Tags: cronyism | department of justice | music | ascap

Cronyism and the Department of Justice: Making Bad Music Together

Cronyism and the Department of Justice: Making Bad Music Together

By    |   Thursday, 30 June 2016 07:13 AM

It is quite ironic that ASCAP does not own the rights to the Michael Jackson catalog — the music collective is a “Smooth Criminal” in every attainable respect.

ASCAP habitually disobeys antitrust laws in order to extort more money from radio stations and businesses, and then it hires lobbyists to successfully woo the Obama Administration into removing those same laws that it neglects.

Amazing, right?

ASCAP is a performing rights organization (PRO) that collects royalty fees for composers, songwriters, and music publishers. It is also a government-recognized monopoly — along with Broadcast Media, Inc. (BMI), its leading competitor, it controls the rights to approximately 90 percent of all music compositions. 

Since these music collectives have so much market share, they have plenty of leeway to throw the law of supply and demand out the window and rig the cost of music licensing upwards. That’s why the Department of Justice put these companies under an antitrust consent decree 75 years ago — to prevent them from holding out copyrights and mandate that the music collectives provide licenses upon request.

You know the kind of unsavory characters. They do a lot of talking about law and order, but once they find a loophole they are quick to dance around the rulebook in hopes that no one will notice.

ASCAP tried this push-the-envelope technique the second that the internet radio marketplace opened up. The music collective attempted to illegally raise music costs by encouraging Sony to pull its licenses to Pandora from the control of the consent decree.

Sony (SNE) even refused to tell Pandora (P) which songs it removed, giving it an excuse to fine the internet radio company $150,000 for each “unlicensed” song it played.
Thankfully, the Justice Department intervened to stop this gross misconduct. Arguing that there was “troubling coordination” between ASCAP and Sony to “extract supra-competitive prices” from Pandora, U.S. District Judge Denise Cote underscored the importance of the consent decree and warned ASCAP about future misconduct.

But even this rebuke from one of the highest courts in the nation didn't stop ASCAP from trying to game the system. After Judge Cote’s ruling, ASCAP continued to sign hundreds of illegal exclusivity clauses with songwriters and publishers. Thankfully, it got caught by the Justice Department and, just last month, agreed to pay a $1.75 million settlement fee to compensate for its anticompetitive practices.
You’d think that with all of this recent illegal activity, the Obama Administration would be more focused than ever on curbing the PROs’ behavior, right?


Actually, the polar opposite — Obama’s Justice Department is actually contemplating removing their restraints completely!

ASCAP, along with its main competitor BMI, are hopeful that the peace brought about by the nearly $2 million settlement will lead to “broad changes to the consent decree that would allow more flexibility in the licensing market.”

In a brazen and benign attempt to artificially raise prices, ASCAP is asking Department of Justice to permit its publishers to withdraw licensing rights and license those songs outside of the consent decrees.

This, of course, is what ASCAP and BMI have been doing illegally all along. And despite doling out handsome fines and punishments for such infractions, there is much speculation that Obama’s Justice Department will lift the much-needed restraints once and for all. 

Keep in mind that the music industry already generates more than $15 billion in revenue each year. Alone, ASCAP and BMI each make $1 billion a year. These monopolies are not hurting for profits — they’re making bank.

There is no reason to saddle struggling radio stations and small businesses with increased music fees — fees which are already grossly excessive. The Obama Administration should hold firm to the judicial opinions of the past 75 years to ensure that the music industry is preserved for the years to come.

Christopher (Chris) Versace is the editor of the newsletter The Growth & Dividend Report and is a featured columnist to The Street.com as well as a contributor to FoxBusiness.com and Forbes.com. To read more of his blogs, CLICK HERE NOW.

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It is quite ironic that ASCAP does not own the rights to the Michael Jackson catalog - the music collective is a "Smooth Criminal" in every attainable respect.
cronyism, department of justice, music, ascap
Thursday, 30 June 2016 07:13 AM
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