Flanked by musicians ranging from John Rich to Kid Rock in the Roosevelt Room of the White House, President Trump on Thursday signed into law the most sweeping revision to federal copyright law in decades. For the most part, the impact of the Music Modernization Act (S. 2823) on AM/FM radio will be limited, most notably giving broadcasters a way to ensure the consent decrees that govern ASCAP and BMI music licensing aren’t summarily dissolved without a new structure in place.
“The Music Modernization Act closes loopholes in our digital royalty laws to ensure songwriters, artists, producers, and providers receive fair payment for licensing of music,” Trump said, adding, “They were treated unfairly and they’re not going to be treated unfairly anymore.”
Under the provisions of the new law, the Dept. of Justice will be required to alert Capitol Hill of its plans at least 90 days before it takes any steps in federal court to terminate the decrees, including whatever information it has collected about the impact of such a move. That will be critical in the coming year. Assistant Attorney General Makan Delrahim, who heads the Antitrust Division, told a Senate hearing last week his team is still moving forward with plans to rip up the documents. “I don’t think anybody has any intention to disrupt this industry but provide a smooth transition towards a market-based solution for how songwriters are compensated,” Delrahim testified.
The assurances provided by the Music Modernization Act that the licensing marketplace won’t be thrown in chaos have led music users, including the National Association of Broadcasters, to support the new law. NAB president Gordon Smith called it a “consensus solution” that will benefit songwriters, legacy recording artists, producers, digital streaming services, and music listeners.
Even as radio hailed the inclusion of what could be a backstop to changes in the consent decrees, both ASCAP and BMI were also onboard. The prospect of larger payouts to songwriters and composers as well as streamlining music use outweighed any potential downside. ASCACP CEO Elizabeth Williams said it means “a more sustainable future” is in reach for songwriters.
The bill also changes some rate court procedures that the music industry thinks will work to its favor. The current system, whereby each performance rights organization is assigned to a single judge in U.S. District Court in New York, will end and a federal judge will instead be selected at random. That’s something the music industry thinks will ensure the judge takes a look at fresh evidence for each rate dispute without relying on a lingering impression derived from prior cases. The bill would also give ASCAP and BMI more leeway in presenting evidence in rate court as part of an effort to use the rates paid by digital music services as a relevant benchmark when setting rates for radio. Songwriters believe that will help them collect more money from broadcasters.
Pre-72 Exemption Ends
The Music Modernization Act will have other impacts on radio stations. Most directly will be the requirement that any station that airs songs recorded prior to Feb. 15, 1972 begin paying royalties whenever those songs are streamed online. Attorney Helene Freeman, who served as co-counsel in Led Zeppelin’s case over the rights to “Stairway to Heaven,” said platforms like Pandora and Spotify and SiriusXM will pay too. “Up till now these works have been heavily performed, but the artists are not compensated,” Freeman said.
It’s an issue that President Trump focused on during the bill signing ceremony. “Streaming has made music more accessible than ever yet our laws have not kept up with the pace of technology,” he said. “As such artists of all varieties and career stage are losing out on revenue that they have rightly earned.”
Radio Royalty Looms
Even as radio stations would pay for digital pre-72 music use, on-air spins would remain exempt however, since the bill did not address the performance right for AM/FM radio. That hot button issue was left to the side while negotiations on a possible settlement between the two industries continue.
Although the radio performance royalty wasn’t brought up by anyone gathered at the White House bill signing ceremony, it isn’t forgotten. Chris Israel, executive director of the musicFirst Coalition, said the new law pushes the industry into a “new era” where creators are played wherever their work is played. “That means terrestrial AM/FM radio,” he said. MusicFirst and the NAB are having discussions about a potential deal and Israel said the music industry hopes to harness the enthusiasm that helped get the Music Modernization Act through Congress to achieve that next goal.
The NAB’s Gordon Smith told Inside Radio one outcome of the recent compromise is that the radio and music industries are more in harmony that they’ve been in the past. And that could help with the radio royalty discussions. “There are some people meeting in good faith on both sides of this issue earnestly striving to find that common ground,” Smith said. “That doesn’t mean we are close to a deal but that means there are honest discussions, proposals, and ideas being shared.”
Artists may have other issues at the top of their list. “Everybody knows this business of music is a pretty dirty business,” Kid Rock told the White House gathering. “There’s a lot more that needs to be done. We need to go after the record companies next for things like free goods.” Those are the fixed percentage of records that a label deducts from an artist’s royalty payments to cover things like the giveaways and promotional copies that are sent to radio stations and elsewhere.
The bill unanimously passed in both the House and Senate, a bipartisan outcome that even caught the President by surprise. “Music is the one thing that can get unanimous consent in the Senate and the House,” said John Rich, who is half of the country duo Big & Rich and a former winner on the Trump hosted “Celebrity Apprentice” television reality show. He said the benefits of the new law cross the musical spectrum. “It affects all of these artists and all of these genres,” Rich said.