yet made a public stance on this antitrust matter, he is a staunch supporter of markets that benefit the American consumer.  He is ready to curb the monopolistic practices and advances from lobbyists and special interest groups.  Trump wants to "drain the swamp," not retain it.

Our country needs a president again who will fight to represent the best interests of small businesses and the American people.  This president-elect will trump the monopolistic predators to ensure that fair prices are maintained in the music industry.

Revised