Hometown Cronyism is Still Cronyism

Tennessee’s US Senators Lamar Alexander and Bob Corker are both given to espousing their “conservative principles” especially in proximity to an election campaign. Indeed, both have actually cast their fair share of conservative votes, but when it comes to doing the bidding of their home state industry, their grasp on the precise definition of either conservative or principles is tenuous at best.

The music industry is obviously big in Tennessee. The music industry also happens to be one of the most aggressive rent seeking, cronyism-reliant industries in the game today. The industry has refused to evolve with the world around it, preferring instead to run to government and seek new laws to kill new technologies and use the force of the state to mandate higher profits for themselves.

The industry’s newest gamut to prop up their 1940’s business model is known as the “Songwriter Equity Act” which is intended to change the formula used to set royalty rates for musical compositions. This legislation is the epitome of cronyism as the formula is rigged to move one direction--upwards--and it was introduced by none other than Senators Lamar Alexander and Bob Corker.

Of course they have attempted to make the crony shaped peg fit into the conservative shaped hole saying this is an issue of fairness and using phrases like “fair market value.” The truth is that there is little that resembles a free market in the music industry especially as it pertains to songwriters and publishers who have a long history of colluding and extorting licensees.

Copyright laws rightfully give songwriters absolute control over their works which they typically assign to major publishing companies. The issue arises in the structure of how licenses for using songs are negotiated and controlled. Effective control of 100% of all musical compositions is aggregated in three organizations that deal with those who wish to license music. These three organizations,the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and the Society of European Stage Authors and Composers (SESAC) don’t reveal which precise musical compositions they control. The result is absolute control and the absence of any competition or free market pressures.  Radio stations, restaurants and anyone seeking to play music must buy a license from all three organizations or risk millions of dollars in infringement fines. Playing one song without  license will cost you a cool $150,000. Total control of course includes the power to set prices and determine prices. That is why these organizations have been found to be true monopolies and are required to operate under consent decrees which empower a U.S. Court to set the royalty rates in the event the industry tries to impose monopolistic rates. The Court uses a pre-set formula for setting rates that is intended to determine what the cost would be in a real market place.

The publishers and songwriters recently attempted to use their domination to bully Pandora into exorbitant rate hikes but were defeated in federal district court so now they want to re-rig the formula used by the court. That is precisely what Corker and Alexander’s Songwriter Equity Act does. If passed the legislation will artificially increase the rate music licensees pay and could ultimately put platforms like Pandora out of business.

This is not innovation. This is not free market. It certainly isn’t an example of conservative principles at work.  The fact that Corker and Alexander’s hometown industry supports this bill doesn’t make it any less crony and should not give them a pass. Too many politicians who claim to be conservatives show up to Tea Party rallies to give speeches and get photographs for their campaign mailers only to jump on  board with legislation that undermines liberty and free markets to help out their buddies and campaign contributors.

To be fair, few politicians actually set out to blatantly perpetuate widespread cronyism in America. But every Senator and Congressman has a hometown industry and every hometown industry has an agenda that in some way seeks a leg up from government. It is the same selective home town cronyism being displayed by Corker and Alexander with their music industry legislation that has filled the books with so many egregious laws that are strangling the free market in modern America and bankrupting our nation’s treasury.

Both Corker and Alexander should be reminded that there are no geographic caveats to conservative principles. Hometown cronyism is still cronyism.

E-mail me when people leave their comments –

You need to be a member of Command Center to add comments!

Join Command Center