(by Gregg Skall) Senators Orrin Hatch and Lamar Alexander announced on Wednesday a new bill they claim is the “most significant change in music licensing laws in decades.” The Music Modernization Act is designed to assure songwriters a fair value for their songs. In a press release, the senators claim further that the bill would create a new, simplified licensing entity, making it easier for digital music companies to obtain a license for and play songs and also ensure that songwriters are paid royalties they are owed.
The legislation is supported by an impressive bipartisan group of senators including Orrin Hatch (R-Utah), Lamar Alexander (R-Tenn), Chris Coons (D-Del), Bob Corker (R-Tenn), Dick Durbin (D-Ill), Johnny Isakson (R-Ga), Doug Jones (D-Ala), and Sheldon Whitehouse (D-R.I.).
The legislation is claimed to address two challenges: (1) the arrival of the internet streaming as the primary way listeners consume music, and (2) assuring songwriters will be paid when their songs are played, a problem it is said they face because music is no longer purchased on hard copy media.
You can read a draft of the legislation HERE. A hard look at the press release description indicates that it seeks to utilize and enact the same devices introduced several years by much the same group of senators in the Songwriters Equity Act of 2014.
The Music Modernization Act would add a criteria that songwriters will be paid “fair market value,” directing the Copyright Royalty Board to set royalties according to fair market value, “rather than the current, below-market standard.” It would also remove provisions of law that restrict the type of evidence that can be consider when setting songwriter royalties. The Copyright Act currently allows the Copyright Royalty Board to consider four objectives; maximizing the availability of song uses, providing a fair return for a copyright owner, a fair income for the user and minimizing disruptive impact on the music industry.
WHY THIS COULD COST YOU MORE MONEY
The 2014 Songwriter bill, and presumably this new proposal, would benchmark rates to those that would have been negotiated in the marketplace between a willing buyer and seller. This is intended to allow evidence from other rate proceedings as evidence in setting that benchmark, such as the rates set between SoundExchange and the record labels. NAB has consistently opposed this legislation arguing that it could impose “new costs on broadcasters that jeopardize the future of our free locally-focused service” and would seek to rectify a financial imbalance between songwriters and artists by subjecting free broadcast radio stations to new fees.
Editor’s Note: NAB CEO Gordon Smith released this statement Wednesday: “Unfortunately, the current bill text includes unrelated provisions that will almost certainly result in unjustifiable cost increases for local radio and TV broadcasters and many other music licensees, for whom the rest of the legislation is largely irrelevant. NAB has been diligently working with the bill sponsors and other stakeholders to resolve those concerns, and we sincerely appreciate the shared commitment to finding a workable solution.”
At the end of 2017, Representative Collins (R-Ga) introduced HR4706, also called the Music Modernization Act of 2017. So far he has picked up 19 co-sponsors. The new Senate bill is likely the companion legislation to Collins’ bill, which also sets up a new licensing scheme that includes a blanket compulsory license for potential music providers, covering all musical works including distribution of server, intermediate, archival and incidental reproductions and contains the signature provision. It would have the Register of Copyrights initially create a mechanical licensing collective that would offer and administer blanket licenses from a master music database and collect and distribute royalties. Speeches on the senate floor indicate that this will also be a part of the senate proposal.
The sponsors claim broad support among music industry organizations.
NAB has acknowledged that the emergence of streaming has presented important issues for the songwriter community, but those issues should not be addressed by subjecting free broadcast radio stations to new fees. In 2014, the music industry brought an impressive group of songwriters to lobby Capitol Hill, including Paul Williams, Jimmy Webb, Carly Simon, Randy Newman and others.
It will be interesting to see how this legislation fares. It may be that some solution is necessary to address the way music is streamed to listeners over the Internet, but NAB will certainly be stressing that broadcasters should not be required to bear that burden. A newer more creative approach, if any, will be required.
Gregg Skall is a Partner at Womble Bond Dickinson in Washington, DC and can be reached at 202-857-4441 or [email protected]