Will Jeff Sessions Stop Music Cronyism?

Dan Horowitz
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Posted: May 16, 2017 10:24 AM
Will Jeff Sessions Stop Music Cronyism?

It’s no secret that crony capitalists are not huge fans of “law and order” politics. That’s why for over three months now, the heavy hitters in the music industry have been working overtime to butter up Attorney General Jeff Sessions.

Now, it’s game time: Sessions has a few days from today to stick to his guns, continue to advance the conservative governing philosophy and reject crony capitalists and their Hollywood special interests.

For years, music lobbyists have been trying to lift the federal consent decrees, which are the only thing protecting the free market and prohibit their music collective monopoly from charging above free market prices for song licenses.

The issue at hand is a simple one: copyright laws have led ASCAP and BMI, the nation’s two leading Performing Rights Organizations (PROs), to control the rights to nearly 90% of our music. In order to stop them from leveraging their monopoly power to rig prices above free market rates, the government was forced to put them under the restraining consent decrees over 75 years ago. As a result, ASCAP and BMI have provided their catalog of music to businesses to use at a fairly negotiated rate. These groups hold the payments and eventually give the individual copyholders of each song their earnings.

While not perfect, this system has worked out for all of the parties involved -- music collectives continue to break record revenues every year, while consumers continue to receive affordable music. Yet, the music industry fat cats still aren’t happy. They want the United States to move to a system called “fractional licensing,” which will force every business in this country to separately negotiate with every single individual stakeholder in a given song copyright.

There’s a reason fractional licensing has never been the law of the land: it is completely impractical. It would be the equivalent of signing a death warrant to the music industry as we know it. Suddenly, no business would be able to play music in their stores. The local Little League would not be able to play a recording of the National Anthem before their game.

Most songs have many individuals listed as copyright holders. How on earth could coffee shops, restaurants, or local department stores navigate a fractional license system? How would any individual figure out who they must negotiate with or even afford to negotiate with each and every stakeholder scattered all over the country or elsewhere around the world? That’s the entire reason for the existence of the PROs.

Small business owners pay for a license from ASCAP and a license from BMI so they are able to play popular music — whether it's Jimmy Buffet’s Margaritaville while you have dinner on vacation or some new Top 40 song playing while you buy your kid their new pair of shoes. The business owner should buy a license to compensate the creator for their art. But also otherwise the business owner is sued for “public performing without a license.” Fractional licensing would take away protection from suit — which is the entire reason for anyone to purchase such a license in the first place. Even when not factoring in the gridlock and litigation risks, it’s clear that any “fractional system” will only result in a paperwork nightmare. Small businesses will either decline to take part in this system or be forced to shuffle the costs onto consumers in the form of drastically higher prices.

The impracticality of this idea hasn’t stopped the music lobbyists from spending loads of cash to legislate their dream into reality. Just last year, the Department of Justice concluded the latest review of the ASCAP and BMI consent decrees. After several years of examinations by it’s Antitrust Division, the DOJ announced last year that no changes should be made. Stalwart conservatives like Sen. Mike Lee, who held a hearing on this very issue, praised the DOJ for its thorough review and conclusion.

But ASCAP and BMI aren’t ones to take “no” for an answer. After hearing this bad news, they then immediately appealed to the courts and found a sympathetic judge in New York to overturn the DOJ’s decision. The Justice Department announced its intent to appeal the lower court’s decision, but time is running out: the appellate court set a May 18th deadline for them to do so.

The music industry understandably sees Attorney General Jeff Sessions as a great threat to their objectives. In fact, the moment Sessions’ Attorney General confirmation hearings began is when the Songwriters of North American (SONA) front group filed their motion to oppose the DOJ’s grant for dismissal of its lawsuit.These same Hollywood groups are now trying to convince Sessions that fractional licensing is an issue that most conservatives should be able to rally behind.

“The Republicans are pretty much horrified by the regulation of songwriters in the first place,” entertainment lawyer Dina LaPolt said in a statement. “They see copyright as private property that the government shouldn’t regulate.” Who are we to believe? A Hollywood lawyer or U.S. Senator Mike Lee?

Attorney General Sessions is too smart to fall into their trap. This week, he needs to stand up to these cronies looking to game the system and restore law and order to the music industry. The fate of the industry as we know it depends on it.

Dan Horowitz is an American defense attorney and regular commentator on CNN, MSNBC, and Fox News . He has served as staff for conservative members in both the U.S. House and Senate.