Trump Justice Department Shouldn't Reinvent the Wheel on Music Licensing

Posted: Jun 20, 2018 12:01 AM
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Sometimes, government action necessarily breeds more government action.

As conservatives, we believe in limited government, not no government at all. We believe that government can and should exist to provide services such as national defense, light-touch regulation, and the safeguarding of private property.

Although these services are necessary for any functioning society, like in any other case of government action they occasionally create adverse effects that require addressing.

Intellectual property laws, particularly as they relate to the music industry, are just one example of when federal action is needed to rectify...well...existing federal action.

Few conservatives would dispute the importance of copyrights and patents, which ensure that artists and inventors are rightfully compensated for their work. At the same time, though, intellectual property laws inherently create government-chartered monopolies, which sometimes lead to anti-competitive, stagnant marketplaces.

In the music industry, any establishment – hotels, restaurants, mom-and-pop stores – that wishes to play music or have music performed on its premises must purchase performance rights licenses. This is a necessary measure to protect private property, but the downside is that, in the absence of federal restraints to these government-granted protections, it is quite easy for the music collectives that control the performing rights to charge more than the market would normally bear.

There are just a fixed number of copyright stakes to each tune. This number will, except in cases of dispute and litigation among songwriters, remain constant for generations, meaning that there is no "invisible hand" solution to the music collective's price gouging.

Seventy-seven years ago, the public and private sectors came together to find a solution to this problem. The Department of Justice settled with ASCAP and BMI, the two largest music collectives that possess roughly 90 percent of the nation's performing rights licenses, by imposing federal consent decrees to restrain their power. These decrees keep performers' intellectual property entirely intact but make the music collectives provide performing rights licenses at fair market rates, with disputes settled by the court. This light-touch regulatory approach, while not perfect, has for decades respected the private property rights of music creators while ensuring that businesses are not left with unreasonably high bills from the middlemen involved.

As you may have guessed, this is not the end of the story. Almost annually, the music monopolies seemingly do what monopolies do best: beg for more. Their goal appears to be scrapping the consent decrees – or at least the parts that restrict their anti-competitive tendencies – entirely.

In response to their efforts, the Justice Department conducted a thorough two-year review of the music consent decrees, which concluded in the summer of 2016. It found that the decrees are an important part of the marketplace and must remain unaltered.

Case closed? Not quite. The interest groups that oppose the consent decrees are relentless, making this issue a never-ending one. As reported by Bloomberg last week, they have now ostensibly pushed the new administration to investigate the matter yet again, as at a June 13th conference Makan Delrahim, the Assistant Attorney General for the Antitrust Division, remarked that he is reviewing the DOJ's decades'-old agreements with ASCAP and BMI.

What this means is that important law-and-order voices in Congress, such as Sen. Mike Lee (R-Utah), Chairman of the Antitrust, Competition Policy and Consumer Rights Subcommittee and Sen. Amy Klobuchar (D-Minn.), the Ranking Member, must step up to the plate and do what they did so successfully three years ago: hold another hearing that gets to the very bottom of this issue.

The World Has Gone Crazy
Derek Hunter

As John Adams said, facts are stubborn things. Once the current Justice Department has a sufficient grasp of the issue, it will inevitably come to the same consensus on this issue as every other DOJ: the decrees are an important part of the marketplace and must remain in place. But that may only happen if Congress takes this matter seriously and acts swiftly.

This year has been filled with more partisan division than nearly any other in recent memory, but the ASCAP and BMI consent decrees should refreshingly bring both sides of the aisle together as they have in years past. Congress must seize on this opportunity to work with the judicial branch in ensuring that important federal policy works as effectively as it should. It's what songwriters and small businesses nationwide deserve.