Big Music's antitrust meddling could mess up how you listen

The old joke in economic circles is that antitrust law — first popularized by the William H. Taft and Theodore Roosevelt administrations over a century ago — brings people together.

Compare the 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 consensus remains clear: antitrust law, in some form, is essential for protecting competition, jobs, and fair-market pricing.

Some supply-side economists like me balk at expanding the DOJ's power and advocate for narrowing the focus of its consumer protection efforts.  However, the consensus of ensuring that antitrust law serves as a traffic cop in industries where free markets do not exist, remains as strong as it has ever been.  And yet, despite this uncontroversial area of agreement, executives at some of the most notorious institutions restrained by the DOJ are now seemingly trying to demolish this area of near unanimity that has existed for decades.

The most recent example of this racket has come from the American Society of Composers and Publishers (ASCAP) and Broadcast Music Inc. (BMI) — the two music industry collectives, known as performing rights organizations (PROs), that license the vast majority of the songs Americans hear on the radio.

Although the DOJ closed the lid on a two-year examination of their DOJ consent decrees in 2016, when it found that it would be inappropriate to modify the agreements, the organizations' presidents began requesting that the Trump Justice Department alter them significantly. 

Makan Delrahim, the assistant attorney general for the Antitrust Division who seems to have extreme views on antitrust policy that are ostensibly at odds with those of his new boss, Attorney General William Barr, has already begun heavily looking into this issue despite the DOJ just having completed an extensive review. 

While Delrahim is correct in that past administrations have used antitrust law improperly, the same is 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. 

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 — ensuring that the licensing rates they charge are reasonable and sustainable for consumers and businesses throughout the country

Although free-market competition is typically the only remedy needed to stop predatory behavior, little competition exists in the music industry due to the footprint of government.  The long and short of it is that intellectual property law, while essential for protecting performers and songwriters, inherently breeds monopolies. 

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 ASCAP and BMI are composed of — decide to price-gouge, there would be little stopping them from doing so.  Small businesses like restaurants and coffee shops that play music would suffer tremendously as a result.  Hence the need for antitrust remedies. 

The DOJ agreements allow ASCAP and BMI to remain intact, free from worries of a government break-up, while simply maintaining fair pricing, which is ensured through the maintenance of blanket license agreements for all of the songs they manage, which anyone can purchase. 

These antitrust settlements do not restrain business' decision-making 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 decrees open the marketplace, not stifle it.

There was nothing controversial about these agreements years ago, so there should certainly be nothing contentious about them today with the steam that the antitrust movement has gained.  Nevertheless, ASCAP and BMI remain adamant about removing their restraints. 

Doing so would not only upend the music industry, but also put a dagger in one of the only policy areas that both sides of the aisle manage to agree on today.  Worse, it would raise the question: if antitrust law should not be used for curtailing the abuse of government power, then why have it all?

While Delrahim is certainly correct in that some bureaucrats have abused their powers, almost every economist agrees that over the last 100 years, antitrust law has also protected the American people and preserved the integrity of markets that have large governmental presences — lowering prices, restraining industry concentration, and ensuring that policy benefits people rather than interest groups. 

Here's hoping that Barr's Department of Justice stands with the over century's worth of economic precedent and keeps consumers protected, just as the DOJ has in years past.  Doing so will remain essential for preserving free, open markets in the years to come.

Michael Busler, Ph.D. is a public policy analyst and a professor of finance at Stockton University, where he teaches undergraduate and graduate courses in finance and economics.

The old joke in economic circles is that antitrust law — first popularized by the William H. Taft and Theodore Roosevelt administrations over a century ago — brings people together.

Compare the 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 consensus remains clear: antitrust law, in some form, is essential for protecting competition, jobs, and fair-market pricing.

Some supply-side economists like me balk at expanding the DOJ's power and advocate for narrowing the focus of its consumer protection efforts.  However, the consensus of ensuring that antitrust law serves as a traffic cop in industries where free markets do not exist, remains as strong as it has ever been.  And yet, despite this uncontroversial area of agreement, executives at some of the most notorious institutions restrained by the DOJ are now seemingly trying to demolish this area of near unanimity that has existed for decades.

The most recent example of this racket has come from the American Society of Composers and Publishers (ASCAP) and Broadcast Music Inc. (BMI) — the two music industry collectives, known as performing rights organizations (PROs), that license the vast majority of the songs Americans hear on the radio.

Although the DOJ closed the lid on a two-year examination of their DOJ consent decrees in 2016, when it found that it would be inappropriate to modify the agreements, the organizations' presidents began requesting that the Trump Justice Department alter them significantly. 

Makan Delrahim, the assistant attorney general for the Antitrust Division who seems to have extreme views on antitrust policy that are ostensibly at odds with those of his new boss, Attorney General William Barr, has already begun heavily looking into this issue despite the DOJ just having completed an extensive review. 

While Delrahim is correct in that past administrations have used antitrust law improperly, the same is 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. 

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 — ensuring that the licensing rates they charge are reasonable and sustainable for consumers and businesses throughout the country

Although free-market competition is typically the only remedy needed to stop predatory behavior, little competition exists in the music industry due to the footprint of government.  The long and short of it is that intellectual property law, while essential for protecting performers and songwriters, inherently breeds monopolies. 

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 ASCAP and BMI are composed of — decide to price-gouge, there would be little stopping them from doing so.  Small businesses like restaurants and coffee shops that play music would suffer tremendously as a result.  Hence the need for antitrust remedies. 

The DOJ agreements allow ASCAP and BMI to remain intact, free from worries of a government break-up, while simply maintaining fair pricing, which is ensured through the maintenance of blanket license agreements for all of the songs they manage, which anyone can purchase. 

These antitrust settlements do not restrain business' decision-making 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 decrees open the marketplace, not stifle it.

There was nothing controversial about these agreements years ago, so there should certainly be nothing contentious about them today with the steam that the antitrust movement has gained.  Nevertheless, ASCAP and BMI remain adamant about removing their restraints. 

Doing so would not only upend the music industry, but also put a dagger in one of the only policy areas that both sides of the aisle manage to agree on today.  Worse, it would raise the question: if antitrust law should not be used for curtailing the abuse of government power, then why have it all?

While Delrahim is certainly correct in that some bureaucrats have abused their powers, almost every economist agrees that over the last 100 years, antitrust law has also protected the American people and preserved the integrity of markets that have large governmental presences — lowering prices, restraining industry concentration, and ensuring that policy benefits people rather than interest groups. 

Here's hoping that Barr's Department of Justice stands with the over century's worth of economic precedent and keeps consumers protected, just as the DOJ has in years past.  Doing so will remain essential for preserving free, open markets in the years to come.

Michael Busler, Ph.D. is a public policy analyst and a professor of finance at Stockton University, where he teaches undergraduate and graduate courses in finance and economics.