WASHINGTON. The old joke in economic circles, first popularized by the William H. Taft and Theodore Roosevelt administrations over a century ago, is that antitrust law brings people together. Today, over a century later, ongoing antitrust issues that continue to rage throughout America’s contemporary music industry highlight the comic irony of this jovial observation.
Free market economists’s view
Compare the antitrust content generated by center-right groups like The Heritage Foundation with analyses from left-leaning think-tanks like The Brookings Institution. Although there is some disagreement on how expansive it should be, the bipartisan consensus remains clear: antitrust law, in some form, is essential for protecting competition, jobs, and fair market pricing in this country.
Free market economists balk at expanding the Department of Justice’s (DOJ’s) power in this arena. They advocate for narrowing the focus of the agency’s consumer protection efforts. However, the consensus backing the idea that antitrust law is the traffic cop in industries where free markets do not exist remains as strong as it has ever been. But despite this non-controversial consensus, executives at some of the most prominent institutions currently constrained by the DOJ are up in arms. They apparently intend to demolish the near unanimity that has existed in this arena for decades.
ASCAP and BMI vs Everyman
The most recent example of this arrives courtesy of the American Society of Composers and Publishers (ASCAP) and Broadcast Music Inc. (BMI). These are the two music industry collectives, known as performing rights organizations (PROs), that license the vast majority of the popular songs Americans hear on the radio and via streaming media.
The DOJ closed the lid on a two-year examination of their DOJ consent decrees in 2016. That’s when the agency found it would be inappropriate to modify the music licensing agreements. Subsequently, the PRO organizations’ presidents began requesting that the Trump Justice Department alter them significantly.
Makan Delrahim, the assistant attorney general for the DOJ’s Antitrust Division, currently seems to have extreme views on antitrust policy. Ostensibly, his views are at odds with those of his new boss, Attorney General William Barr. Barr, however, has already begun heavily looking into this issue despite the DOJ’s recent completion of an extensive review.
While Delrahim is correct, in that past administrations have used antitrust law improperly, the same situation remains as true today as it was three years ago. Altering the ASCAP and BMI decrees would be catastrophic, especially because of the damage it would cause to small businesses and the future of antitrust policy in general.
Looking at past settlements
ASCAP’s and BMI’s antitrust settlements came about in 1941 to prevent the two institutions from using intellectual property law for monetary gain rather than the benefit of music-creators and the industry at large. The settlements ensured the licensing rates ASCAP and BMI charge are reasonable and sustainable for consumers and businesses nationwide.
Free-market competition is typically the only remedy needed to stop predatory behavior. But little competition exists in the music industry due to the footprint of government. Intellectual property law is essential for protecting performers and songwriters. But such protection inherently breeds monopolies in the production and promotion of both products and performance rights.
After all, there is only one “Summer in the City” by Lovin’ Spoonful and one “All I Want for Christmas” by Mariah Carey. If the gatekeepers of these public performance rights — the music publishers that constitute ASCAP and BMI — decide to price-gouge, there would be little stopping them. Small businesses like restaurants and coffee shops that play music as part of their businesses could suffer tremendously. Hence the need for antitrust remedies.
What the music industry antitrust settlements accomplished
The DOJ settlements allowed ASCAP and BMI organizations to remain intact. That freed them from worries of a government break-up in return for simply maintaining fair pricing. The settlements continue to ensure fair pricing. They do so through blanket license agreements for the songs these organizations manage, which anyone can purchase.
These antitrust settlements do not restrain any business’ decision-making process or freedom to contract. In fact, music publishers that choose not to join one of these two organizations can strike licensing deals with businesses independently, without dealing with antitrust mandates. The DOJ decrees open the marketplace rather than stifling it.
There was nothing controversial about these agreements years ago. That’s why there should certainly be nothing contentious about them today. That’s largely due to the considerable traction the antitrust movement has gained over many years. Nevertheless, ASCAP and BMI remain adamant about convincing DOJ to remove their existing antitrust constraints.
The music industry’s future
Should DOJ actually accede to ASCAP’s and BMI’s demands, not only could that decision upend the music industry. It could also kill one of the few policy areas both sides of the political aisle agree on today. Worse, such a reversal of longstanding antitrust policy would raise a serious question. If antitrust law does not exist to curtail the abuse of government power, then why have any antiturst law all?
Delrahim is certainly correct when he notes that some bureaucrats have abused their powers over the years. However, almost every economist agrees that over the last 100 years, antitrust law has protected the American people. Simultaneously, it has preserved the integrity of markets that have large governmental presences. The end result: lower prices, constraints on industry concentration, and a policy benefitting people rather than interest groups.
Here’s hoping AG Barr’s Department of Justice stands with over century’s worth of economic precedent to keep consumers protected, just as the agency has in years past. Doing so remains essential for preserving free, open markets in the years to come. This includes not only music, but numerous other business sectors as well.
— Headline image: BMI and ASCAP logos via webpage defending the organizations’ proposals to DOJ
on their longstanding antitrust agreement.