More socialism is not the right note for music industry reform
President Trump's commitment to "drain the swamp" often runs into opposition – not just from Democrats in Congress, but from his Republican counterparts as well. The most recent case in point is the Music Modernization Act, which recently passed the House of Representatives with a bipartisan majority and is awaiting a vote in the Senate.
The culmination of years of negotiations between streaming music sites like Spotify and licensors in the music industry, the Music Modernization Act combines legislation that works to reform how digital services license music from publishers and how songwriters get paid.
Without a doubt, music licensing is a complex, arcane, and often challenging issue for a layman to understand. The intricacy of the issue benefits the corporate stakeholders, who use their lobbyists and advisers to shape legislation in their favor by working with congressional staff who often have little expertise in these complex issues. That appears to be the sleight of hand used in the Music Modernization Bill, and someone is going to profit handsomely if the bill is not amended by the Senate.
Rather than foster the growing marketplace addressing this complex issue, the bill imposes a Washington top-down approach that ostensibly benefits crony lobbyists and corporations while short-circuiting creative innovators. It is a classic example of a backroom swamp deal that robs Peter to pay Paul. In this case, Peter is the American people, and Paul is the biggest crony actors in the music industry.
I understand the need for artists, producers, etc. to ensure that they are rightfully paid for their work product, and in radio, that has been an issue. While I have jokingly complained many times about the increased restrictions on radio hosts like myself playing our favorite tunes for bumper songs, like my beloved '90s throwback jamz, creators deserve compensation for their work. But, as with every other business enterprise, the solution is always best left to free markets. I don't think when Warren G wrote one of my all-time faves, "Regulate," this is what he had in mind.
"Modernization" is a code word for "power grab" aimed at moving more power to a centralized government entity, one without the expertise or skill to effectively or efficiently achieve anything but control and increased costs passed on to consumers. The bill was founded on the premise that socialism is the solution to every "problem," and the music industry is no exception.
The legislation's most important feature is a policy change requiring blanket mechanical licenses to be paid through the creation of a federal agency that will determine rights, collect payments, and issue reports on the performances. This agency or collective, as it is known, would be paid for by new fees taken from users of services like Spotify, and the agency would determine every five years whether the fee should increase.
Currently, those steps – identification of rights and collection and distribution of payments – are taken through several private companies that compete for business in the marketplace. The change could centralize the process by allowing insiders to determine what company gets all the business. Rather than private organizations competing, there will be only one: the one chosen by the installed agency. To hell with consumer choice.
In the marketplace, public choice typically ensures that the best service at the best price rises to the top of the market over time. That basic economic principle equally applies to the entertainment industry, the business we call "show." When bureaucrats and government officials substitute their own views and opinions, the process becomes open to fraud, political influence, and worse. Everyone loses except the fat-cat special interests who used the levers of government to get what they want.
It's clear as day that this sad reality is occurring in the Music Modernization Act. Although the House missed the boat on reforming this special interest giveaway, the Senate still has time to remove these unjust provisions before enacting the legislation into law. Here's hoping the body will be up for the task, because a decade's worth of music industry innovation is on the line here.
Andrea Kaye is host of the nationally recognized Andrea Kaye Show, heard on KCBQ 1170 AM The Answer in San Diego, California. Find out more at andreakayeshow.com.