NMPA

The Music Modernization Act: Making the Case for Open Data

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.”

 

NMPA CEO David Israelite to Speak at DEW on Modernizing Music Licensing

Just before Christmas, a bi-partisan group of lawmakers introduced the Music Modernization Act, which, among other things, would create a new blanket license for mechanical reproduction rights to musical compositions and establish a new entity to collect and distribute mechanical royalties.

The bill is meant to address one of the abiding sources of friction within the digital music streaming business. Musical compositions in the U.S. are subject to a compulsory mechanical license, meaning anyone can record a song and sell copies of that recording by sending a notice of intent (NOI) to the composition’s copyright owners and paying a per-copy royalty set by the Copyright Royalty Board.

Unlike the public performance right, however, where performance rights organizations (PROs) like ASCAP, BMI and SESAC aggregate millions of compositions and offer a blanket license covering their entire repertoires, anyone availing themselves of the compulsory mechanical license is required to identify and pay the appropriate copyright owners individually. Where the copyright owners cannot be identified or located, the user can file the NOI with the U.S. Copyright Office and the royalties paid are held in escrow until the rights owners are located.

The system worked well enough for many years when it was rare for anyone or any outlet to make bulk use of the mechanical reproduction right. With the rise of digital streaming, however, which has been held to implicate both the public performance and the mechanical reproduction right, the lack of an efficient system for administering mechanical rights has been a constant source of tension, between digital service providers like Spoity and Apple Music on the one hand, and music publishers and songwriters on the other.

That tension has frequently erupted into litigation, including the $1.6 billion lawsuit filed against Spotify in December by Wixen Music Publishing over Spotify’s alleged failure to pay required mechanical royalties.

Should it become law, the Music Modernization Act could go a long way toward easing those tensions. Since it’s introduction, in fact, the bill has gained broad support throughout the industry. In a rare show of unity, a group of more than 20 industry organizations representing music publishers, songwriters, record labels, PROs, and service providers issued a joint statement earlier this month endorsing the bill and urging its passage.

Much of the credit for the bill’s introduction and for rallying support behind it belongs to the National Music Publishers Association (NMPA) and its CEO David Israelite, who worked closely with the bill’s sponsors on Capitol Hill and helped broker the joint statement. Israelite will sit down with me for a special fireside chat at Digital Entertainment World on February 5th to discuss the Music Monetization Act, as well as other issues facing the industry, including the music industry’s notorious data challenges, and the future of performance rights licensing in the wake of recent court cases.

This week, we asked Israelite a few preliminary questions to set the stage for his fireside chat:

RightsTech Project: Last week, a group of music industry organizations jointly endorsed the Music Modernization Act, the Classics Act and the AMP Act. To what do you attribute the sudden outbreak of cooperation among so many different stakeholders?

David Israelite: We have a window of momentum and consensus that is ripe for action. Congressional leaders like Judiciary Committee Chairman Bob Goodlatte, who retires this year, has made copyright reform a priority, and with songwriter champions like Rep. Doug Collins (R-GA) and Rep. Hakeem Jeffries (D-NY) offering consensus bills like the MMA – and the Senate hopefully following suit – there is a real opportunity to move legislation that will significantly help the future of songwriting. Additionally, the MMA is not a wish list for music publishers and songwriters – it is a bill that took months to negotiate because it helps both the tech and music industries. No one got everything they wanted – but both sides are better off with the MMA. DiMA, which represents the biggest tech companies in the world is supportive, as are the biggest songwriter groups in the U.S.

Largely because of the momentum around the MMA – the music industry has coalesced around other music bills that will help legacy artists and producers. As I have always said – we are stronger together – and we have a great opportunity to not just help our segment of the pie – but to advance the whole creative class. After years of trying to develop and unite around reasonable reforms, it is truly exciting that today we stand together and that Congress is invested in these changes as well.

Where do you think the debate over the BMI/ASCAP consent decrees goes now in the wake of the 2nd Circuit decision?

BMI’s win sends a strong message that the DOJ cannot simply reinterpret decades of industry practice and upend the lives of thousands of songwriters. The new leadership in DOJ’s antitrust division hopefully offers a new path forward, and I believe they are looking at the consent decrees with fresh eyes. My hope is that they will ultimately abolish them altogether and give songwriters the free market that other intellectual property owners enjoy.

3) What is NMPA’s position on the various PRO database initiatives (ASCAP/BMI; ASCAP/SACEM/PRS)?

The PROs currently offer searchable repertoires. Their efforts to create a single database will bring clarity to the industry – however these initiative will take time and money. I look forward to seeing their progress in the coming months.

Click here for information on how to register for Digital Entertainment World.

 

Waiting for Zuck

Facebook last week snared long-time music industry attorney Tamara Hrivnak to head up its global music strategy and business development, luring her away from YouTube, where she had served as director of music partnerships.

The hire, which comes just weeks after reports surfaced that Facebook is moving forward with the development of its Rights Manager tool for identifying infringing content on its platform and had begun preliminary discussions with the major record labels and music publishers about securing licenses to host music on the site, further raised expectations that the giant social media network is gearing up for a major push in music.

Tamara Hrivnak

“Music is important and it matters – it connects us and binds us to times, places, feelings and friends,” Hrivnak said in a statement announcing her hire. “My career has been dedicated to growing opportunities for music in the digital landscape.”

That’s music to the ears of rights owners and distributors, who see in Facebook both a serious and growing problem of copyright infringement, but also a potentially major opportunity.

At a RightsTech panel on user-generated content platforms during the Digital Entertainment World conference last week, speakers representing multichannel networks, rights-management providers, and distributors were unanimous in identifying Facebook’s apparent moves into content licensing as the most important development to watch in the UGC space over the next year.

Ever since Facebook moved video front and center in users’ news feed it has become a popular destination for music videos, particularly user-created covers and lip-dubs of popular songs. None of the current is currently licensed, however, and so generates no revenue for the original rights owners.

The site has increasingly come under criticism from rights owners for failing to adequately address the growing amount of infringing content it hosts. Facebook also generates huge numbers of share-driven views of licensed content scraped from YouTube and other outlets without compensation to rights owners.

“With views in the millions, it’s time for Facebook to answer songwriters’ friend request and properly license their platform,” National Music Publishers Association president David Isrealite wrote in a Billboard op-ed in October.  “Otherwise, it may find itself de-friended by the music industry.”

The reports that Facebook is developing a more robust version of Rights Manager, and the hiring of Hrivak were sign as responses, at least in part, to such criticism.

But Isrealite’s op-ed also hinted, perhaps unintentionally, at the potential scale of the opportunity Facebook presents to rights owners if currently infringing content can be brought within the purview of licenses.

“[W]hile we don’t know the full extent of what is posted, we do know that engagement and viewership on Facebook often outpaces other social media video platforms.,” Isrealite wrote. “In fact, in a recent study of the popularity of copies of Adele’s music videos, of the 60,055 copies of ‘Hello’ found that while ‘Facebook had only 64 percent of the number of copies published to YouTube, Facebook still garnered over two times more video views than YouTube. On average, Facebook racked up 73,083 views per video, whereas each YouTube amassed an average of 23,095 views per video.'”

Currently the most widely used streaming platform for music, YouTube has emerged as the bête noire of music rights owners over what many view as paltry royalty payouts relative to the volume of usage it attracts. Apart from complaining about it, however, rights owners have so far had little practical impact on YouTube’s policies up to now, largely because they have lacked the leverage of an alternative.

Few other platforms have the scale to mount a serious challenge to YouTube. But one of the few that does is Facebook. If Facebook were to strike more artist-friendly deals with the record labels and publishers the data cited by Isrealite suggests it could emerge as a potent counterweight to YouTube — the main reason the DEW panelists cited for their (cautious) optimism.

Speaking to analysts during an earnings call last week, Facebook CEO Mark Zuckerberg offered rights owners still more reason for optimism.

“We’re focusing more on shorter-form content to start,” Zuckerberg said. “There is the type of content that people will produce socially for friends. There’s promotional content that businesses and celebrities and folks will produce. But there’s also a whole class of premium content. The creators need to get paid a good amount in order to support the creation of that content, and we need to be able to support that with a business model, which we’re working on through ads to fund that.”

Much will depend on the development of the revamped Rights Manager. While reportedly modeled on YouTube’s Content ID, few details of how it will work have surfaced to date.

For all of the complaints directed at YouTube over its payouts to artists, Google spent years and (it claims) more than $60 million to develop Content ID, which even YouTube’s critics acknowledge has evolved into a sophisticated and robust piece of engineering.

Facebook certainly has both the financial and engineering resources to throw at the problem. But development still takes time, as will building up the vast library of  reference files Content ID uses to match against posted content.

Without an effective content recognition system even the most favorable license agreements are bound to prove disappointing to rights owners. But if anyone can change the marketplace dynamics of ad-supported streaming it’s Facebook.

Copyright Royalty Board? Statutory, Mechanical Performance? A Primer for the World of Music Licensing and Its Pricing

The Copyright Royalty Board (CRB) is currently fielding proposals from stakeholders around a new rate-setting process that will cover 2018-22, a process that is causing high drama in the music industry as stakeholders debate publicly over each others’ proposals.

The highest-profile of these disagreements stems from the National Music Publishers’ Assn. (NMPA) and the Nashville Songwriters Assn. International (NSAI), which have jointly criticized Sony Music Entertainment for its participation in the rate-setting process. Essentially, publishers and songwriters are on one side, and on-demand (or “interactive”) digital music services like Spotify are on the other.

Source: Copyright Royalty Board? Statutory, Mechanical Performance? A Primer for the World of Music Licensing and Its Pricing | Billboard

DOJ Cites Music Industry’s Data Problem in Rejecting Changes to ASCAP, BMI Consent Decrees

577cc1d010909-imageThe U.S. Justice Department’s antitrust division formally closed its revue of the ASCAP and BMI consent decrees Thursday, issuing a lengthy statement spelling out why it decided not to make any changes to the decrees, at least for now, and why it now reads those decrees to require 100 percent licensing by the PROs of any works in their repertories even if they don’t represent 100 percent of the owners of those works.

Irving Azoff Calls on Music Industry to ‘Work Together’ in NMPA Keynote 

In a keynote address at the National Music Publishers’ Assn. legendary music industry executive Irving Azoff called upon the music industry to work together.

“The music industry has never been more powerful and popular and we as an industry have never done a shittier job of rallying together as one industry,” Azoff said. “We should work together to solve the root of the problem” — fair compensation. “I had one artist who was making $450,000 a year between all of his royalties,” Azoff said. Now after the digital revolution, he is down to making “$40,000 a year.”

Source: Irving Azoff Calls on Music Industry to ‘Work Together’ in National Music Publishers’ Assn. Keynote | Billboard

Dubset signs deal for indie publisher rights with NMPA

Independent publisher and songwriter members of the National Music Publishers’ Association can now sign up to be paid royalties each time their compositions are used in mix content that’s distributed to digital music services by Dubset. The new deal is the result of a rights agreement between Dubset Media Holdings and the NMPA.

NMPA members who opt-in to the agreement will have access to Dubset’s MixBANK platform where they can set terms and rules around how and where their catalogue may be used in mix content.

Source: Dubset signs deal for indie publisher rights with NMPA – Music Business Worldwide

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