Grammy Week typically brings a lot of attention to music-related issues and in recent years that’s meant support from Capitol Hill for industry efforts to change how royalties are calculated and collected. That again has proven true this year as a group of eight lawmakers on Wednesday introduced the Music Modernization Act in the Senate. It would update copyright law to create a single licensing entity that administers the mechanical reproduction rights for all digital uses of musical compositions. While that would impact streaming services like Pandora or Spotify more than broadcast radio, the other piece of the bill would upend how rate-setting negotiations involving ASCAP and BMI play out when they land in federal court. Broadcasters fear such a shift could ultimately cost stations more.
Senator Orrin Hatch (R-UT) called it a “consensus piece of legislation that brings together all sides of the music industry” and would make sure songwriters are paid a fair market value for their work. “Our music licensing laws are convoluted, out-of-date, and don’t reward songwriters fairly for their work,” Hatch said. “They’ve also failed to keep up with recent, rapid changes in how Americans purchase and listen to music.”
The list of cosponsors also includes Senators Sheldon Whitehouse (D-RI), Lamar Alexander (R-TN), Dick Durbin (D-IL), Bob Corker (R-TN), Chris Coons (D-DE), Johnny Isakson (R-GA), and Doug Jones (D-AL). “It is also the first major bill that has the support of music creators, publishers and digital music companies,” Alexander said. “With such broad support, I’m hopeful we will be able to pass the legislation this spring.”
Reps. Doug Collins (R-GA) and Hakeem Jefferies (D-NY) introduced companion legislation (H.R. 4706) in the House on Dec. 21. Collins said their bill, which now has 20 cosponsors, continues to gain “industry support and steam in both houses of Congress.” A coalition of music groups representing publishers, record labels, songwriters, composers, artists and performance rights organizations came out in favor of the bill earlier this month.
NAB Says Changes Would Cost Radio More
The National Association of Broadcasters president Gordon Smith says it’s commendable that members of Congress are working to find a consensus solution to some of the core issues facing songwriters, music publishers, and on-demand streaming services. “Compromise on music licensing has long proved elusive, and these lawmakers have carefully crafted legislation that benefits all of those parties,” he said. But the NAB thinks the way lawmakers are currently trying to achieve that would be bad for broadcasters. “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,” Smith said.
That’s because the bill would alter how rate-setting negotiations involving ASCAP and BMI play out. Today, when the Radio Music License Committee isn’t able to reach a deal with the two performance rights organizations on its own—such as the industry’s agreement with ASCAP—the standoff moves into federal court. That’s the situation right now as BMI and the RMLC are in court attempting to strike a new deal for stations. But the courtroom setting has been a frustration for the songwriting community, which believes it has consistently tilted decisions in favor of broadcasters with deals that, in recent years, have seen stations get refunds rather than pay higher rates. At the urging of the music community, the bills propose a new system that they think could help end radio’s winning streak.
Under existing guidelines, each performance rights organization is assigned to a single judge in U.S. District Court in New York who hears the evidence and makes decisions when they’re unable to reach a deal with the radio industry. But under the proposed changes, rather than being assigned to a single judge for the purpose of rate setting disputes, a federal judge would be selected at random. That so-called “wheel” approach would ensure the judge takes a look at fresh evidence for each rate case, based on the record in that particular case, without relying on a lingering impression derived from prior cases.
The bills would also change how the federal rate courts collect evidence when involved in setting performance royalty rates for songwriters and composers. It would allow ASCAP and BMI, as well as songwriters, to present evidence about the music ecosystem to the judges as they consider whether to increase the rates music users are paying. Today the courts aren’t allowed to consider sound recording royalty rates as a relevant benchmark when setting performance royalty rates for songwriters and composers. The music industry argues that creates an uneven playing field which hurts songwriters.
ASCAP chief executive Elizabeth Matthews said “the bill addresses some of the most critical issues facing America’s songwriting community, including rate court reforms.”
Music To Songwriters’ Ears
The expansion of the discussion about the proposed Music Modernization Act to the Senate drew praise from several music organizations, including ASCAP, BMI, National Music Publishers’ Association, the Nashville Songwriters Association International, and the Songwriters of North America (SONA). “For too long, songwriters have been severely handicapped in the marketplace, with absurdly low payments for the use of our songs or no payments at all,” SONA executive director Michelle Lewis said. “The Music Modernization Act will help rectify this going forward.”
BMI president Mike O’Neill said what’s in the bill may not yet be final, but based on what’s been released it represents an “unprecedented cross-industry effort to introduce comprehensive music reform.”
ASCAP chief executive Elizabeth Matthews agreed. “While there is more work to be done to ensure that songwriters earn fair compensation, this legislation, like the similar bill recently introduced in the House, represents important progress in an ongoing effort on industry-wide reforms that protect the rights of music creators,” she said.
Smith said the NAB has been “diligently working” with the music community and their allies on Capitol Hill to resolve broadcasters’ concerns over the bill’s language, specifically about how it could increase music licensing costs on radio and TV stations. “We sincerely appreciate the shared commitment to finding a workable solution,” Smith said in a statement.