More Wasteful Spending: Feds Subsidize Independent Music

We’re heard time and time again that the federal government is having to make tough decisions to avoid the sequester, which are simply cuts to the rate of spending increases. However, Washington is still spending taxpayer dollars on completely wasteful endeavors that the simply should not be subsidizing.

The Wall Street Journal reports that the International Trade Administration, part of the Department of Commerce, spent $300,000 last year to help independent record labels promote their artists and products overseas:

For the first time, the U.S. government’s trade arm is stepping in to help the music business, funding trade missions to Brazil and Asia in recent months for the heads of a dozen independent music labels, which make up one-third of the U.S. music market.

It is a departure for the International Trade Administration, which has been spending $2 million annually to boost exports for the past two decades under its Market Development Cooperator Program but has never before given one of its $300,000 grants to the music industry, instead favoring sectors like machinery, technology and engineering services.

“We need to find new revenue streams,” said Rich Bengloff, president of the American Association of Independent Music, whose idea it was to apply for the grant. He led the trips and arranged meetings with local distributors, mobile-phone carriers, booking agents and ad agencies. “We now need to adjust to a smaller monetization at home.”

It’s also worth noting that there was a proposal — the “MUSIC Act” — introduced in the last Congress by Rep. Jarrod Nadler (D-NY) that would have given indie labels a $1 million subsidy each year to “assist indie music labels and their artists to attend international music trade shows.” The MUSIC Act was never brought up for a vote. But back to the larger point here.

The music industry has been struggling, and independent labels (or “indie labels”) are feeling the crunch, but most of its financial problems come from a failed business model. The Wall Street Journal attributes this to free music services like Spotify and Pandora. It’s worth noting, however, that those services do pay artists and, ostensibily, record labels.

Music piracy is another issue because the jury is still out on whether or not illegal downloading is actually affecting the industry in a negative way. Moreover, record sales were up last year for the first time since 1999 and labels have found additional revenue streams with what are known as “360 deals,” where they get a cut of all of an artist’s ancillary income — tour revenue, merchandise, publishing royalities, record sales, etc.

Indie labels do face a larger hurdle to overcome, but taxpayers shouldn’t be subsidizing them. It’s incredibly ironic, as Nick Gillespie writes, that they they are considered to be “independent,” when it’s receiving subsidies from the government. This is much an example of cronyism as any government collusion with a major corporation or failed green energy company.

If record labels can’t afford to invest on their own dime, perhaps we should be letting them fail, rather than propping them up. Part of owning a business — whether it’s a record label or a restuarant — is you make investments to get into new markets, you don’t rely on taxpayers to provide you with funding.


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