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Issues & Insights

The DOJ Must Protect The Trump Administration’s Music Industry Blitz

Last year, President Trump reached across the political aisle to deliver what his predecessors could not — legislation designed to help musicians.

The Music Modernization Act updated the nation’s laws to meet the needs of the digital age, ensuring all artists, songwriters, and publishers — not just the big and powerful — receive fair compensation for their work. It passed the Senate with unanimous support and has been hailed as a sweeping success by just about everyone within the industry, many of whom were present for the president’s signing ceremony.

But now, concerns abound that misguided staffers within the Trump Justice Department are putting his major accomplishment at risk.

One year after making a surprise keynote speech at the National Music Publishers Association’s annual meeting, the Antitrust Division head may have even surprised Attorney General William Barr by opening a review of the antitrust agreements, known as consent decrees, with the music industry’s largest duopoly — The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI). Significant alteration of these agreements could have serious consequences for the local musicians the president has been trying to help, enriching Big Music at the expense of everyone else.

ASCAP and BMI license the performing rights to songs for just about any venue one can imagine — from local coffee shops and restaurants to music venues and county fairs. They control roughly 90% of the industry’s music licensing rights because the various music publishers pooled their individual copyright stakes into these two institutions to increase their leverage.

There are benefits to working with ASCAP and BMI. Venues can negotiate with just two institutions rather than broker a deal with a copyright holder for every song they would like to play – a record-keeping nightmare that only the largest venues and chains could capably handle. At the same time, however, as is the case with Big Tech, there are anti-competitive concerns that come from ASCAP and BMI controlling the near totality of the public performance rights marketplace. Understandably, pricing can get out of hand without mechanisms in place to normalize the costs set by these two organizations.

For that reason, ASCAP and BMI willingly came to terms to consent decrees with the DOJ. The antitrust agreements state that they provide a license encompassing all their songs upon request without discriminating among companies of similar services. This arrangement keeps licensing rates closer to market levels for small businesses and has allowed bands from Cheap Trick, which started in a bowling alley, to The Arctic Monkeys, which started at a local pub, to receive their first gigs and rise to prominence from there.

Although these decrees have successfully fostered innovation within the industry, the head of the DOJ’s Antitrust Division still opened a review of the decrees, despite closing one without making any modifications just three years ago. The rationale he provided was that since 1941, “there have been many changes in the music industry” and that “it is important for the Division to reassess periodically whether these decrees continue to serve the American consumer …”

The Antitrust Division is correct in that the music industry has changed drastically since the creation of the consent decrees, but those transformations have all occurred on the distribution side, rather than the licensing side, of the business. The way consumers consume music has gotten progressively different, but to this day, ASCAP and BMI still possess the same market share as they did in 1941. With the DOJ settling a civil contempt claim with ASCAP as recently as 2016, it is clear that the same anti-competitive concerns exist with these monopolies as well.

Further fueling the debate for consent decree reform is songwriters, composers, and producers’ outcry for a larger share of the music industry’s profit. While no rock should be unturned in the fight for payouts to the people who actually make the music, the problem is certainly not these antitrust guardrails. With the vast majority of streaming profits going to the artist and record label and next to nothing to producers and songwriters, the current payout structure, not the consent decrees, marks the true threat to their interests.

In fact, weakening the consent decrees will hurt no one more than the performers of music themselves. As songwriter Matt Fitzgibbons explained at Newsmax, “In the absence of these agreements between ASCAP/BMI and the DOJ, far fewer small businesses would entertain the prospect of promoting local artists because of the higher costs they would incur as a result of their price-gouging of performance licenses. It would amount to a win for big music executives and a net loss for everyone else.”

While the DOJ may still want to review all of this information for itself, it should not make any formal decisions on the ASCAP and BMI decrees without first taking counsel from Congress. In the MMA, which passed with unanimous support in the Senate last year, Congress included language expressing its desire for the DOJ to consult with it. Members of Congress from both parties — from Sens. Lindsey Graham (R-SC) and Mike Lee (R-Utah) on the right to Sens. Amy Klobuchar (D-Minn.) and Richard Blumenthal (D-Conn.) on the left — have voiced concern to the DOJ on this issue. The Justice Department should provide an open ear to these members’ perspective on copyright law, as well as their unique insight into the concerns of their states’ local music industries.

Attorney General Barr and the rest of the Trump administration’s goal is undoubtedly to protect songwriters by ensuring that the regulatory state remains in check; however, a thorough review process into the consent decrees should show how, like with the MMA, certain laws are vital for protecting competition and intellectual property.

Here’s hoping that the administration improves its already impressive record in the music industry by remaining thoughtful and deliberative on this critical issue for local musicians across the country. Change is welcome but the right change is key.

Karl Fowlkes is an Entertainment and Business Attorney with the Fowlkes Firm and an Adjunct Professor of Music Publishing at Drexel University beginning Fall 2019.


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1 comment

  • A better solution would be to reduce copyright to 1. up to 5 years to get it out to the public and then, 2. once it’s public 10 years to make royalties. After that it enters the public domain. That would remove much of the motivation to form cartels by the major producers and enrich the body of works the public can draw from. The extreme and ridiculous copyright terms we currently have are the real root of the problem.

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