What Should Be Heard at Lee’s Music Industry Hearing

Posted: Mar 06, 2015 1:48 PM

Capitol Hill conservatives are watching the new chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Protection hosts a March 10 hearing, which is the chairman's first crack at how the Obama Justice Department plans to help the recording industry in its last months in office.

The hope is that Sen. Michael S. Lee (R.-Utah) will use his hearing, titled: “How Much For a Song?: The Antitrust Decrees that Govern the Market for Music,” to press put industry players on the record about their lobbying of Justice to rework the current royalty framework governing the relationship between radio and television broadcasters and the two major performance rights organizations, the American Society of Composers, Authors and Publishers and Broadcast Music, Inc.

Nine months ago, the Justice Department announced it was preparing to re-work its interpretation the 1941 consent decree that has been the regime governing royalties for the broadcast of recorded music.

Critical to that reworking is whether Justice removes the blanket access to recordings that is the bedrock of the consent decree, which was a solution to a trade war between the two PRO’s, ASCAP and BMI.

The PRO’s have been lobbying for the right to withhold permissions and negotiate separate agreements, a move that might look like a move towards a free market, if not for the dark side of the issue.

Although, the PRO’s are taking about the free-market right of contract, they are actually setting up a jackpot from incidental or accidental broadcast of recorded music. Today, if during a report by a TV reporter standing in front of a city hall a car goes by playing recorded music, there is it not actionable.

In the new regime proposed by the PRO’s that inadvertent broadcast would come with a price—not a negotiated price determined by a pre-arranged contract, but a punitive royalty—as it there had been a theft.

Few conservatives are comfortable with private actors forced to work inside 74-year-old government managed frameworks, but at issue is the selective unwinding of what was really a government imposed truce. In the seven decades since the truce was decreed, there has been a robust buildup of copyright laws, royalties and penalties. What the PRO’s, through the Justice Department are trying to do is return to their pre-decree obligations, but keep their 2015 rewards.

Consider too, that broadcasters believe in their bones that they in fact should be the ones getting back by the record companies, given that it is radio station airplay that makes hits hits and moves concert tickets and actual song purchases.

For conservatives, Lee is now the key man. A member with Sen. R. Edward “Ted” Cruz (R.-Texas) and Sen. Randal H. “Rand” Paul (R.-Ky.) of the troika that functions at the Senate’s conservative center of gravity, Lee is taking lead in the chamber as Paul and Cruz explore 2016 White House bids.

Another mark of Lee’s importance on Capitol Hill is his formal joining the leadership team of Majority Leader A. Mitchell “Mitch” McConnell (R.-Ky.) as McConnell’s ambassador to conservatives.

The Utah senator should be looking into two things. First, how dramatic a reworking of the 1941 consent decree does it intend, because the unilateral unwinding of half of the truce would have a traumatic effect on the broadcasters.

Second, and maybe more important for the health of our body politic, Lee should undertake a larger inquest into the degree to which the Obama administration has grease the skids and the palms of its friends in the recording industry.