Antitrust and copyright law are incompatible

On October 31, 2022, a federal court stunned the legal and publishing worlds when it sided with the U.S. Department of Justice and blocked the planned acquisition of publishing house Simon & Schuster by the book behemoth Penguin Random House.1 Just a little under a month later, the deal officially collapsed, “paus[ing] consolidation in an industry that has been profoundly reshaped by mergers and acquisitions, with little regulatory intervention.”2 For the publishing world, the court’s order—and the decision by Simon & Schuster’s parent company to terminate the deal rather than seek an appeal of the court order—broke a pattern of rapid consolidation in a deeply concentrated landscape that had dwindled to just five publishers.3 For the legal world, the DOJ’s win marked a rare victory for the new antitrust movement: regulators actively seeking to reform antitrust law away from what they argued was a narrow focus on consumer pricing, toward an expansive, mostly untested interpretation of the law that protected labor markets and curbed corporate power.4

More broadly, the decision was that rare collision between antitrust law and the deeply consolidated copyright-content industries, which many have long acknowledged but about which little has been done.5 Yet, to date, scholars have generally viewed copyright and antitrust as working independently of each other, theorizing that copyright law itself might regulate competition amongst firms through specific mechanisms like safe harbors and compulsory licenses, and in cases of extreme anticompetitive conduct, that antitrust law can step in and regulate discrete antitrust harms like price-fixing.6 But, as this Article argues, neither copyright nor antitrust law alone has been sufficient for addressing the immense concentration of the copyright industries or the anticompetitive practices of new, large technology companies.

Despite the claim that copyright creates a “limited monopoly,” a copyright in a single work is alone insufficient to generate meaningful market power.7 However, the mass aggregation of copyrights can allow a single or small group of rightsholders to charge high licensing prices or even block entry to new creators or disseminators.8 Indeed, just like in the book publishing industry, over the course of the past decade, acquisitions and mergers in the recording, music publishing, and audiovisual space have left just a handful of juggernaut content producers in their wake.9

Furthermore, a different set of competition problems are emerging thanks to the growing role of new technology companies in copyright content industries. In industries with large, entrenched incumbents, disruption has often been considered favorable; copyright and innovation scholars have largely taken the view that competition from companies such as Apple, Amazon, and Google in copyright-dominated industries results in more innovation and better consumer outcomes.10 But this Article discusses ways in which large technology firms may use their economies of scale to engage in loss leading, competing not just in the market but for the market.11 While such strategies present no legally cognizable harm to rightsholders or to competitor distributors in the short term, such strategies are intended to cement the dominance of the technology company in the long term, ultimately reducing the variety, quantity, and quality of goods available to consumers.12

The rise of the large-scale copyright aggregator and the Big Tech loss leader threatens to concentrate market power in the hands of a small number of firms. The prevailing wisdom is that such competition problems should be addressed through antitrust—what we call an antitrust-only approach.13 However, as we argue, both the classic Chicago School approach to antitrust as well as the growing “neo-Brandeisian” approach struggle to deal with the particular policy challenges (and peculiarities) of market power in copyright markets, where what seems to be a “supracompetitive” price may or may not actually be necessary to fulfill copyright’s goal of incentivizing the production of new creative works.14 Indeed, the limits of an antitrust-only approach have become apparent in the aftermath of the DOJ’s victory in Simon & Schuster, with the sale of the storied publishing house to private equity, “a move that would likely lead to absolute devastation [of Simon & Schuster] and wholesale job loss.”15 As one industry outlet put it in the wake of the court’s decision: “While the anti-monopoly movement has a huge victory to celebrate, the publishing industry is left with a sense of impending doom.”16

Existing copyright law, however, is also ill-equipped to address market power in the creative industries. Some scholars have noted that the copyright system contains an internal set of mechanisms designed to police market entry, including compulsory licenses housed within the regulatory state,17 various safe harbors,18 and even the basic mechanics of copyright infringement lawsuits.19 Most of these regimes, however, were crafted in a pre-digital world and thus struggle to effectively handle anticompetitive behavior in the content industries. A copyright-internal approach to market power struggles in particular to make sense of the Big Tech loss leader, who, in the short term, may allow for greater production of easily accessible creative works—an ostensible boon to copyright’s policy agenda—but, in the long term, threatens to erect barriers to entry for new content producers and distributors.

The Article argues, instead, that to address concentration in copyright markets, antitrust and copyright law cannot work in silos. To find a way forward, we consider what may be the only existing legal regime that combines antitrust enforcement with sensitivity to copyright’s policy goals: the consent decrees that manage the music performance rights organizations (PROs) ASCAP and BMI. Thanks to these consent decrees, which were entered into in the 1940s but are still in force today, certain segments of music licensing are regulated,20 including via judicial oversight of royalty rates. Our analysis of rate court adjudications brought under the decrees shows that, far from an outdated relic that parties no longer rely upon, parties continue to call upon rate court judges to adjudicate disputes— especially as new technologies and new modes of disseminating content arise.