U.S. Rep. Collins Introduces Music Modernization Act To Reform Licensing Landscape
December 21, 2017
WASHINGTON—Rep. Doug Collins (R-Ga.) today introduced H.R. 4706, the Music Modernization Act, to bring music licensing its first meaningful update in almost 20 years. Rep. Hakeem Jeffries (D-N.Y.) is the bill’s lead cosponsor.
“Songs reframe the world. They show us reality as it is and as it could be. I introduced the Music Modernization Act to move music licensing law closer to where it should be. Today, the music industry is shackled to laws devised before streaming, and even basic recordings, existed—laws that penalize music creators and music lovers alike. Only by ushering music licensing into the twenty-first century can we promote artistry and its appreciation long into the future, and that’s exactly what we’re doing with the Music Modernization Act,” said Collins.
“The House Judiciary Committee has undertaken a thorough review of the issues that adversely affect stakeholders in the copyright ecosystem. We have heard a diverse array of perspectives, and it is clear that stakeholders on all sides believe the copyright system is outdated and needs reform, particularly in the area of music licensing. The Music Modernization Act is carefully crafted legislation that will improve music licensing by increasing efficiency and providing greater transparency. One change it would make is requiring digital services to pay for a Mechanical Licensing Collective that would match songwriters and publishers with recordings to ensure proper payments. I am a proud cosponsor and look forward to working with industry and my colleagues across the aisle and in the Senate on advancing this legislation as well as other needed components of copyright reform,” said Jeffries.
Additional cosponsors of this legislation include Chairman of the Democratic Caucus, Rep. Joseph Crowley (D-N.Y.), as well as Reps. Diane Black (R-Tenn.), Marsha Blackburn (R-Tenn.), Steve Cohen (D-Tenn.), Ted Lieu (D-Calif.) and Pete Sessions (R-Texas).
Overview of the Music Modernization Act
The bill reforms the music licensing landscape in four main dimensions.
Section 115 Reform
This section of the bill ends the bulk Notice of Intent (NOI) process through the Copyright Office, which can prevent songwriters from being compensated or compensated in a timely manner for uses of their works.
Under the Music Modernization Act, the digital services would fund a Mechanical Licensing Collective (MLC), and, in turn, be granted blanket mechanical licenses for interactive streaming or digital downloads of musical works. The MLC would be governed by publishers and self-published songwriters. The MLC would address the challenges digital services face today when attempting to match songwriters and publishers with recordings.
The bill would also create business efficiencies for the digital services by providing a transparent and publicly accessible database housing song ownership information. Additionally, because the database would publicly identify songs that have not been matched to songwriters and/or publishers, publishers would also be able to claim the rights to songs and get paid for those songs. Songwriters and publishers would also be granted an audit right, which they don’t currently have under Section 115.
Willing Buyer/Willing Seller Standard
Section 115 of the Copyright Act has regulated musical compositions since 1909—before recorded music even existed. Section 115 allows anyone to seek a compulsory license to reproduce a song in exchange for paying a statutory rate. Current law directs the Copyright Royalty Board (CRB)—the government body responsible for setting the statutory rate—to apply a legal standard to determine rates that does not reflect market value.
The Music Modernization Act replaces the current flawed legal standard with a standard that requires the court to consider free-market conditions when determining rates.
The “Wheel” Approach
Currently, ASCAP and BMI are each assigned to a single, respective rate court judge. Every case must be adjudicated before each performance rights organization's (PRO’s) respective designated consent decree judge.
Under the Music Modernization Act, a district judge in the Southern District of New York would be randomly assigned from the wheel of district judges for rate setting disputes. The “wheel” approach would enable BMI and ASCAP, as well as licensees, to go before any judge in the Southern District of New York on a rotating basis—rather than being assigned to a single judge—for the purpose of rate setting disputes. This “wheel” approach ensures that the judge will find the facts afresh for each rate case based on the record in that particular case, without impressions derived from prior cases.
Section 114(i) Repeal
Currently, Section 114(i) of the Copyright Act forbids the federal rate courts overseeing the consent decrees that govern the two major PROs from considering certain evidence when setting performance royalty rates for songwriters and composers. The rate court judges are barred from considering sound recording royalty rates as a relevant benchmark when setting performance royalty rates for songwriters and composers. As a result, the playing field is uneven, at the expense of songwriters.
The Music Modernization Act repeals Section 114(i), moving the industry to a fairer system under which PROs and songwriters would have the opportunity to present evidence about the other facets of the music ecosystem to judges for their consideration. This repeal creates the opportunity for songwriters to obtain fairer rates for the public performances of their musical works.
Support for the Music Modernization Act
National Music Publishers’ Association (NMPA) President & CEO David Israelite, American Society of Composers, Authors, and Publishers (ASCAP) CEO Elizabeth Matthews, Broadcast Music, Inc. (BMI) President & CEO Mike O’Neill, Nashville Songwriters Association International (NSAI) President Steve Bogard and Songwriters of North America (SONA) Executive Directors Michelle Lewis and Kay Hanley:
“We strongly support the introduction of the Music Modernization Act which represents months of collaboration and compromise between the songwriting and tech industries. This legislation enables digital music companies to find the owners of the music they use and reforms the rate setting process for performing rights, ensuring that songwriters and music publishers are paid faster and more fairly than ever before.
“For too long, digital music services have taken advantage of the ‘bulk NOI’ process and often failed to find the correct creators to pay, and now—by working together—this bill ends this practice by creating a private-sector system where money will no longer be lost to inefficiencies and lack of information. The bill also improves how mechanical royalty rates are calculated by introducing a willing-seller/willing-buyer standard.
“On the performance rights side, the bill also replaces the current rate court system with the random assignment of judges used in most federal court cases, and allows the rate courts to review all relevant market evidence into the valuation of how songwriters are compensated.
“We thank Congressmen Collins and Jeffries for their leadership in striking this balance that improves and modernizes our outdated licensing system and gives songwriters the ability to be paid what they deserve across all platforms that use music, including the growing interactive streaming services.”
Digital Media Association (DiMA) CEO Chris Harrison:
"DiMA thanks Congressmen Collins and Jeffries for their work to reform an outdated and inefficient music licensing system that serves neither fans of music nor creators.
“We support the Music Modernization Act because it would create a blanket license, which is critical to a modern licensing system and a great step forward.
“We look forward to continuing to work with the sponsors and the Judiciary Committee to enact legislation that creates a music licensing system that benefits everyone."
BMI President & CEO Mike O’Neill:
“We thank Congressmen Collins and Jeffries for their introduction of the Music Modernization Act of 2017 and for always working to protect the rights of the American songwriter. While we believe there is still more to do to protect the value of the performance right, we are gratified that the Music Modernization Act contains two important provisions that create a more level playing field when determining the fair market value of our songwriters’ music; a wheel assignment for rate court judges and the repeal of 114(i). BMI also takes comfort that the bill’s new mechanical licensing provisions were the result of an important collaboration between the subject matter experts in this area—the mechanical rights holders and the digital services who rely on those rights. While we know this bill is not yet final, we believe it is an important step forward in modernizing music licensing and we look forward to working with all of the interested parties.”
NSAI President Steve Bogard:
“This legislation has been years in the making, represents compromises with digital streaming companies and reflects substantial progress in the way digital mechanical royalties for songwriters are determined. When we begin the next CRB proceeding we will be able to actually fight for what songwriters would be paid in a free market.”
SONA Executive Directors Michelle Lewis and Kay Hanley:
“After many months of working together on copyright reform and significant compromises by all parties, SONA is optimistic about the gains for publishers and songwriters that the Music Modernization Act provides. It lays the groundwork for a clear and concise system which will put an end to the mass abuses of outdated regulations, and ultimately gets songwriters and copyright owners paid more fairly for their work.
“SONA is proud to be a part of this historic bill. We hope this is only the beginning and look forward to continuing to work with members of Congress to fight for the rights of music creators."
The American Society of Composers, Authors and Publishers (ASCAP) is a professional membership organization of songwriters, composers and music publishers of every kind of music. ASCAP's mission is to license and promote the music of its members and foreign affiliates, obtain fair compensation for the public performance of their works and to distribute the royalties that it collects based upon those performances. ASCAP members write the world's best-loved music and ASCAP has pioneered the efficient licensing of that music to hundreds of thousands of enterprises who use it to add value to their business - from bars, restaurants and retail, to radio, TV and cable, to Internet, mobile services and more. The ASCAP license offers an efficient solution for businesses to legally perform ASCAP music while respecting the right of songwriters and composers to be paid fairly. With more than 790,000 members representing more than 10 million copyrighted works, ASCAP is the worldwide leader in performance royalties, service and advocacy for songwriters and composers, and the only American performing rights organization (PRO) owned and governed by its writer and publisher members. Learn more and stay in touch at www.ascap.com, on Twitter and Instagram @ASCAP and on Facebook.
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