What Will Happen If the Music Modernization Act Doesn't Pass Soon (Column)

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TheĀ US Capitol Building in Washington, DC.

After years of planning, more than a year of hardcore lobbying, and months of final compromises, the Music Modernization Act could go to a hotline vote in the Senate later today. The bill has overwhelming support: It passed the House of Representatives unanimously in April, it has more than 70 cosponsors in the Senate, and, after some compromises to get the support of Sen. Ron Wyden (D-Ore.), the only remaining opposition comes from Sirius XM. And the fact that it has been hotlined implies that its Senate cosponsors -- and, presumably, music-business lobbyists -- believe it can pass on a voice vote.

The stakes are high. A single objection to the bill, if it can’t be addressed, means that the Senate would then have to schedule a formal vote. At that point, Sirius XM would have a powerful ally: Time. The Senate only has so much time before the election, and it will be harder to pass anything in the “lame duck” session after that. That could be the last chance for the bill -- and if it doesn’t pass, the music business is going to have a major mess on its hands.

Many observers seem to believe that if the Music Modernization Act doesn’t pass before the end of this year, legislators and lobbyists will simply try again in 2019. It’s not that simple, though. (Also, a word to the wise: I wouldn’t recommend suggesting this to anyone involved in person. It’s a lot harder than it looks from the outside.) First, three of the main forces behind the legislation are retiring. In the House, both Rep. Darrell Issa (R-Calif.) and Rep. Bob Goodlatte (R-Va.) will leave Congress, and the latter, currently Chair of the House Judiciary Committee, oversaw the copyright reform process that made this possible in the first place. This will also be the last term for Sen. Orrin Hatch (R-Utah), a cosponsor of the bill and a long-time champion of copyright (as well as a songwriter himself).

Copyright, for all of the debate it sparks, is one of the only bipartisan issues in Washington. But that only helps if legislators can work together across the aisle. And although no one knows what the new Congress will look like, voters in both parties don’t seem especially interested in electing the kind of moderates who are willing to dive into complicated issues with colleagues they disagree with. Compared to investigating President Trump -- or blocking Democrats from interfering with the administration, depending on where you stand -- copyright is a pretty unsexy issue.

The bigger problem is that the compromise at the heart of the Music Modernization Act just won’t last. The most significant part of the bill will establish a mechanical royalties collecting society that will be run by rightsholders and paid for by services. In exchange, the bill will give services a safe harbor of sorts from copyright infringement lawsuits for statutory damages filed after December 31, 2017. One could argue about the justice of this, or the way the collecting society has been set up, but this would reform mechanical licensing, give streaming services the stability they need, and ensure that the music business can continue on its current path of growth.

It could also be seen as a ticking time bomb.

If the bill doesn’t pass, rightsholders could unleash a torrent of copyright suits against streaming services for using their music without permission. With statutory damages of up to $150,000 per work infringed, such litigation could endanger the financial stability of the streaming services. That would be bad for the entire music business. But it could also potentially leave rightsholders without the leverage they need to reach a compromise on potential legislation. Music publishers wouldn’t be able to offer safe harbor from the legal storm services would face then. That means they wouldn’t be able to get some of the other advantages the bill offers them, such as a better rate-setting standard for copyright royalty board decisions, and the ability for ASCAP and BMI to get different judges in litigation.

Aren’t there other ways to fix the mechanical licensing mess? Sure, but it’s hard to imagine anything happening without the support of both services and publishers. They could come to another compromise, but it almost certainly wouldn’t be as advantageous for rightsholders. Just for starters, another bill could create a mechanical royalty collecting society that’s controlled and paid for by both publishers and services. The former would mean more compromises with services, while the second would mean that any such society would hold back some money from rights holders to cover its costs. The facts that the current bill establishes a society thats funded entirely by services has helped win the support of independent publishers and songwriters.

Not all of the Music Modernization Act involves publishing -- it also clearly establishes a digital public performance right for pre-1972 sound recordings, among other things. That part of the bill would presumably have the same support in Congress. But it wouldn’t have as much support from the music business, since it only involves the recording business. And while it addresses an  important issue, it lacks the urgency of fixing music streaming that helped make the Music Modernization Act a priority.

The genius of the Music Modernization Act is that it’s a compromise that has the support of the entire music business. Making that compromise involved actually compromising on some ideals -- and thus no one is entirely happy with the result. But it was done so as to avoid the opposition of a powerful, united industry. (It’s hard enough to overcome the objections of SiriusXM -- imagine going up against the combined might of Spotify, Apple, and Amazon.) That makes it a bill that can pass. Let’s hope it does -- soon.