The MMA will ensure that SiriusXM plays by the "same rules as every other digital service."
SiriusXM’s top lawyer says “music is a funny business” but the company’s effort to kill music licensing reform is no joke.
The Music Modernization Act is based on two simple principles – streamline the licensing system and work towards fair-market-value based rules for creators. It’s a compromise, like most big packages of legislation, in which every segment of the industry had to give in some places in order to get reforms they cared about more in others.
But that kind of “give a little get a little” deal isn’t of much interest to SiriusXM, which has instead focused its efforts on special carve-outs and legal chicanery such as withholding royalties from pre-72 artists until it was sued.
The company has embarked on a full-court press seeking eleventh-hour changes to legislation that has unanimously passed the House of Representatives and the Judiciary Committee in the Senate. It seeks to upend one of the most popular and broadly supported pieces of music legislation in decades – a bill that has to date 75 bipartisan cosponsors in the Senate, the backing of every creator organization, and all the major music services - except, of course, for SiriusXM.
The company knows its proposed changes cannot be accepted, but that’s OK if its real goal is simply to kill reform -- which probably explains why the arguments it is making are so illogical and thin.
First, as a public relations matter, SiriusXM wants artists to acknowledge it “has already paid for all of the pre-1972 works it uses.” This claim is especially rich under the circumstances – probably the most carefully worded spin I have seen in years – and I live in Washington, DC.
SiriusXM played thousands upon thousands of legacy artists’ recordings on its “decades” channels (like 60s on 6) and other country, classic rock, Broadway, Motown and specialty stations and refused to pay anything to legacy artists and their labels for years, hiding behind a dubious legal claim it concocted that recordings made before 1972 could be used for free because they weren’t covered under the federal compulsory license.
That forced artists and labels to sue in state court where they scored early wins in California, compelling SiriusXM to settle at least some of its obligation to legacy artists – which is the only reason it has “already paid” anything at all - at less than the post-'72 rate for a short period of time, while it simultaneously tries to kill legislation that would finally require full payment to pre-'72 artists after their settlements expire. And now it complains it isn’t getting enough credit for what it has paid? Give me a break.
The company’s claim that it wants to “ensure that artists receive 50 percent of the monies under those existing licenses” is even more absurd. Major record companies and their artist partners already agreed artists would receive 50 percent of performance royalties under licenses with SiriusXM, and the artists’ share has already been and will continue to be distributed through SoundExchange, the collective for artists and labels. Could it be that SiriusXM is simply trying to look like they are pro-artist while they work behind the scenes to kill artists’ rights to fair treatment?
The real issue is that SiriusXM wants to avoid paying legacy artists any more money while it keeps its special deal that allows it to pay for post-'72 music at below-market rates. The Music Modernization Act finally corrects both these injustices and makes SiriusXM play by the same rules as every other digital service.
More than 3000 of SiriusXM's competitor services currently pay under the market-based "willing buyer/willing seller standard," while SiriusXM gets a leg up over its competition with a below-market standard. One of the core goals of the Modernization Act effort is to get rid of these outdated special carve-outs and subsidies and provide for fair competition at fair market rates for creators.
SiriusXM's claim that Congress happily "confirmed" its special status back in 1998 is bogus. The DMCA in 1998 was drafted to move all services, including Sirius and XM, to market value rules, but Sirius and XM opposed it, just as they are opposing the Music Modernization Act now after 20 years of special subsidies. This time, creators are watching.
Finally, SiriusXM asks "[w]hy are we changing the rate court evidence standard for musical compositions in this legislation?" It knows full well the answer is that Congress is taking steps to assure songwriters can get fair market value for their work, that's why. And as to the company's crocodile tears about AM/FM radio's unfair exemption from royalties for artists and record companies, we've been fighting that fight for years, and it'd be nice if SiriusXM once joined in to help solve the problem rather than simply using it as an excuse to pay less itself.
That's it – the sum total of SiriusXM's objections: 1) They had to pay to settle litigation they lost because they didn't want to pay legacy artists and don't want to pay after those agreements expire in a few years; 2) They want to pay less than their competitors and deny fair market value for the recordings they play; and 3) they want to deny songwriters the chance to make a case for better rates in court.
Thankfully, creators have mobilized like never before to protect their rights, something SiriusXM's distractions and red herrings cannot overcome. We are confident that Congress will not let one company -- a profitable self-described "cash flow machine" earning $5.4 billion a year – singlehandedly stand in the way of historic music licensing reforms supported by nearly three-quarters of the U.S. Senate, the entire U.S. House of Representatives and thousands of songwriters and artists.
Mitch Glazier is president of the Recording Industry Association of America.