Last week, the Department of Justice (DOJ) formally issued a decision in its multiyear review of the antitrust consent decrees that govern the licensing of music copyrights. At the end of the day, the DOJ opted not to change the way music is licensed, which was an undeniable win for consumers.
{mosads}At issue were antitrust consent decrees between the DOJ and the two largest collectives for the music industry, the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI). For more than seven decades, the two collectives have operated under antitrust consent decrees, which have allowed ASCAP and BMI to maintain their monopolies in exchange for anticompetitive protections for consumers.
ASCAP and BMI, as well as their largest member publishers, have recently once again aggressively lobbied the DOJ to relax these consent decrees. From the outset, their goal was to raise fees on businesses across the country by scaling back some of the protections against monopoly pricing. This was in spite of ASCAP and BMI achieving record revenues over the past couple of years.
Businesses throughout America would have been harmed by any relaxation of the consent decrees. Had the DOJ bent to the demands of ASCAP and BMI, businesses from restaurants and retail stores to radio stations and digital music services would have been subjected to huge cost increases as a result of ASCAP and BMI leveraging unrestrained monopoly pricing.
Luckily for consumers of all types, DOJ refused to make any changes to the music licensing system. The evidence clearly suggested continued anticompetitive activity in this marketplace, and relaxing the consent decrees would have only increased the collusion and price manipulation by ASCAP, BMI and the largest publishers. In fact, as a result of this review, ASCAP recently agreed to a $1.75 million fine for failing to comply with the existing consent decree.
While the evidence clearly pointed toward no changes to the consent decrees, the DOJ’s decision was not an easy one. From the start, the largest publishers within ASCAP and BMI threatened to pull out of the collective licensing system altogether if the DOJ did not grant the changes they demanded. The publishers were essentially saying to the DOJ, “give us the ability to charge monopoly prices or we will create disruption in the marketplace.” However, the DOJ refused to be bullied by the music industry, and preserved the status quo that has benefited businesses and music creators for decades.
ASCAP, BMI and their major publishers are not happy with the DOJ’s decision. They have made wild accusations that in making no changes to the consent decrees — by continuing to maintain the existing status quo — the DOJ has somehow radically changed the way music is licensed. Such claims defy common sense, yet a few of their most ardent supporters in Congress have attempted to undo the years of work put in by the the DOJ’s Antitrust Division. Despite these very public and misleading attacks and significant added political pressure, the DOJ remained firm.
The Department of Justice made the correct decision by not making any changes to the consent decrees. It might not have been popular within the music licensing industry, but it was based upon very clear marketplace realities. The decision will mean continuity and stability in the market for music licenses. It will also mean that a system is preserved that has yielded record revenues for music creators. Most importantly, the decision will protect Main Street businesses across America from monopoly abuses.
Horowitz is a senior fellow with the Center for Cyber and Homeland Security at George Washington University in Washington.
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