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Music Industry Should Not be Granted a 'License' to Engage in Anticompetitive Practices

ASCAP seeks permission to engage in anticompetitive practices ASCAP seeks permission to engage in anticompetitive practices[/caption] For the last several years, the music industry has been pushing back strongly against the consent decree from the 1940s, that protects consumers of music licensing against the near-monopoly market power held by groups that represent music publishers. Those groups, the largest of which are the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI), without the consent decree, could otherwise charge excessively high licensing fees to store, restaurants, music streaming services, and other consumers of music licenses. ASCAP and BMI control the licensing over about 90 percent of all music compositions. While the Department of Justice (DOJ) has been reviewing the consent decree over the last two years, the music industry is pushing hard for terms that will allow them to use monopoly power to extract higher licensing fees from consumers of music. The latest move by the industry is the push for what is called “partial withdrawals.” If the DOJ allows this, it means ASCAP and BMI can selectively withdraw rights, and license those rights outside of the consent degree to individual licensees. By doing this, they can leverage their market power free from the restraints of the consent decree, and raise the price of music across the board. That is exactly what will happen if the consent decree is voided or weakened. Before the courts threw out rates set in this manner due to collusion and anticompetitive practices, two of ASCAP’s major publishers were able to leverage their market power against the threat of infringement liability to force Pandora to pay significantly higher rates. Again, the courts rejected this practice and the higher rates that were extorted under the practice. That is why ASCAP is asking DOJ to grant them this authority. The consent decree, which has been in place for 75 years, is necessary because there has been little change in the ownership concentration of music licenses since the decree was agreed upon. Despite this, anticompetitive practices are still a threat. This is illustrated in cases like Pandora vs. ASCAP case, which could have resulted in online music streaming services such as Pandora paying higher royalty fees that could have put them out of business. In fact, two federal courts suggested the much smaller collective SEASAC (which controls less than 10% of music compositions) was considered a monopolist by two federal courts, and forced to settle two separate antitrust suits. In the news this past week, ASCAP settled with the DOJ as a result of an ongoing probe, and ASCAP agreed to a heavy fine and changes in its licensing practices. After the Southern District of New York’s scathing rejection of ASCAP practices, DOJ investigated ASCAP for collusion with its major publisher affiliates and advance payments for exclusive licensing, which is prohibited under the current consent decrees. Demonstrating either unparalleled bravado or complete tone deafness, ASCAP continues to pressure DOJ to further relax the antitrust consent decree, despite the fine and settlement this past week for non-compliance with the existing consent decree. ASCAP and BMI, which have been pushing for years for weakening of the consent decree, are asking DOJ to rewrite the consent decree to give them a right that was rejected by the courts in allowing selective withdrawal rights. The DOJ should not reward bad behavior, by granting this weakening of the consent decree requested by ASCAP, that will allow and enable anticompetitive practices. While ASCAP has shown it has little desire to comply with the current consent decree, why would it be more willing to comply with looser restrictions on their monopoly power? By weakening the consent decree, the DOJ will ensure that local businesses from restaurants and retail stores and radio stations and hotels will pay more in music licensing fees. This increase in fees will not be the result of improvement in the product, but it will be due to higher fees from the permitted abuse of market power.]]>

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