Why Tuesday's Music Licensing Hearing is a Big Deal

On Tuesday seven witnesses will talk music licensing before the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet. More witnesses will appear before the subcommittee in two weeks. As far as music and copyright go, this will be must-watch TV.
 
Copyright can be dry and confusing, and it lacks the mainstream appeal found in most entertainment business topics. But it's worth paying attention to the hearings and learning a little bit about the topics. The positions presented at these hearings will help shape future changes in copyright law and impact everything from new business models to how digital services get licenses and what they pay for those licenses.

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Do you believe music publishers and songwriters should be paid higher royalties? The NMPA's David Israelite will testify that songwriters aren't being paid their market value because of "outdated laws and antiquated government oversight." For example, publishers feel the mechanical royalty for reproductions in CDs and digital downloads, currently 9.1 cents, is a "depressed rate" compared to what publishers and songwriters could get on the open market. In addition, the royalty for mechanical licenses could increase if the NMPA-proposed, market-based standard is used when setting rates.
 
Should artists be paid more when their music is played by digital services? The exclusion of pre-1972 sound recordings from Sections 112 and 114 mean digital services like SiriusXM and Pandora pay only songwriters and publishers when those older recordings are played. Rights owners, performing artists and their trade groups are also pushing for a performance right for terrestrial radio. This would mandate AM and FM radio stations pay royalties for the performance of sound recordings in addition to the royalties they currently pay for performances of the recordings' underlying compositions.

Would you like for webcasters like Pandora to have a more sustainable business model? Giving the companies more favorable royalty rates would help them become more profitable -- or actually turn a profit. The Digital Music Association supports the 801(b) rate-setting standard for performance royalties paid to SoundExchange. Groups representing record labels and performers are against it. This standard, the focal point of the Internet Radio Fairness Act in 2012, could results in lower royalty rates and the amount of revenue services pay to rights holders and performers. The amounts Pandora and other webcasters pay for performances of musical works are another hot topic. The matter of rights withdrawal, which impacts the rates a webcaster pays for performance of musical works, is sure to be discussed. 

The hearing starts at 10am E.T. and will be streamed live on the House Judiciary website. Each witness's opening statement has been posted at the hearing's page.