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Artist and consumer rights organizations petition Justice Department to block Liberty Media/iHeart deal

Liberty Media is a powerful force in music, with holdings in Sirius XM, Pandora, and Live Nation/Ticketmaster. After the Sirius XM and Pandora deal closed, the rumors turned next to Liberty having an interest in iHeartMedia. A group of consumer rights advocates and an artists’ rights organization have teamed up to send a letter to the Justice Department to oppose that possible acquisition.

The missive argues that Liberty’s broad reach over many aspects of the music industry, with the potential addition of radio, would create less choice for listeners, and a worse situation for artists.

“With its current holdings, Liberty already has amassed monopoly control of the satellite radio market, substantial control over the concert/live performance market, and ownership of one of the top three music streaming companies,” the groups argued. “The potential impact on radio markets is evident and likely catastrophic, removing competitive discipline across multiple market segments.”

The American Economic Liberties Project, the Artist Rights Alliance, the Center for Digital Democracy, the Institute for Local Self-Reliance, the Open Markets Institute, and Public Citizen are the organizations behind the letter.

The full text is copied here:

Assistant Attorney General Makan Delrahim
United States Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530

Dear Assistant Attorney General Delrahim:

Press reports indicate the Department is currently evaluating Liberty Media’s potential acquisition of iHeartMedia.

Musicians, songwriters, and performers depend upon a vibrant, competitive media ecosystem to find and reach fans and audiences and earn fair compensation for their work. On behalf of musicians, songwriters, and performers and groups that oppose corporate concentration, we urge you to reject this massively overreaching effort to monopolize music radio in this country.

With a controlling stake in “satellite radio behemoth” Sirius XM, the largest provider of satellite radio in the US, Liberty dominates non-streaming, non-retail music distribution. Sirius’s recent purchase of Pandora marries that dominance with the free streaming pioneer’s 70 million monthly active users.

Liberty’s 33% stake in Live Nation/Ticketmaster also gives the company substantial influence in the live performance and ticketing sector. Live Nation also has a hand in artist representation, managing 500 artists as of 2016. The Department is familiar with the anti-competitive practices of the events/ticketing portion of Liberty’s business, having just settled substantial antitrust claims based on the company’s forcing concert venues into using its ticketing product and other apparent violations. That settlement extended the original Live Nation/Ticketmaster consent decree for five years and imposed significant additional conditions.

In sum, with its current holdings, Liberty already has amassed monopoly control of the satellite radio market, substantial control over the concert/live performance market, and ownership of one of the top three music streaming companies.

Now, Liberty has expressed interest in acquiring iHeartMedia which is, among other things, the single biggest AM/FM radio broadcaster and a massive nationwide streaming competitor as well. The iHeartRadio streaming service alone has more than 120 million registered users, and the combined broadcast/streaming company touts itself as “the number one audio media company in the US based on consumer reach” with a monthly total reach of 275 million listeners, “greater than the digital audience of Google (251 million, including YouTube) and Facebook (215 million, including Instagram and Messenger) in the US.”

The potential impact on radio markets is evident and likely catastrophic, removing competitive discipline across multiple market segments. The merger of Sirius and XM removed one vector of potential competition. Then, the consolidation of SiriusXM and Pandora removed another. Now consumers face the prospect of their top local broadcast music stations (including markets in which iHeart already owns multiple stations), the massive iHeart streaming network, Pandora, and SiriusXM all being under one roof. Not to mention sharing space there with the Live Nation/Ticketmaster monopoly.

For listeners, it will almost certainly mean fewer options, less diversity, and higher prices. It’s easy to see ticketing offers and exclusives steered to Liberty’s radio channels, shutting out non-Liberty listeners and further undermining competition on the radio subscription side. And will Libertyeven continue to invest in its free-to-listeners AM/FM product when that is competing with its lucrative satellite and streaming businesses?

For artists, the prospects are even direr. Up and coming talent will face an even greater challenges cracking through shrinking nationalized playlists. This challenge will be more daunting if a new Liberty music conglomerate gives preferential airplay and venue access/promotion to its own signed artists. Such preferential treatment would disfavor everyone else and squeeze more diverse voices off digital, AM/FM, and satellite distribution.

This merger will also be a setback in the struggle for fair economics for music distribution, as the new conglomerate uses its massive power to demand cut-rate, below-market royalty rates at the pain of being shut out across these major platforms altogether.

Will anyone be surprised if artists, songwriters, record companies, and PROs that refuse to give in to Liberty’s demands on royalty rates find themselves shut out of access to Live Nation venues and Ticketmaster promotion? Will the new entity squeeze royalties even further for working artists and songwriters – piling on to the lost working-class music jobs seen in places like Nashville, where since 2000, the number of working songwriters has collapsed by 80%?

Independent artists and diverse new voices are already struggling in a consolidated industry, and this will only narrow their opportunities to be heard.

This unacceptable new proposal will put a broad array of music creators at a massive disadvantage in an arena that is already massively stacked against them. Please reject Liberty Media’s bid to acquire any meaningful portion of iHeartMedia.

Sincerely,

American Economic Liberties Project
Artist Rights Alliance
Center for Digital Democracy
Institute for Local Self-Reliance
Open Markets Institute
Public Citizen

Anna Washenko

One Comment

  1. Hey Anna,
    I appreciate your thoughts on this but I think you are way off base.
    It seems to me that you have forgotten that the music industry (Producers and Labels) have been for years getting the lions share of the proceeds from the creative efforts of musicians simply because they control the market. It reminds me of the NFL and football athletes years ago. The musicians have little alternative. So the producers/labels take their music and almost all the streaming royalties giving the musicians peanuts unless they become their touring slave.
    If the musician is “lucky” enough to be picked up by a producer/label then he must give up his music and sign a contract that forces him to endlessly tour and create more music (content) that he must then also give up rights by contract.
    When the musician is older and less creative they don’t even get to own their own music.

    It seems to me that the industry was shook up with introduction of streaming, but, the industry held tight to their fiefdom and figured out how to get around that and replace record sales with royalties. In the old days artists even made more money off record sales than they presenlty do now with streaming royalties.

    I think it is time for a change, and Liberty’s vertical stack may be just the thing. Liberty owning Iheart creates more competition and a better experiance for the artist!!! Actually, artists will be jumping ship from the old industry because of what they will be able to get from a contract with liberty.
    The producers have all there connections and take their fees from ticketing, streaming and concerts, merch, ect.. At least with Liberty it will be all under one roof and transparent based on SEC rules and not back room deals. Liberty will bring the option to the musicians to have poart in many more revenue streams that than the old industry. If you get signed with liberty you will be working with someone who can negotiate contract that would allow the musician to get a % of the ticketing, Merch, Streaming, Videos, cable rights, etc..because one company would have control and scale to make that deal in one contract.

    Also, just like Sirius Radio does with keeping their trial funnel full, liberty would know that they need a funnel of new talent. This would drive them to make more channels for allowing new musicians to be heard. Pandora’s Genome finds new musicians, Siri has new musicians channels, etc….

    You see the old model was the record companies would control what gets played on terrestrial radio to market there new musician under contract. Did you ever hear of Payolla.

    If you own the the vertical stack there is no need for Payola. All some of that has the potential to go back to the artists.

    The system will move closer to the Sports business model and the musicians can get agents and negotiate fair deals with the likes of full stack Liberty.

    Why cant artists be treated like athletes. Liberty’s full stack would be closer to the sports leagues business models. Apple and Amazon would quickly follow suit and try to vertically integrate offering greater competition to get better contracts for the artists. and it would then be better than the sports leagues because there would be better competition.

    What you really don’t seem to understand is that Liberty would not be competing for artists. The artists would be flocking to work for Liberty.
    Then liberty would be competing not against other producers etc, but instead competing against other large vertically integrated music businesses for viewing hours and air time with sports and Racing and movies.

    Do you really think that apple isn’t vertical up using their streaming to up sell their apple platform. Same with Amazon. What do you think Tencent is doing with their purchase of a part of Universal with options to buy more.

    The world is changing. Your article places you in the camp that is trying to hold onto an old an unfair practice just because it has been around for a long time. There has never been competition between Producer/labels. It was always about finding the artists and then controlling them. Unfortunately they forgot to take care of the artists and now change is coming in the name of Liberty Media.

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