Congress may actually fix music royalties

Despite constant gridlocks, a government shutdown, and an approval rating so low it couldn’t get into a European bar, Congress may be ready to update music licensing laws for the first time in 20 years. A bill called the Music Modernization Act has been introduced in the House and Senate over the past month, and it is designed to streamline the music licensing process to make it easier for rights holders to get paid when their music is streamed online.

The two bipartisan bills look to revamp Section 115 of the U.S. Copyright Act, with three major changes:

  • It would create a new governing agency, which would issue blanket mechanical licenses to digital services, and collect and distribute royalties to rights holders. (This wouldn’t prevent rights holders like major labels from entering into licensing agreements with digital services.) Currently, services like Spotify and Apple Music are responsible for identifying the rights holders to each individual song in their catalogs — a job that would switch to the new entity in this bill. Digital services would pay the operating costs for the unnamed entity.
  • Mechanical royalties would be paid to songwriters whenever a copy of their track is made (be it physical or digital), and it would be based on what a buyer and seller negotiate in an open market, instead of the current rate-setting standards.
  • The rate court system would be overhauled. Currently, the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music Inc. (BMI), the two largest music performance rights organizations in the country, are assigned a single judge who handles all of their rate court cases. The bill proposes that a district judge in New York’s Southern District would be randomly assigned to each case going forward. The bill would also repeal Section 114(i) of the U.S. Copyright Act which prevents rate courts from considering sound recording royalty rates when setting performance royalty rates.

The most major change would be the new agency, which would solve the biggest issue for songwriters: getting paid on time. As part of the bill, the agency would create a public database containing song ownership information to help songwriters identify which songs haven’t been properly attributed to them. It would also help streaming services like Spotify and Apple Music avoid lawsuits for not properly identifying the rights holders of songs on their services. (Digital services wouldn’t be liable for statutory damages, as they would no longer be responsible for identifying rights holders.)

With digital services avoiding some liability and rights holders having a more transparent way to claim their work and get paid, it’s not surprising that nearly the entire music industry is on board with the Music Modernization Act. Major music industry organizations including ASCAP, BMI, SoundExchange, and SAG-AFTRA have all come out in support of the bill in a joint press release from the National Music Publishers’ Association (NMPA).

“A unified music community is essential if we are to take advantage of this once-in-a-generation opportunity,” Recording Industry Association of American (RIAA) president Mitch Glazier said in the statement.

On Thursday, the Internet Association, a trade group that represents Facebook, Google, and Spotify, among others, also came out in favor of the bill in a letter to the senators and representatives who initially sponsored the Music Modernization Act. “We look forward to working with you on efforts to achieve consensus and pass the Music Modernization Act,” Michael Beckerman, CEO of the Internet Association said in the letter.

Beckerman also said his group took issue with the rate court system overhauls, specifically the repeal of Section 114(i), calling the provision “problematic,” throwing a wrench into the industry-wide love fest that has surrounded this bill. “These provisions are inconsistent with the MMA’s goal of modernizing and streamlining music licensing,” Beckerman said, while noting that the group is ready to “work with [Congress] to improve these prior to passage.”

Today, the House Judiciary Committee will hold a hearing at Fordham University in New York to discuss the Music Modernization Act and other music issues, where Recording Academy CEO Neil Portnow will speak in favor of the bill, according to Variety.

In an industry as contentious and divided as the music industry, seeing all parties come together (for the most part) in support of legislation is nearly unprecedented. With bipartisan support in Congress and support throughout the music industry, the Music Modernization Act has a strong chance of moving forward and finally fixing a royalty process that should’ve been dealt with over a decade ago.

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