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Let Freedom Sing … Properly

Mises Daily: Saturday, April 01, 2006 by

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[Editor's Note: Due to a vaguely remembered booze-filled night that resulted in a row with the wife, a future court appearance, and — worst of all — a lost bet, this page has been loaned out to a man of very little reputation but very large aspiration to write for his beloved, hometown New York Times. I am certain my readers will understand that a man must keep an honestly, if drunkenly, sworn oath; so until monday, I extend to you my best regards and wishes.]

"The monopoly capitalists weave around art a complicated web which converts it into a willing tool. Rebels are subdued by its machinery and only rare talents may create their own work. The rest become shameless hacks or are crushed." — Che Guevara

A recent article in the New York Times Sunday Magazine ("Mariah Carey Sings the Same Ol' Tune: Greed" February 31, 2006) shows that the current administration's effort to promote competition in the music industry is picking up steam. Last month Arnold Tinker, spokesperson for the Department of Justice, said during the official press conference that "Mariah Carey's continued refusal to abide by the strictures of the 2004 agreement on uncompetitive practices has led us to invoke Article 56 of Section 8 from the same". Mr. Tinker is referring to the agreement Ms. Carey signed with the department in March of 2004, in which she agreed to help promote competition by releasing a single of one local artist on each disc from the district where the disc is offered for sale.

"Ms. Carey" continued Mr. Tinker, "has the possession of monopoly power in the relevant market and has used her willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. This is exactly what the public expects us to protect them against."

Government attorneys and music industry activists claim that Ms. Carey uses her market power to maintain her grip, often to the tune of 85-90% of the female pop sector's total sales, according to industry experts. "It's like I can't turn on the radio without hearing one of her songs…it's awesome!!!!" says Mrs. Debra Maloney, of Long Island, New York. But screaming fans aside, Ms. Carey's dominance of her market has important implications to the long-term health of the music industry.

Between the massive radio airplay, endless appearances on Mtv, and her exposures on the E! Channel, Ms. Carey's power within the industry is well respected — if subtlety feared. Her latest album The Emancipation of Mimi has already sold over five million copies in just its first year of issue and, even months after its release date, still dominates sales charts. At press time, five singles from the album have muscled their way onto Billboard's Top 100. Committee chairman Sen. Orrin Hatch, R-Utah, recently noted that Ms. Carey has seen sales of "breathtaking growth … (which) has for many raised serious questions about the future of competition and innovation in the music industry."

Sen. Herb Kohl, D-Wisconsin, was more pointed, almost lecturing the pop diva during her televised appearance before the committee, "Ms. Carey, no one — no matter how powerful — is above the law." He and other senators said they had not prejudged Ms. Carey's business practices or the musical merit of her work. "I will admit, whenever I hear Ms. Carey's Don't Want To Cry it takes me right back to my high school days, I'm sitting in my Camaro having a good cry over a fight with my girlfriend at the time, who is now my lovely wife and mother of our six children", he related to reporters.

While historians and economists might point to the opinions of Alexander Hamilton ("Monopoly can only exist where force exists.") and Ludwig Von Mises ("The monopoly problem…is a product of purposive action on the part of governments."), many dispute these assertions. However, New York's Attorney General Eliot Spitzer agrees, stating in a recent interview, "Exactly, and now that the force of government has been put behind the public good, monopoly will not exist in the music industry, nor any other. Purposive action on the part of the government will be to prevent monopoly rather than to foster it."

Join Together With the Band

"Our individual lives cannot, generally, be works of art unless the social order is also." — Charles Horton Cooley

Ms. Carey is not alone in her troubles with anti-trust regulators. The Rolling Stones are also a band that advocates for fairness in the music industry have had chance to cheer against in federal court. Under their landmark agreement signed with the Department of Justice in April 2000, the band agreed to help promote competition by releasing a single of one local artist on each disc from the district where the disc is offered for sale - at the time a groundbreaking penalty, if common today. The band has taken pains to balance its responsibility to the public with a commitment to keeping the music profitable. "Congo was the toughest, a nightmare", Mick Jagger, the band's lead singer recalled, "Between the mortar bursts, machine gun fire, and the screams of wounded people, we could hardly hear some bands audition. Plus, three of the bands lost key members to kidnappings before we could even record their songs. The ransoms put the whole project into the red right at go".

But not all bands see the bottom line as the only reward for their effort. U2's Bono, a fierce advocate for local musician's rights, most recently played back-up on a hollowed out human skull with members of Papua New Guinea's Huli tribesmen. "It was from one of their most esteemed chiefs, from hundreds, if not thousands of years ago. I sensed their history playing out on my every breath. You can't put a price on that."

Yet with average CD prices now $37, government subsidies to popular musicians are coming under attack. "Our government is, as always, pandering to the moneyed interests. Those subsidies should be given not to the famous stars but used to support local based music centers. If we're going to promote competition, we should do it at the source", states Lauren Hinkleman, an activist for local musician's rights. But established musicians insist that CD prices have risen on account of the added cost of finding and recording so many local musicians and would be even higher without the subsidies.

Ms. Carey's lead attorney, Mr. Harold Ramstein, said that government lawyers had a skewed view of how the industry works, saying, "In the end, the music industry, which contributed over $100 billion to the world economy last year, is an open economic opportunity for any entrepreneur in America, the world even."

And the U.S. Congress along with State Attorneys, notably Eliot Spitzer, are working on legislation to keep it that way, raising the penalties for non-competitive practices in the music industry, calling for higher fines and even revocation of licenses to play. A Department of Justice source responded via e-mail, "The abuses seen during the 1960s, when musical tycoons such as the Beatles dominated sales, cannot be allowed to re-surface. The days of unregulated, laissez faire music are, thankfully, over".

As government attorneys forcefully stated: "Ms. Carey's dominance in her market — females from the important 12-32 age group — present an almost insurmountable barrier that would prevent an aspiring entrant into the relevant market from drawing a significant number of customers away from a dominant incumbent, even if the incumbent priced its products substantially above competitive levels for a significant period of time." They cited as evidence over three hundred different local artists, whose albums, though priced at substantial discount to Ms. Carey's standard price of $37 a unit, lay unsold, clogging up garages, bedrooms, and public storage units throughout Western Europe and the US.

Some economists state the impossibility of a monopolist setting both the price and quantity sold, for this would give them power to do anything they please. They believe such power cannot and does not exist. When shown the high-lighted passages from Carl Menger's Principles explaining this, Eliot Spitzer warned "these numbers from Western Europe and the US don't even begin to include those in the Far East, and my people are working on it!" Such talk has musicians keeping close tabs on their lobbyists' efforts in our nation's capital.

But many activists for fair competition point to the plight of unknown musicians who, unlike well established acts such as Ms. Carey and the Rolling Stones, don't have the resources for high priced lobbyists. They give sixteen year old local musician Becky Gebeam as a prime example of the harsh results to be expected from monopoly's cruel, cold focus on profit and market share. Ms. Gebeam's mother produced and printed 5,000 copies of her debut album I'm Getting A Car. Hopes were high in the Gebeam household, yet there are now around 4,996 copies of the eagerly anticipated debut taking up space in their garage. The Gebeams blame Ms. Carey for the shortfall in sales.

"The date for Ms. Carey's Madison Square Garden concert just happened to fall on the same night as my daughter's album release party. Do you think that was just a coincidence?" In court documents obtained by this paper, she claims that all her daughter's girlfriends went to the concert instead of her daughter's album release party at the banquet hall she'd rented. She is suing Ms. Carey for scheduling her concerts in a "predatory manner designed to restrain trade" and hopes to recover the costs of the hall rental, noting its $23,550 tab. Ms. Carey's attorney insists that she has never heard of Ms. Gebeam and was unaware of her album release party. Summer interns from Eliot Spitzer's office are currently in Mrs. Gebeam's Paterson, New Jersey garage counting the unsold albums. "And those numbers won't even begin to include those in the Far East!" warns Mr. Spitzer.

Ms. Carey is vigorously fighting the charges in court. Her lawyer stated, "Ms. Carey has always striven to abide with her agreement with the Department of Justice. While making her music she always keeps in mind her responsibility to the public good as her past and present efforts to promote competition prove." But this is not the first time Ms. Carey has come into the regulator's cross hairs since her 2004 agreement. Just last year rumors of a planned tour with Aretha Franklin, a titan in the soul music segment with over 81% of market share, prompted anti-trust rumblings from Washington. Ms. Carey and Ms. Franklin both quickly denied any intentions to tour together and a federal probe found no cause for sanction.

Yet this will likely not help Ms. Carey in this instance, with Mrs. Gebeam's recent, emotional testimony before the committee a hard blow to Ms. Carey's case, according to government sources and public opinion polls.

Standing before the senators and cameras with newly frosted hair and nails of a luminance which screamed of professionally delivered perfection, Mrs. Gebeam turned to the chamber and asked, "How many here have heard Mariah Carey's new single, We Belong Together? Almost every hand shot skyward accompanied by screeches of delight from a group of Ms. Carey's fans. "And how many have heard Becky Gebeam's new single, Tuesday Is a Temper Tantrum?" Every hand descended. Turning dramatically to the senators, Mrs. Gebeam forcefully proclaimed, "That is a monopoly!"

Is it? Only time, delivered on the slow wheels of justice, will provide us an answer.

"Let justice be done, though the world perish." — Ferdinand I

[Editor's Note, Redux: We here at Mises.org are both ideologically and morally inclined to view any assaults on private property as repugnant, and, even more to the point, irrational and counterproductive from an economic perspective. We are fully sympathetic to Ms. Carey as an individual and as a fellow human being. However, even we have our limits - the moment has finally arrived where we will throw our arms around Keynes, emancipate ourselves from preconceived ideas, and realize that in the long run we too are dead. For if the laws of economics, to which we pay endless, well-deserved homage, can be harnessed to create an artificial shortage of Mariah Carey's musical output, here, at long last, is a government intervention we can heartily approve of. As our esteemed Ludwig Von Mises would say in such a situation, Das ist nur ein Aprilscherz.]


C.J. Maloney lives in New York and works on Wall Street. Send him mail. Comment on the blog.