Matt Mackowiak, 4/1/2019 [Archive]

Local Music At Risk from Trump Justice Department

Local Music At Risk from Trump Justice Department

By Matt Mackowiak


The safety and security of unique local music scenes across the country may be under threat as Makan Delrahim, the antitrust division chief in President Trump's Department of Justice, considers allowing the monopolies of the music industry to operate without any federal restraints.

On March 28, Delrahim said their review of the nation's 1,300-plus antitrust agreements, called consent decrees, is gaining steam and that in the coming months, they will file motion to terminate hundreds of them.

Given the DOJ's seeming focus on the decrees that curtail the power of the music monopolies, which has included insinuations from Delrahim that he may modify or sunset their agreements, this concerns any individual or business that plays, performs, or listens to music.

The only way for Americans to hear the tunes they love - whether played by a band or heard over a business' speakers - is to purchase licenses through two organizations, called ASCAP and BMI, which collectively manage the rights to over 90 percent of the country's music.

While most stakeholders in the music industry believe that ASCAP and BMI's existence is essential for simplifying the licensing process on performers and small businesses, many have also expressed concerns with their past operational practices.

Josh Baish, a former live music venue owner, wrote in the past that these institutions used their power and influence to price-gouge, negatively affecting both the hosts and performers of local music.

"Both ASCAP and BMI have a history of abusing their market share," Baish wrote. "Since their businesses hinge on managing intellectual property - an area where there is no true free market - there is little competition and hence no way of stopping their price gouging."

In addressing these concerns, the Department of Justice and ASCAP/BMI came to terms with consent decrees in 1941, which established blanket song licenses encompassing all of ASCAP and BMI's performing rights that can be purchased at a set flat rate.

Matt Tunstall, a local restaurant owner, wrote, "This system has for decades prevented the prevalence of anti-competitive behavior, all while ASCAP and BMI attain record revenue numbers on an almost annual basis."

Today, however, ASCAP and BMI are fronting an advocacy effort to alter the agreements.

In an open letter to the Justice Department, the presidents of both organizations wrote, "A free market would create a more productive, efficient and level playing field for everyone involved."

Some political analysts, like Andrew Langer, the president of Institute of Liberty, have denounced the logic of ASCAP and BMI's letter.

"Contrary to the pleas of ASCAP and BMI, music creators can engage in free market negotiations today," Langer wrote. "Any music creators is free to individually negotiate the value of his or her product with a business. However, once the music creator opts instead to collude with other competitors under the ASCAP or BMI monopolies, guardrails are justifiably needed. The music industry is not special nor is it above the antirust standards that apply to any other industry."

Matt Fitzgibbons, a songwriter, said that the Trump DOJ removing the ASCAP and BMI consent decrees could leave the future of local music in turmoil.

"In the absence of these agreements between ASCAP/BMI and the DOJ, far fewer small businesses would entertain the prospect of promoting local artists because of the higher costs they would incur as a result of their price-gouging of performance licenses. It would amount to a win for big music executives and a net loss for everyone else."

In his article, Baish expressed similar sentiments, writing, "Performers would lose even more chances to start their careers as an ever-increasing number of small venues, restaurants and bars would be unable to weather the skyrocketing financial costs. The rich would get richer while the poor get poorer, all because of poor governance in Washington, D.C."

In the Antitrust Division's annual spring update on March 28, Delrahim indicated the Justice Department will file motions to terminate hundreds of antitrust agreements over the next month. What they will decide to do with respect to the agreements with ASCAP and BMI remains to be seen.

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Copyright 2019 Matt Mackowiak distributed exclusively by Cagle Cartoons newspaper syndicate.

Matt Mackowiak is president of Austin, Texas, and Washington, D.C.-based Potomac Strategy Group. He's a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators.

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