If the newly passed Music Modernization Act (MMA) delivers more streaming revenue to music publishers and songwriters, who will see their slice of the pie shrink? That’s a question weighing on the minds of some record-company executives as the industry wraps up its celebration over the passage of the historic act and prepares to carry out the new law’s mandates.
The Music Modernization Act was signed into law Thursday by President Donald Trump, witnessed by a smattering of industry executives and such recordings artists as Kid Rock and John Rich. After an effort that began years ago and was renewed last year, the compromise legislation, which ultimately took much more compromise than the initial version of the bill anticipated, will present a whole new set of business conditions on the music publishing industry that hopefully will be worth with the reward of higher rates for songwriters and publishers.
The Music Modernization Act is not the law of the land yet, but it’s pretty damn close, as the House of Representatives today (Sept. 25) unanimously approved passage of the U.S. Senate’s version of the bill, which had itself been approved by that chamber last week. Now, the MMA is off to the White House where it will await the signature of President Donald Trump before becoming the law of the land.
The long road to copyright revision is nearing its end as the U.S. Senate passed the Music Modernization Act by unanimous consent Tuesday (Sept. 18). The move mimics the House’s unilateral support, previously passing the bill by a vote of 415-0 back in April. Now the Senate version of the bill will go back to the House where it needs approval due to all the changes made to the bill in order to get it passed in the Senate.
On Monday (Aug. 6), the Recording Academy launched a social media campaign targeting SiriusXM and Music Choice, both of whom are against different portions of the bill. On July 30, Music Choice filed paperwork signifying the company had brought on a new lobbying group to oppose a change in the rate standard portion of the bill. The next day, SiriusXM filed similar paperwork after hiring a new lobbyist to help them continue to oppose the Classics component of the MMA.
The vicious infighting between SESAC/Harry Fox Agency owner Blackstone on one side and two songwriter organizations on the other has ended with a compromise that sees the PROs now giving unconditional support for the Music Modernization Act. From superstar acts to DIY artists and all kinds of music composers in between, songwriters all across the U.S. have been tweeting up a storm for the last 10 days, accusing Blackstone of trying to introduce a change into the law that — in the songwriters’ view — could potentially derail it.
The revised and amended Music Modernization Act that got the okay from the Senate Judiciary Committee June 28 was still garnering accolades from all sides of the music business days after its passing. Yet, the proposed amendments to the bill — some that were added in the Senate and some that are still under consideration by lawmakers — are also raising new questions and concerns, including how to pay for the proposals.
Meanwhile, the clock is ticking: the Senate needs to act on the bill before this Congressional term ends; otherwise lawmakers and music industry lobbyists must start the legislative process again next year after the fall midterm elections bring new officials into Congress.
The House Judiciary Committee on Wednesday unanimously approved the Music Modernization Act (MMA), an omnibus bill that would bring the biggest changes to how music is licensed and paid for in more than a generation. The vote was 32-0.
The bill incorporates components of four other bills that were originally introduced separately. They include the original Music Modernization Act, which for the first time creates a blanket license for mechanical rights in the U.S. and establishes a new organization to administer the license and collect the royalties; the CLASSICS Act, which requires digital radio services to pay performance royalties for previously exempt pre-1972 sound recordings; the AMP Act, which codifies current industry practice of honoring so-called Letters of Direction by artists who wish to share performance royalties with producers and engineers; and a provision taken from the Fair Play, Fair Pay Act that establishes a new, “willing buyer, willing seller” standard for setting statutory royalties.
Left out of the bill were other elements of the Fair Play, Fair Pay Act that would have required terrestrial radio stations to pay performance royalties for sound recordings. That provision was strongly opposed by broadcasters and their opposition could have derailed the omnibus bill had it been included.
Although supporters of performance royalties for radio play, primarily the record labels, vowed to push ahead on those provisions their exclusion from the MMA leaves their fate far from certain. The National Association of Broadcasters has successfully resisted similar legislative efforts over many years, and without the cover of the broad coalition backing the MMA the labels’ efforts could be thwarted again.
National Music Publishers Association CEO David Israelite, a principal architect of the MMA, praised today’s vote.
“The House Judiciary Committee’s approval of the Music Modernization Act (MMA) is a critical step towards finally fixing the system to pay songwriters what they deserve,” he said in a statement. “There is unprecedented consensus and momentum behind this bill, and we look forward to seeing it soon pass the full House.”
Although no date has been set for the bill to be taken up by the full House, it is expected to get a vote within the next several weeks.
The Senate has yet to take up the bill in its current form, although individual elements of it have been introduced there. The Senate is not obligated to follow the House’s lead in combining the four individual bills, but the broad support for the bill from disparate industry groups, and the rare display of unanimous, bi-partisan support for it from the House committee is likely to create strong pressure on the Senate to follow suit.
“After years of compromise and collaboration across the music, tech and policy sectors to reach this point, the Music Modernization Act of 2018 will help songwriters to be better compensated for their work and positively impact how their music is licensed,” Copyright Alliance CEO Keith Kupferschmid said of today’s action. “We commend Chairman Goodlatte (R-VA) and Ranking Member Nadler (D-NY), Representatives Collins (R-GA) and Jeffries (D-NY), and all who demonstrated vigorous backing for this critical piece of legislation, enabling it to be passed through committee with decisive and overwhelming bipartisan support.”
Kupferschmid will lead a panel discussion on copyright and licensing reform, including the Music Modernization Act, at the RightsTech Summit on Oct. 5 in New York.
The Music Modernization Act (MMA) has been scheduled for a vote in the House Judiciary Committee on April 9th, where it’s expected to pass with bipartisan support, committee chairman Bob Goodlatte’s (R-Va.) office confirmed Wednesday.
Still to be determined is whether it will go to the House floor as a standalone bill, or gets bundled into a package of music-related measures, including the CLASSICS Act, and the Allocation for Music Producers (AMP) Act. Either way, the MMA stands to be the most significant piece of legislation affecting music licensing in a generation.
“It’s also the only significant piece of legislation affecting music licensing in a generation,” quipped National Music Publishers Association CEO David Israelite during a panel discussion on Capitol Hill this week on music licensing issues.
In addition to being a rare example these days of genuine bipartisanship in congress, the MMA has proved an even more rare example of consensus among nearly all the (frequently warring) institutional voices within the music industry, including organizations representing digital service providers, publishers, songwriters, and record labels.
The bill is aimed at solving an enduring problem within the music industry that has grown more acute with the rise of streaming as the dominate mode of distribution for sound recordings: uncertainty and inefficiency in licensing mechanical reproduction rights for musical compositions.
Under U.S. copyright law, songs are subject to a compulsory mechanical license. Once a song is published, anyone can record it by notifying the songwriter or representative of their intent and paying the statutory royalty set by the Copyright Royalty Board. Unlike the performance right for songs, however, where a venue or service provider can obtain blanket licenses from ASCAP, BMI, SESAC, and GRD for their entire catalogs of works, covering nearly every song published in the U.S., and unlike other major territories, there is currently no blanket licensing facility here for mechanical rights. Instead, a service provider like Spotify or Apple Music, with upwards of 30 million or more sound recordings in their libraries, must locate, notify, and pay the songwriters or administrators for each of those recordings individually, many of which have complex, and often opaque fractional ownership structures.
Alleged failures to correctly locate and pay the appropriate rights owners have led to a raft of litigation against service providers for copyright infringement, including the $1.6 billion lawsuit currently pending against Spotify brought by Wixen Music Publishing.
The MMA would address that problem by creating a blanket license for mechanical rights and creating a new entity, selected by the Copyright Office, to administer it. Instead of having to pay each songwriters individually, service providers could write one check to the new entity, which would assume the burden of locating and paying the appropriate rights owners. The costs of operating the new entity would be paid by service providers, eliminating the need for the new entity to charge a commission to songwriters.
Songwriters and publishers would gain greater certainty of being paid, while service providers would be relieved of an enormous administrative burden and protected against the risk of litigation.
It is that alignment of interests that has led to the broad consensus in support of the MMA within the industry. But the MMA’s most important contribution could be to prove the case for open data and open protocols.
In addition to administering the blanket mechanical license, the new licensing entity envisioned by the MMA would, for the first time, create an open, publicly available database matching sound recordings to musical compositions and their authors and owners.
“We’re really changing the paradigm on data,” said NMPA’s Israelite, one of the MMA’s main architects. “Throughout the history of the music business databases have been regarded as proprietary. ..We want to encourage competition.”
By making critical ownership data public, MMA’s backers hope, entrepreneurs will be able to develop new applications and services beyond the current crop of streaming services, bringing new investment and new revenue into the music business.
“I don’t think streaming is the be-all and end-all in terms of business models,” Panos Panay, VP for innovation and strategy at Berklee College of Music and a leader of the Open Music Initiative, said during the same panel discussion. OMI is working to develop open protocols for the exchange of music rights data, which could achieve some of the same effects as the proposed MMA database.
“With open protocols you can build an ecosystem, you can have innovation” Panay said. “The MMA, hopefully, will let this industry finally move beyond its past. If we get this right, we won’t have to stop at streaming. All sorts of new applications could be developed to create all sorts of new revenue streams.”
If that pans out, it could provide a valuable proof of concept for other rights based industries. An open and verified database of authenticity and provenance for images and artworks, for instance, could help unlock new licensing and e-commerce opportunities that are today held back by high levels of uncertainty and fraud.
Likewise, the lack of an open, comprehensive database of rights to published works makes it difficult for would-be developers to learn what works are available for license in which territories, holding back the creation of potentially new, digital applications and revenue streams for authors and publishers.
Much will depend on how well the new music rights database is maintained. There are companies in the market today, such as Music Reports and Loudr, that have already compiled comprehensive databases matching sound recordings to compositions and their rights owners, and they invest significant money and effort to verify the data and keep it current. Whether the administrators of the new open, non-proprietary database will have the same incentive to maintain it at a high level of accuracy and currency remains to be seen.
“Everyone will benefit from having this, and everyone is hurt by not having it,” Panay said of envisioned new database. “I think the important thing is that puts a focus on the data, and the importance of good data.”