When Two Companies Control 90% of the Market - It’s Not a Free Market
Do Not Pass Go. Ever
Many self-described free marketeers vociferously oppose antitrust laws:
“Antitrust laws also referred to as competition laws, are statutes developed by the U.S. government to protect consumers from predatory business practices. They ensure that fair competition exists in an open-market economy.
“These laws have evolved along with the market, vigilantly guarding against would-be monopolies and disruptions to the productive ebb and flow of competition.
“Antitrust laws are applied to a wide range of questionable business activities, including but not limited to market allocation, bid rigging, price fixing, and monopolies.
The problem for these self-described free marketeers is - if they oppose antitrust laws…they aren’t actually free marketeers.
Because one or a few companies overwhelmingly dominating a market - inherently means the market isn’t free.
With that dominant market power, these companies can artificially warp the market to their will.
In part - by anti-competitively crushing any competitors that might attempt to arise.
In part - by crony-ing up with government to ensure things continue to always go their way.
We’re certainly encountering this with the Leftist Big Tech companies - Facebook, Twitter and Google (owner of YouTube).
They have been massively abusing their nigh-monopoly market dominance.
Conservatives aplenty have been kicked off the Big Tech websites. And they can go…where, exactly, to replicate the audiences they’ve built?
Without a Web search, name for me a please a competitor to either Facebook, Twitter or YouTube. I’ll wait…. You can’t - because there actually aren’t any.
When Big Tech silences you - you’re silenced.
And Big Tech has long been bribing the living daylight out of governments everywhere - to ensure nothing will be done to alter their de facto universal rule.
Forget Wall Street – Silicon Valley Is the New Political Power in Washington
A lesser known example of this anti-free market monopolistic dominance - is the music royalty business.
Behold ASCAP and BMI - who together control the performing rights to approximately 90% of all songs.
What this means is: Just about ANY place that wants to play music - either prerecorded or live - must go through ASCAP and/or BMI.
And this certainly means the VAST majority of the most popular tunes and artists - given ASCAP and BMIs overwhelming dominance.
This absolutely means even the tiniest of places - coffee shops, mom and pop stores, bars, restaurants, hotels, retail stores,.…
ASCAP and BMI do perform a helpful service. They give these venues one place to pay all royalty rates - rather than impossibly having to chase down and negotiate with each artist and performer individually.
ASCAP and BMI have 90% market share not because they’re excellent at what they do. They have it because they are a cartel - created by the music publishers.
Music publishers - should be free market rivals. And they are - except in music licensing.
In music licensing, publishers combined their market share into these two institutions - ASCAP and BMI. What this was - was the creation of a cartel. What this is - is actual, in-practice, Russian-free collusion:
“The indicators used by the Antitrust Division in detecting antitrust violations are patterns of behavior or transactional records that suggest some sort of agreement among competing companies.”
Which artificially delivered the publishers massive leverage - and the ability to massively price-gouge.
For decades, these cartels choked to death music performers and music-playing venues alike.
Until 1941 - when the Department of Justice (DoJ) stepped in. And introduced the consent decrees:
“ASCAP and BMI are governed by ‘consent decrees’ originally issued by the US Department of Justice (DOJ) as a means to curb the anticompetitive tendencies of the publishing sector….
“Back in 1941, there was only one legally recognized copyright in music—the musical composition—and the balance of power in the industry was heavily tilted to the music publishers and ASCAP.
“At the time, ASCAP acted as a kind of gatekeeper to the world’s most valuable musical repertoires, to the extent that the DOJ took action that same year to balance the scales. The result of this intervention are consent decrees that, to this day, govern how radio, whether AM/FM or digital, licenses compositions….
“Intended to promote competition in the marketplace for musical works, the consent decrees encourage ASCAP and BMI to compete with one another to attract licensees and recruit new songwriter/publisher members.”
The consent decrees - truly do assist all the Music Little Guys. Anyone trying to break into the business ASCAP and BMI dominate:
“Under the blanket licenses made possible by consent decrees, a performance of a song published by a small independent publisher is worth just as much as a performance of a song published by a huge multinational….
“The arrangement is also useful to emerging services that may not have the capital or clout to cut direct deals at the rates demanded by the big publishers….”
Except…periodically, ASCAP and BMI try to get the Justice Department to modify their consent decrees.
I.e.: ASCAP and BMI kick up the cronyism. And try to get the DoJ to allow them to again slam down the lid on the marketplace they used to singularly control - and wish to singularly control again.
That time of attempted DoJ cronyism - is again upon us. Attorney General William Barr - gird your loins:
ASCAP and BMI Call On DOJ to Replace Consent Decrees: Open Letter:
“(T)he two performance rights organizations have issued an open letter endorsing that the DOJ replace the consent decrees with ones that would offer music users many of the same protections they now enjoy, albeit with a sunset clause.”
ASCAP and BMI are yet again asking for the DoJ to end the anti-duopoly protections - that have kept music royalties palatable for nearly eighty years.
And ASCAP and BMI manage to ask - with a straight face - for this duopoly reinstatement…in the name of the free market:
“We believe that a free market with less government regulation is hands down the best way for music creators to be rewarded for their hard work and intellectual property.
“A free market would create a more productive, efficient and level playing field for everyone involved. Competition is a good thing.”
Except the only thing preserving a free market in the music royalty business - is the consent decrees.
Without them, we go back to the bad old days when royalty rates killed every Little Guy trying to do anything anywhere with music.
As someone who once tried to sell fifteen million records, I know first hand that the littlest of the Little Guys in the music business - is the unsigned songwriter/performer.
Ending the consent decrees - will make those tiny people even smaller…cowering in the giant shadow cast by ASCAP and BMI.
Songwriter/musician Matt Fitzgibbons knows it:
William Barr Must Choose Between Protecting Local Musicians or Enriching Big Music:
“As a songwriter and musician, I am disappointed that the Department of Justice is considering removing the monopoly protections that have for decades protected local musicians like me from Big Music’s overreach and abuse….
“Why the Justice Department is revisiting this issue when it just finalized a two-year review of their agreements three years ago, in which it decided that they should remain unchanged, is anyone’s guess.
“While there are certainly far bigger fish to fry at the DOJ, it seems that whenever Big Music cries loudly enough it finds a shoulder to cry on in Washington.
“One thing’s for certain, though: what is good for Big Music almost always represents a disaster for everyone else in the industry and removing these DOJ agreements would be of no exception.”
So this is one of those instances in DC where the best move - is no move at all.
Attorney General William Barr and his DoJ - should keep the consent decrees exactly as they are.
What’s worked for eighty years - ain’t broke.
And if it ain’t broke - don’t “fix” it.
AG Barr: Don’t just do something - stand there.
This first appeared in Red State.