This article appeared in Deseret News on March 8, 2015.
The sheer volume of preachy public service announcements featuring musicians might leave readers surprised to learn that a significant part of the music industry is classified as a “bully” by the Department of Justice. For nearly 70 years, the two major organizations representing music publishers have operated under federal consent decrees to restrain their anti-competitive behavior and cartel-like tendencies. But a campaign is underway to let the bully roam free in the schoolyard once again. This move has gained the attention of Sen. Mike Lee, R-Utah, chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, who is holding a hearing next week to examine the issue.
The consent decrees date back to 1941, when the government recognized that the music publishing industry had improperly used its market dominance to force radio stations to pay higher fees for the music they broadcast. Seeing that they would certainly lose an antitrust suit, the American Society of Music Composers (ASCAP) and Broadcast Music Inc. (BMI) signed consent decrees with the Department of Justice. These agreements allowed for the organizations to freely negotiate licensing agreements but also provided recourse for licensees to seek relief should the industry fall back into its old, abusive ways.
While much has changed in the past seven decades, the industry’s attitude toward negotiations apparently has not. Just two short years ago, Sony Music Publishing tried to extort online radio station Pandora into paying exorbitantly higher rates. Pandora went to court under the terms of the consent decree and won. A judge in the case called the actions by Sony and ASCAP “troubling coordination” that implicates a core antitrust concern.
In the Pandora case, the consent decrees did precisely what they were supposed to do — create market-like checks and balances in an industry where the absolute nature and government-granted privileges of copyright law mean no real market exists. Songwriters absolutely control their works, and when these rights are aggregated into larger performance rights organizations, there is no alternative source to which licensees can turn. ASCAP and BMI together control nearly 100 percent of all songs.
Of course the industry, like any other, would rather not be restrained by competition or similar checks and has petitioned the DOJ to lift the decrees. With the DOJ currently considering the publishers’ request, Sen. Lee’s hearing is well-timed to examine the implications of changing the consent decrees. Given the industry’s recent behavior, such scrutiny seems in order. Releasing the industry from the oversight of the consent decrees has the appearance of reducing government interference, but instead would mean that the side effects introduced by one government action — copyright privileges — would no longer be balanced by another.
It could also produce significant consequences for music lovers and licensees like restaurants and bars. The viability of the streaming music model might even be at stake.
Sen. Lee is one of Congress’ strongest advocates for the Constitution and free markets, and he is right to stand up for American consumers to ask the hard questions of the industry and of the DOJ. In the end, their answers may impact the next time you try to listen to music on your phone or computer — and it isn’t there.
