- - Wednesday, March 2, 2016

ANALYSIS/OPINION:

Royalty payments to songwriters and music publishers were at an all-time high last year. In fact, both the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI) each topped more than $1 billion in revenues. Despite the record royalty revenue, the major publishers represented by organizations are asking the Department of Justice to allow them to skirt antitrust protections to manipulate the market into even high royalties from music licensees.

ASCAP and BMI represent the copyright holders of about 90 percent of all music compositions. They entered into consent decrees with the Department of Justice dating back to the 1940s after accusations of anti-competitive practices. The consent decrees require the two largest performing rights organizations to provide a license to licensees upon request, prohibits discrimination between similarly situated licensees, and in the absence of private market agreements on rates and terms, provides a rate court process to settle disputes, for which the jurisdiction is the Southern District of New York.

ASCAP and BMI, along with their largest publishers, have long sought to be released from the consent decrees or otherwise remove the anti-competitive protections contained in them to leverage their market power to extract much higher licensing fees from millions of businesses that license music, and from restaurants, bars, retail stores and radio stations. Without the protection of the consent decrees, ASCAP and BMI and their major publishers would exercise monopoly power and drive up costs on businesses across the spectrum.

ASCAP and BMI and their largest publishers attempted a legislative remedy to achieve higher royalties by seeking the passage in Congress of the Songwriter Equity Act, which has failed to gain much support. The Songwriter Equity Act would have raised costs for millions of businesses. Since that legislative failure, the two organizations have sought to achieve the same result by lobbying the Justice Department to ease the antitrust protections of the consent decrees. Having started that review two years ago, the department has legitimate concerns about relaxing the consent decrees, given the marketplace concentration of ASCAP and BMI, as well as their largest publishers and their history of anti-competitive practices. Relaxing the consent decrees would present some very complicated market realities. Any ruling by the Justice Department should be based on unmistakable evidence from the marketplace, and that evidence clearly suggests the consent decrees should be strengthened rather than weakened.

At a time when revenues are hitting record rates, and ASCAP and BMI claim the songwriting industry is shrinking, it begs the question where is the money going, and why the consent decree should be seen as a problem needing to be fixed. Recent court decisions make it clear the consent decrees are more necessary now than ever, especially given the evidence of continued anti-competitive practices of these organizations. As recent as 2014, the Southern District Court of New York cited collusion and anti-competitive manipulation of the marketplace by ASCAP and its largest publishers.

A real world example of why there should be no changes to the consent decrees rests with recent court decisions involving the Society of European Stage Authors and Composers (SESAC). The society represents less than 10 percent of music compositions, and does not operate under a consent decree. Two federal courts found the SESAC to possess monopoly power. The society settled under terms quite similar to the consent decree under which ASCAP and BMI operate.

It is quite puzzling that ASCAP and BMI would seek to overturn the long-established order under the consent decree that has worked so well for all parties involved, especially given the record revenues enjoyed last year by songwriters. Why would anyone want to fix a system that clearly is not broken?

Dean Chambers is conservative columnist and freelance writer who has been featured on The Blaze, The Drudge Report and “The Rush Limbaugh Show.”

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