They won’t be doing the Macarena at President-elect Trump’s inaugural ball — but not because The Donald doesn’t dance. The music mafia doesn’t want to play for Trump.
More precisely, it doesn’t want to allow the music to be played.
The “mafia” being the two Performance Rights Organization (PRO) “families” — the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI). Together, these PROs own almost all the publication/playback rights to 90 percent of the music ever written.
They have a monopoly.
A legal one (bear with; more below).
If you own a restaurant or bar or other business (this includes streaming music services like Pandora) and want to play music for your customers, you must pay ASCAP and BMI a licensing fee for those playback rights. ASCAP and BMI then pay the artists (composers, musicians and singers, etc.) a percentage of that in royalties.
It’s a very lucrative arrangement… for the mafia.
And like the real mafia, a lot — profit in excess of $1 billion each year.
While it seems like the entire music industry save Jackie Evancho and the Mormon Tabernacle Choir have boycotted President-elect Trump’s inauguration, the lobbyists ASCAP, BMI, and the major music publishers are shamelessly lobbying the new administration to relax the anti-trust decrees that prohibit the monopolies from gouging consumers.
These consent decrees, agreed to with the Department of Justice many years ago, were based on two relevant facts — the first being the monopoly hold the PROs have on music rights. The second being the prospect of that monopoly power enabling multi-level profiteering by the PROs.
This is possible because it is often the case that several artists — in some cases, more than a dozen individual people — have a partial ownership stake in a given work. One artist, for example, may have contributed the “bridge” to a song while another wrote the chorus.
Another writing team composed the lyrics.
Then add the musicians and singers.
But ASCAP and BMI own the rights to everything. Or at least, almost everything (90 percent).
Under the terms of the consent decrees, a single fee is paid to the PROs in return for what’s known as a “whole work” license — and all the artists with a stake in a given song are compensated according to an agreed-upon formula. The single fee structure greatly simplifies the process of obtaining these music rights and ensures all the writers of a song are properly paid.
Also, under the “whole work” licenses required by the consent decrees, businesses like a local retail store or bar do not have to sweat being sued out of the blue by a person claiming to have a partial ownership stake in a given song.
ASCAP and BMI were not happy about the deal they both signed on to — notwithstanding that it enabled them to legally maintain an effective monopoly and rake in billions in profits as a result of that monopoly power. They had hoped the new Justice Department would be agreeable to a fractional licensing system, which would require that before a restaurant or bar or streaming music provider could legally play a given song, a licensing deal would have to negotiated with each and every person holding an ownership stake in that song, no matter how small.
Superficially, this may sound fair — but it would prove completely unworkable in the real world. If fractional licensing replaced the “whole work” licensing structure agreed to under the terms of the consent decrees, a bar or restaurant owner would have to negotiate the same rights to millions of songs, time and time again. It would grind the market to a halt.
Gridlock would be the result.
If a single part-owner of a song withheld rights, the song could not legally be played — and if a restaurant or bar or streaming music service inadvertently played a song that it had negotiated licensing rights with nine (but not the tenth) part-owner, who came out of the woodwork at a later date, they would be open to an expensive lawsuit.
Worse yet, the holdup power created by fractional licensing would result in the same troll-like behavior we see in the patent world. Businesses trying to comply with the law would have to deal with ever-increasing infringement claims.
The likely result would be a much-reduced playback menu as providers shied away from playing any song they weren’t absolutely certain they had cleared all rights.
The fear of the unknown and the legal exposure created by fractional licensing is what the PROs are counting on to raise prices on millions of business across the country.
The Justice Department, following a multi-year review, has already rejected a move to fractional licensing. The issue is now being fought out in the courts.
The incoming Trump Administration should side with the millions of businesses across the country that would be held hostage to extortion if the PROs get their wish to move to fractional licensing — not the music cronies who have hammered the president-elect at every turn.