- - Tuesday, March 12, 2019

ANALYSIS/OPINION:

On Feb. 26, Brent Kendall and Anne Steele of The Wall Street Journal indicated that the Department of Justice is analyzing the binding antitrust settlements that, for more than 70 years, have restrained the music industry’s largest collectives — American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI), which control about 90 percent of the performing rights to the songs Americans hear.

Two days later, Elizabeth Matthews and Mike O’Neill, the respective presidents of ASCAP and BMI, argued in an open letter that sunsetting their current agreements would fit in with the current administration’s deregulatory agenda. They wrote, “We believe that a free market with less government regulation is hands down the best way for music creators to be rewarded for their hard work and intellectual property,” while adding that doing so would “would create a more productive, efficient and level playing field for everyone involved.”

The logic of Ms. Matthews and Mr. O’Neill is entirely backward. Their antitrust settlements, known as consent decrees, with the DOJ are not out of line with conservative principles; in fact, the DOJ created them with the intent of opening the very market mechanisms in the music industry that ASCAP and BMI closed.

ASCAP and BMI are by their nature antithetical to a free market — both are composed of otherwise competing songwriters and publishers which band together in cartel fashion to fix prices on neighborhood pubs, bars, boutiques and other small businesses. ASCAP and BMI do provide important efficiencies for both the music industry and those businesses that seek a license to play music but absent the market protections of the consent decrees these two collectives would hold monopoly power.

ASCAP and BMI’s DOJ agreements, signed in 1941, have cut through their predatory instincts, bringing the pricing for music rights back closer to market levels by ensuring small businesses can purchase a single, affordable license free from anticompetitive practices.

Contrary to the pleas of ASCAP and BMI music creators can engage in free market negotiations today. Any music creator is free to personally negotiate the value of his or her product with businesses. However, once the music creator opts instead to collude with other competitors under the ASCAP or BMI monopolies, guardrails are justifiably needed. The music industry is not special nor is it above the antirust standards that apply to any other industry.

The logic behind managing ASCAP and BMI is no different than that of the City of Philadelphia’s, which sued seven banks over colluding to inflate interest rates in February, or the House Judiciary Committee’s, which recently approved a bill to subject OPEC — a coalition of oil-producing countries that artificially raises prices — to antitrust lawsuits. Organizations that suppress competition and wield significant market power need to be regulated, and the music industry is of no exception. ASCAP, BMI, and other music industry special interests can ignore these realities and continue pretending that their DOJ agreements are stringent government red tape, but as the old cliche goes, facts are stubborn things. In 2016, the Obama Justice Department, which was by many accounts very favorable to the entertainment industry, ruled that their DOJ agreements should remain in place and unchanged — the right decision when considering that not much about these institutions, including their market share, has changed since 1941.

The truth transcends partisan lines, and as it continues to review this issue, it is only a matter of time before Attorney General William Barr’s Justice Department determines what the Obama administration and every DOJ before it has ruled: To protect consumers, music creators and businesses alike, ASCAP and BMI’s restrictions must remain under close watch.

• Andrew Langer is the president of Institute for Liberty.

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