Free Markets for Music

On Thursday September 12th, Digital Liberty and Americans for Tax Reform joined a coalition of free market groups opposing H.Con.Res 16., the Local Radio Freedom Act. 

Digital Liberty urges representatives not to sign on to H.Con.Res 16 because it would be another layer of government meddling in what should be free market negotiations.  Copyright owners and distributors do not need the government to play middleman. 

The letter makes it clear that government meddling in this arena would stall free market reforms in the music industry before a conversation even begins:

As you may be aware, H. Con. Res. 16, the Local Radio Freedom Act (LRFA) has been introduced in the House.  This resolution is a specific endorsement of the current regime, which offers no meaningful property rights to music performers in regard to transmission over terrestrial radio.  Because this resolution endorses the status quo, it has a chilling effect on the development of a forward-thinking policy that respects the rights of all music producers in all media.  For this reason we urge you to refrain from co-sponsoring H. Con. Res. 16. 

The Constitution protects private property rights and specifically delegates to Congress authority to protect creative works. Unfortunately, LRFA closes the discussion about how best to protect property rights by resolving that terrestrial radio should never pay performance royalties on music broadcast on their stations used for raising advertising revenue.  This is not equitable treatment for any musical artist or music distribution service.

On March 25, 2013, Americans for Tax Reform sent a letter to the Judiciary Committee outlining what copyright reform should look like in regards to musician compensation and the distribution of creative arts. 

In an increasingly interconnected world where competition is not platform based, we must consider the entire universe of music distribution and how copyright is applied before making reforms. Artists and distributors, as complimentary parts of the market, should have the opportunity for free-market negotiations, as do many other businesses. 

The entire existing price-controlled arrangement is unfortunate and unnecessary. Instead, all parties, e.g, writers, artists, recording companies, broadcasting companies and others, should be allowed to negotiate mutually agreeable terms. There is no way, ultimately, for a legislator to decide what the fair market value of a product or service is. That is what the market is for. We believe H.Con.Res 16 could hinder this discussion by examining one music distribution service in a vacuum.

We should move toward a market where setting prices, forbidding actions on one side or the other, preventing the acceptance of payment for one service or another, or prohibiting collection of compensation for the use of property are things of the past.

We cannot look at music distribution services in a vacuum.  We cannot look at different platforms or business models as if no other music distribution service existed.  These models and platforms are changing quickly; the best way for the industry to function effectively is without government involvement through free market negotiations.

The House and Senate should practice regulatory humility and remove all legislation from business negotiations.