Music Modernization Act Introduced In the House of Representatives, With Major Music Licensing Reform At Stake

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The long awaited Music Modernization Act, co-sponsored by Rep. Doug Collins (R-Ga.) and Rep. Hakeem Jeffries (D-NY), was finally introduced into the House of Representatives today in a move that would create a collective to manage a blanket mechanical licensing system.

The bill, with additional co-sponsors including Rep. Joseph Crowley (D-NY), Rep. Diane Black (R.-Tenn.), Rep. Marsha Blackburn (R-Tenn.), Rep. Steve Cohen (D.Tenn.), Rep. Ted Lieu (D-Ca.) and Rep. Pete Sessions (R-Texas), also incorporate some other ingredient long sought by music publishers, like including amending Section 115 of the U.S. Copyright Act to change the way the Copyright Royalty Board determines rates from using a legal standard to one that reflects market value by trying to approximate a willing buyer/willing seller market rate.

Furthermore, the bill would wrest the ASCAP and BMI rate courts away from the judges that have long presided over them. Instead, the bill would introduce a “wheel” approach, which would randomly assign each rate dispute lawsuit to any judge sitting in the Southern District of New York. According to the announcement from Collins' office, “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.”

Moreover, the legislation would eliminate the mandate barring rate court judges from considering sound recording royalty rates as a relevant benchmark when setting music publishing royalty rates for songwriters and composers.

The legislation was negotiated by the various interested parties in the industry in a move to try and form consensus legislation, and includes endorsements from the heads of the NMPA, ASCAP, BMI, the Nashville Songwriters Assn. International, the Songwriters of North America and the Digital Media Assn. However, two groups initially mentioned as having been part of the process -- the National Assn. of Broadcasters (NAB) and the RIAA -- appear to be absent from the list of those endorsing the legislation.

But in response to a request for comment from Billboard, the RIAA stood up and was counted among those endorsing the bill. “We are glad the stakeholders have come together on mechanical licensing reform,” the Recording Industry Assn. of America said in a statement. “This is a step forward toward developing a comprehensive copyright and music licensing package that can become law next year.”

In particular, if NAB is opposed to this legislation, it will be an uphill battle going up against the radio industry powerful lobbying efforts, which for decades has thwarted all efforts from the record companies to get a performance royalty for master recordings.

While it didn't take part in the group press release, the NAB issued a statement that takes a conciliatory approach to the legislation before getting to the thick of the situation. That statement notes that NAB appreciates the efforts of the legislators in shaping the bill, which it calls an important step towards resolving critical issues faced by music licensors and music licensees.

"However, NAB has serious concerns about unrelated provisions in the bill that may unjustifiably increase costs for many music licensees, including local radio and TV broadcasters, who otherwise receive no benefit from the legislation,” the organization said in its statement. “NAB looks forward to working with the bill sponsors and impacted parties to resolve our outstanding concerns.”

Surprisingly, so far the biggest word against the main thrust of the legislation comes from the Songwriters Guild of America. In a letter to Rep. Collins -- made available to Billboard -- SGA president Rick Carnes said that while the proposed legislation has many good points, it also has a “number of serious problems” that will need to be addressed before SGA and thousands of its members can support the bill. 

The “enactment of the proposed bill as currently constituted would -- to the best of our knowledge -- represent either one of the first times or the very first time in history that any Government has acted to sanction the creation of a music copyright licensing and royalty collective over which creators themselves would not share at least equally in governance,” Carnes wrote. “That is a concept that we cannot support.”

On the other hand, an important group that traditionally might oppose music industry licensing efforts, the Digital Media Assn. (DiMA), endorsed the bill, calling the current music licensing system outdated and inefficient. "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,” DiMA CEO Chris Harrison said in a statement.

The bill would give relief to on-demand digital services, who currently find themselves wrestling with copyright infringement lawsuits and grievances from songwriters and publishers for playing music without going through the proper mechanical licensing steps.

While NMPA president and CEO David Israelite notes there is still more to do to free songwriters from oppressive government regulation, he called the proposed legislation a major step forward. “The Music Modernization Act brings the laws that govern songwriters into the modern age,” Israelite said in a statement. “This legislation will lead to improved rates for songwriters and will streamline digital music companies’ ability to license music.”

The two performance rights organizations governed by the consent decree, ASCAP and BMI, also endorsed the proposed legislation.

"For too long, songwriters have had to work within an outdated system that over-regulates and undervalues their music," ASCAP CEO Elizabeth Matthews said in a statement. "ASCAP and our members have long advocated for a more flexible framework that can adapt to the realities of the modern music marketplace."

Across town, BMI president and CEO Mike O’Neill chimed in as well in a statement: "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... We will continue to push for reforms that can help move the entire music industry forward."

Finally, the songwriter group leaders also endorse the proposed legislation. SONA co-executive directors said in a combined statement, noting that the bill, as currently written, "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."

Meanwhile, NSAI president Steve Bogard said in a statement, "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."

While the legislation has been introduced, it still has a way to go before it becomes law. For one, sister legislation would have to be introduced in the Senate. In an interview with Billboard published Dec. 15, Collins noted that Senator Orrin Hatch (R-UT) was interested in a Senate version of the bill.

Meanwhile, Collins said he introduced the Act to move music licensing law closer to where it should be. “Today, the music industry is shackled to laws devised before streaming,” he noted.

“The House Judiciary Committee has undertaken a thorough review of the issues that adversely affect stakeholders in the copyright ecosystem,” Jeffries said in a statement. “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."

Jeffries noted that the legislation would have digital services pay for the mechanical licensing collective, which would be managed by songwriters and publishers.