Latin Music Week

SiriusXM CEO Jim Meyer Explains the Trouble With The Music Modernization Act (Guest Op-Ed)

Courtesy Photo
Jim Meyer

"It's bad public policy to make a royalty obligation distinction between terrestrial radio and satellite radio."

Just like I said back in February, "We've seen this show before." Another special, backroom deal has been brokered in an effort to breathe life into the Music Modernization Act. Supporters of this bill are now attempting to portray SiriusXM as the "enemy" by mischaracterizing our position in the press as a "brand new attack," a "new source of friction" and, my personal favorite, a "fresh assault." This is simply wrong.

Our position on the CLASSICS Act (now part of the MMA) has been clear since its introduction -- it's bad public policy to make a royalty obligation distinction between terrestrial radio and satellite radio. Radio is radio. If SiriusXM and other "audio services" pay pre-'72 royalties, then terrestrial radio should be required to do the same. The same is true for post-'72 royalties. The President of SoundExchange recently agreed with us, writing in an op-ed published earlier this month:

"...it's not like radio can't afford to pay recording artists. Nobody makes more money from recorded music than the $14 billion radio industry. Radio revenue blows away that earned by competitors like SiriusXM ($5.4 billion) and online streaming services ($6.2 billion in total). Music radio revenue has risen by nearly $40 million since 2013 and the number of music stations has increased every year for the past five years . . . if radio wants to have rules that reflect the music industry of today then that should apply across the board."

In connection with the death of the great recording artist Aretha Franklin last week, the New York Times accurately noted that terrestrial radio never compensated Ms. Franklin for the 7 million spins of her iconic "Respect" recording, only Otis Redding for his music and lyrics, while services like SiriusXM, Spotify and Apple pay Aretha Franklin (and other pre-'72 artists) pursuant to license agreements. And SoundExchange estimates that the annual royalty loss due to the lack of the radio broadcast royalty is over $200 million annually.  It's astonishing with those realities that Congress is poised to clearly and unequivocally exempt terrestrial radio from a sound recording royalty obligation with the CLASSICS Act.

While we do not believe CLASSICS is good public policy, SiriusXM has nonetheless been working with Congress to address our specific concerns with certain MMA language. A number of the provisions of the MMA simply put "a thumb on the scale" to favor one set of interests over another. For instance, the current MMA language does not fully guarantee our prior pre-'72 settlements and license agreements and, as a public company, we cannot responsibly put nearly $250 million at risk. And despite having paid nearly $250 million to pre-'72 copyright owners, we (and Congress) have heard from artists in recent months that they do not realize their labels have been paid by SiriusXM, so we have proposed language that would assure artists are compensated for existing pre-'72 agreements, not just for those executed after the passage of the MMA. 

In addition, the MMA would apply an unworkable rate standard to SiriusXM, Music Choice and Mood Music. Specifically, the "willing buyer/willing seller" ("WB/WS") standard is a failed experiment, which has led to unsustainable rates and left streaming services operating in the red. By contrast, the criteria specified in the 801(b) standard considers the contributions and interests of both music services and content owners. In fact, we support applying the proven 801(b) standard to our competitors as well. Until these and other issues are resolved to create a more level playing field for industry and to ensure fair treatment to artists, we simply cannot support the MMA in its current form. 

SiriusXM has paid nearly $3 billion to the recording industry since we started serving consumers in 2001. SiriusXM supports a music industry that rewards artists for their creative work, allows consumers access to the music they want and how they want it, while at the same time allowing services to continue to hire the best and the brightest, earn a return on investment and invest for the future. As currently written, the MMA would hinder those objectives and SiriusXM's ability to provide music, news, talk, weather, traffic and other services to our 33 million subscribers, as well as to the many communities we serve.

James E. Meyer has been CEO of SiriusXM since 2012, and is a director on the Board of Pandora Media Inc.