Songwriter Groups Reach Compromise With SESAC, Harry Fox Over Music Modernization Act

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The vicious infighting between SESAC/Harry Fox Agency owner Blackstone on one side and two songwriter organizations on the other has ended with a compromise that sees the performance rights organization now giving unconditional support for the Music Modernization Act.

From superstar acts to DIY artists and all kinds of music composers in between, songwriters all across the U.S. have been tweeting up a storm for the last 10 days, accusing Blackstone of trying to introduce a change into the law that -- in the songwriters' view -- could potentially derail it. The songwriters were supporting the two songwriter organization -- Nashville Songwriters Association International and Songwriters of North America -- who called Blackstone out.

But Blackstone’s lobbying clout resulted in Senators -- particularly those with reservations about how the MMA could impact competition -- deciding to push all parties to reach a compromise. In that compromise, announced today (Aug. 2), the proposed collective that will be built to administer the blanket mechanical license that the legislation will create will now be limited to only administering mechanical licenses.

Previously, the legislation did not disallow the proposed collective to compete to administer direct deals for synch, performance and lyric licensing, as it does now through the compromise. By limiting the collective to administering the compulsory mechanical licenses and directly negotiated mechanical license deals, the compromise provides more opportunities for private companies -- like SESAC’s HFA and Music Reports -- to sign that type of business. It also allows the private companies to compete with the collective to administer mechanical licenses in direct deals between the publishers and the digital service.

“SESAC has been fighting for songwriters since 1931 and continues to do so with its enthusiastic support of the MMA,” the organization’s chairman/CEO John Josephson said in a statement. “At the encouragement of Senators closely involved in this legislation, all parties came together to agree on outstanding items related to the MMA, including the reform of the Section 115 compulsory license and other important related matters. We share a collective responsibility to help ensure that the MMA benefits all stakeholders in the industry and look forward to the Senate’s consideration of the bill.”

Before the agreement was reached today, SESAC had been taking a public relations punishment, as both the Nashville Songwriters Assn. International and the Songwriters of North America encouraged their members to speak out against SESAC’s effort to get changes made to the bill, and in some cases had songwriters urging their colleagues to resign from SESAC entirely.

With today's agreement, the NSAI said in a statement, “Reaching consensus within the music industry, on what may be the most important songwriter legislation in history, is a win for American songwriters and the broader music community. We are pleased to have put our differences behind us and support this bill in unanimous harmony. The Nashville Songwriters Association International has been a friend and fan of SESAC’s for decades and that is how our relationship will immediately resume.”

The giant private equity firm Blackstone, which owns SESAC/HFA, had been using its lobbying clout in the Senate to try to get the bill changed so that the work would be divided between private company administrators, like HFA, and the collective. In their scenario, HFA would have done the day-to-day administration instead of the collective; while the new entity would take care of the pending and unmatched royalties for songs where the publishers aren’t known, AKA black-box monies; as well as the building and administration of a comprehensive database.

Under the agreement, the collective will now be handling all of the responsibilities in instances where the blanket mechanical compulsory license is employed, which was the way the legislation had been written before Blackstone began its lobbying campaign.

“We are pleased to have come together with our partners SESAC, the NMPA, SONA and NSAI to move forward as a unified music community to support the successful passage and implementation of the much-needed Music Modernization Act," SONA executive directors Michelle Lewis and Kay Hanley said in a statement. “SONA would personally like to thank our partners, the NSAI and songwriter Ross Golan for their efforts and support in mobilizing the songwriter and artist community nationwide.”

While both organizations accused Blackstone/SESAC of acting in bad faith by waiting until the legislation reached the Senate before introducing their agenda, anybody who understand business would realize that the private companies handling that business now would have been cut out and economically hurt by the creation of the collective. Yet hardly anyone behind the forging of the legislation appeared to be willing to listen to their concerns, sources say.

Now, with all parties on the same page, the Music Modernization Act can count the powerful lobbying efforts of Blackstone in its corner.

But while this compromise certainly smooths the act's path toward passage, it doesn’t ensure it. There are still other issues to deal with, such as the various concerns raised by a few senators, including Sen. Ron Wyden, who is sponsoring the ACCESS to Recording Act which is meant to muddy up the waters for the MMA’s CLASSICS Act component. The CLASSICS portion of MMA ensures that recordings made before 1972 receive royalties from digital and satellite radio. (Currently, the master recording copyright begins on Feb. 15, 1972 and recordings made before then aren't covered by federal law.) While the CLASSICS Act doesn't give those recordings all the same rights enjoyed by master recordings created after that date, at least it gets those artists and master copyright owners paid when they are played by digital and satellite radio.

Also, Congress still needs how to figure out how to pay for the legislation, as the expected $175 million in new taxes it raises falls $47 million short of the $223 million in estimated costs the added responsibilities would incur, as measured in an earlier compromise on the Act in the Senate. 

If all the issues and obstacles can be overcome, the music industry is hoping that the bill will qualify for a verbal vote, rather than one that heads to the floor, when debate is allowed and it could potentially be watered down or bundled or included in some other legislation.

If it does pass the Senate, the act would still have to go back to the House, which will have to vote on the bill all over again. (The MMA passed the House unanimously in April in its first attempt.) And all of this is a race against the clock with midterm elections coming in November, which means a new Congress in January. If the bill doesn’t pass by the end of the year, it's back to the drawing board to start all over again.

Several music industry organizations released statements following the compromise decision today.

“We are thrilled that we have mutually agreed on a path forward,” NMPA president and CEO David Israelite said in a statement. “We are stronger when our music family speaks with one voice and this agreement will allow us to come together to work towards the passage of the MMA. Songwriters need and deserve this bill. We thank the Senators involved for their leadership and guidance.”

“Music industry unity got the Music Modernization Act through the House and it will take that unity to get it through the Senate," said Recording Academy president/CEO Neil Portnow in a statement. "The Academy is gratified that the music industry worked through its differences and can work together to pass MMA into law.”

“After working so hard for so long to update our music licensing laws, we must keep working together to keep the Music Modernization Act moving forward," said ASCAP CEO Elizabeth Matthews in a statement. "All parties have had to give and take in order to achieve this consensus legislation that has so far seen widespread, bipartisan support and would help update music licensing laws to improve the future for music creators. We hope the Senate will pass it without delay.”

"The AIMP applauds the NMPA and SESAC for coming to the table to move past their issues and confirming their unconditional support of the MMA," the Assn. of Independent Music Publishers said in a statement. "We hope that this clears the way for all Senators to embrace the MMA and move this forward.”