Business

Trump's Justice Department Loses Its Tune On Music Licensing

The Justice Department building
Samuel Corum/Getty Images

The Justice Department building on a foggy morning on Dec. 9, 2019 in Washington, DC.

The outgoing administration had been eyeing the deregulation of licensing, which could have spurred price hikes and lack of access to libraries.

Of the 158 million Americans who voted in the recent presidential election, likely zero did so with music licensing rules in mind. Nevertheless, the election has already proved consequential for the song industry. When Donald Trump leaves office today (Jan. 20), it’ll be a mild surprise that key restrictions on ASCAP and BMI — the two largest performance rights organizations — will survive his administration.

Those restrictions date to the early 1940s, when the Department of Justice settled an antitrust investigation into how a group of composers and publishers had gained enormous power by pooling rights. Since then, thanks to the ASCAP and BMI consent decrees, anytime a TV or radio broadcaster, sports stadium, restaurant, etc. wants to play a song to the public, they can get immediate access to a repertory without negotiation. If there’s an objection to the fairness of the blanket license flat fee, that dispute goes to a federal judge in New York.

Thanks to this system, musical selections on loudspeakers abound without friction, because negotiating each and every song is unnecessary. Trump’s shocking ascension to power in 2016 swept in a bunch of political appointees intent on deregulation throughout the federal bureaucracy.

One of them was Makan Delrahim, who became chief of the DOJ’s Antitrust Division. Skeptical of remedying anti-competitive conduct through never-ending rules, his office secured judicial permission to terminate hundreds of long-lasting settlements, including the Paramount Consent Decrees, which for nearly three quarters of a century had governed how studios package movies for theaters.

But in song licensing, Delrahim met his match. More than 800 letters to his office, some from such powerful interests as the National Association of Broadcasters, urged the status quo, fearing price hikes and lack of access to music libraries. And truth be told, ASCAP and BMI weren’t ready to rip up consent decrees.

Instead, they wanted modifications, including the ability to deliver just partial song licenses plus the ability to move into other rights markets. Had the presidential election gone differently, the public playing of music might have fundamentally changed, with potential further deregulation toward a freer marketplace for songs, where rights holders have more power to control circulation.

Instead, it’s a footnote. Just after tendering his resignation Jan. 13, Delrahim chose to give one of his final speeches in office in Nashville, on the topic of the ASCAP/BMI consent decrees. He urged further review “every five years” and added that “compulsory licensing is not the answer.” In an exit interview to the Wall Street Journal, he admitted that changes to song licensing rules that predated the country’s participation in World War II became “very difficult to do in the time we had.”

This story first appeared in the Jan. 20 issue of The Hollywood Reporter magazine. Click here to subscribe.