One of the main forces behind the bill is the Notice of Intent (NOI) system, whereby music users that want to license music have had to identify the copyright owner, and if they couldn’t, were required to file a Notice of Intent with the U.S. Copyright Office. That NOI would allow them to play the music, but it also meant that 45 million songs across all the digital services -- even if one administrator is handling licenses for three services, it would have to submit three NOIs for that one song -- weren’t getting paid on time. “The NOI doesn’t work in the digital age,” said attorney Jacqueline Charlesworth, Of Counsel with the firm of Covington & Burling LLP.
The big thing that the law would change is that, currently, the money that isn’t being paid to songwriters sits with the services. The proposed legislation would move that unattributable money over to the songwriter/publisher side of the business. “It's worth underscoring that this gets the money from the digital service to our side,” Sony/ATV Music Publishing supervisor of North American publishing administration Ted Goldthorpe pointed out. Added songwriter and Songwriters Guild of America president Rick Carnes, “Once it's on our side, we have to make sure that the songwriters and publishers are found and get paid."
Besides getting the correct rights owner paid, the goal is to create a more efficient process so that the organizations involved do not waste time trying to create their own databases. Currently, the services pay for the cost of finding the right songwriters, but having that done in a centralized way under the new legislation would cut down their costs, since each service wouldn't have to do that anymore.
The panel also explained the two other bills rolled up into the Music Modernization Act: the CLASSICS Act, which provides payment for recordings issued before Feb. 15, 1972; and the AMP Act, which allows for the formalization of SoundExchange-paying producers and engineers to receive their royalties from sound recordings, which previously were paid by the artist or the label.
The CLASSICS Act is important because it's not just about artists who are older and can no longer make money from touring, “it's about their widows and their children getting the royalties, too,” Carnes said. "That’s why copyright lasts for the life of the artist plus 70 years [after the artist passes]." Also, songwriters don’t get a lot of money up front, but get small amounts -- a nickel here and a dime there -- but are entitled to it for a long period of time, which eventually adds up.
In the following panel, on the Collective Management of Rights, moderator John Simson -- Of Counsel at Fox Rothschild, and executive-in-residence and program director for the business and entertainment program department of management at American University -- noted that the industry had come a long way from the early “failures” of MusicNet and Pressplay. MusicNet was a digital service owned by the Warner Music Group, BMG, EMI and RealNetworks, while Pressplay was owned by Sony Music and Universal Music Group. Both launched in 2001/2002, but the industry ultimately needed Apple’s iTunes to launch itself into the digital world.
Yet digital consultant Cindy Charles, who worked at MusicNet back then, argued that those initiatives weren't a total failure, considering that the labels had to see what rights they had under their artist contracts, which is why MusicNet -- now known as MediaNet -- only launched with 70,000 tracks.
None of what MediaNet was trying to do had been done before, she pointed out, including figuring out what to charge and then teaching the consumer to rent music instead of buying it. “We had the vision then that this is where the music business is going -- that people should be able to buy and stream, and that streaming legally will ultimately be better than stealing,” she said. “We were too early.”
Don’t forget, she said -- people didn’t have mobile smart phones like they do now, so in that sense, it wasn’t a complete failure. But “it was a painful” experience, she added.