Music Rights Orgs Hoping Trump Won’t Hold Hillary Donations Against Them

Brian McNicoll
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Posted: Nov 25, 2016 12:01 AM
Music Rights Orgs Hoping Trump Won’t Hold Hillary Donations Against Them

Donald Trump put fear in the hearts of the left before the election, but since then, his opponents have gone completely off the deep end.

They’ve marched through the streets. They’ve destroyed property. They’ve beaten Trump supporters and lashed out at his vice president after he attended a Broadway play. 

They fear – correctly, it seems, judging from the appointments and other decrees emanating from Trump Tower – that, unlike the current occupant, Trump looks at the presidency as something to do, not something to be. 

He’s not thinking about having Jay-Z and Beyonce at the White House or which fashion designers have caught the eye of his wife or what’s in or out on school lunches. He thinks about actually governing, running the country properly, changing its direction and re-asserting American power and influence in the world. 

And the protectors of the status quo – and those who enabled it for their own expediency – are justifiably worried. 

Take, for instance, the music industry. Companies in the content sectors donated nearly $7 million to Hillary Clinton and less than $140,000 to Trump. Vivendi, Sony Music Entertainment and the Warner Music Group – big players in music – donated nearly $750,000 to Hillary and $17,850 to Trump. 

They supported Clinton not just because she is far more likely to invite them to the White House, but because they want some changes made to copyright law, and they obviously thought she was more favorably disposed to a pay-for-play arrangement. 

With regard to music, the two largest music collectives – ASCAP and BMI – control the rights to 90 percent of all compositions. They license songs to bars, restaurants, stores, even elevators and distribute the funds to those who own the rights to the songs.

The government allows these two organizations to control so much of this highly profitable market because it brings order that otherwise would be impossible to obtain. Some compositions are owned by dozens of people, which could make obtaining rights extremely difficult if not impossible. 

But businesses are able to license through ASCAP and BMI and avoid infringement suits, and songwriters have entities large enough to enforce their rights.

In return for giving ASCAP and BMI monopoly power, the Department of Justice maintains antitrust consent decrees with the two organizations that restrict monopoly pricing.

Under the consent decrees that govern these businesses – which date to the 1940s – ASCAP and BMI need reach agreement with only one of the co-owners to license a song to a radio station or retail store so long as the fees from the license are properly distributed to all other owners. These are not exclusive agreements – other rights-holders could enter into agreements with other such organizations.

These rights organizations are not poor. BMI topped $1 billion in annual sales last year, and ASCAP grew nearly 7 percent in 2014. But they have developed schemes to collect even more money from the system … if only they could get an administration to go along and help change the consent decrees.

They want to impose what’s called fractional licensing, which would require restaurants that seek to play licensed music to come to agreement with every rights holder to a given work. Given the millions of works a restaurant has to license to avoid infringement suits, fractional licensing would lead to dramatically higher prices for music licenses and make it nearly impossible to license the rights to some music. 

How will Trump handle this? Nobody knows for sure. The consent decrees are legal – they were upheld by a federal court as recently as last summer – and they do work. They’ve brought unprecedented order and growth to an industry with a long history of anticompetitive behavior.

Trump transition officials have met with some stakeholders who have asked for the consent decrees to be thrown out, but the team has not given indications about his policy preferences. Sen. Mike Lee (R-UT) held a hearing on this issue, where a number of the anticompetitive concerns relating to ASCAP and BMI were raised. 

The Department of Justice just finished a more than two-year review of the ASCAP and BMI antitrust consent decrees, after which it concluded the consent decrees should not be changed to allow fractional licensing. ASCAP and BMI have appealed the decision and turned to their Capitol Hill allies to help. 

Trump should leave this market alone to function as it should. The consent decrees have worked for 75 years, and the industry has grown wealthy over the arrangement. 

Moreover, this is the very kind of insider favoritism and crony capitalism Trump was elected to stop. The big rights holders and music producers backed Hillary Clinton because they thought they could get her to change the rules to help them make more money. It wasn’t for you or me or the music fans of America, and it wasn’t for the musicians and creators. 

It was for the bottom line of the big shots who always seem to get their way. And, as the voters let us know loud and clear on Nov. 8, that’s gone on long enough.