By Ed Brodow
Being a former Fortune 500 sales manager and Marine Corps officer might seem like two different career paths, but they are more similar than most people realize. Both require steady discipline, the ability to make lightning-quick decisions that affect others, and the maturity to take full responsibility for one’s actions. In a free market, a sales managers’ decisions might not mean life or death as they do in the Marine Corps, but they can mean the difference between profit and loss.
But when the government overextends itself in the marketplace – whether in the Armed Forces, with monetary policy and Wall Street, or elsewhere in the economy – it often tips the scales away from proper decision-making. Rather than determining what is best for the customer, the government sets the rules to favor those who are politically connected. Washington is replete with examples where the most creative and innovative ideas are shoved to the side for those who gave the most money or hired the best lobbyists.
“Draining the Swamp” last November was an effort by voters to put a swift end to this type of crony capitalism. Unfortunately, the swamp will not be drained quickly, no matter who is in the Oval Office – not when Congress is yet to get on the same page. A testament to this unfortunate truth came last month when the House included a provision in the Music Modernization Act that is likely to short-circuit a competitive marketplace and replace it with a crony, government-controlled system.
The issue at hand deals with the way publishers and composers receive compensation for mechanical licenses, mainly from streaming services. Rather than create a mechanism to foster competition, Congress drafted legislation to create a government-knows-best approach that will stifle technology and innovation while ensuring the influential and powerful get rich.
Here’s how it works. The legislation creates a government-controlled mechanical licensing “collective” that will be paid for by higher fees on streaming services. The collective’s board, comprised of representatives from the crony music publishing world, will determine the rate structures. This collective will single-handedly decide which company will be responsible for collecting and distributing the fees – pulling the plug on the growing and competitive marketplace where companies currently compete and replacing them with one entity that the Washington political scene controls.
As is typical when bureaucrats call the shots, it is likely that one of the most well-connected industry players will get the contract rather than the most creative and technologically advanced. By stifling competition, innovation and investment will suffer. Consumer utility will undoubtedly decline as prices potentially rise. Everyone will lose at the expense of those that have the best lobbying presence in our nation’s capital.
Given that Republicans control both houses of Congress, Washington’s footprint should be getting smaller, not larger, in industries like the music arena. The wealthiest music publishers and Hollywood elites have derided and stymied the GOP for far too long. The worst thing Congress could do is throw them a life vest now while they are in power. Here’s hoping that our representatives in the Senate stand up for the free market principles they espouse and right the wrongs made by their colleagues in the House now before it’s too late.