In his prepared remarks for today’s Senate Judiciary Committee hearing to discuss the Music Modernization Act, RIAA president Mitch Glazier sought to straighten out the “circular argument” surrounding pre-1972 sound recordings and pushed lawmakers to pass the “historic” bill.
The Music Modernization Act passed the U.S. House last month by unanimous vote and was introduced May 10 in the Senate by Sen. Orrin Hatch (R-UT) and a bipartisan group of cosponsors. The three-tiered legislation, which contains the Musical Works Modernization Act, the CLASSICS Act, and the AMP Act, enjoys widespread support across industry groups and is expected to pass easily.
The bill creates a blanket mechanical license that should help songwriters and publishers get paid correctly for all their songs, while making licensing much easier for digital services, through the creation of a new agency to administer that process. The bill also helps songwriters and composers by letting market rates and other considerations become involved in the rate-setting process and also helps producers by formalizing any royalty payments due to them via Sound Exchange.
It would also require digital radio to pay master rights sound recording performance royalties for music made before 1972. It is this component of the bill — making up the CLASSICS portion — that Glazier came before the Judiciary Committee to testify on behalf of the labels his trade body represents.
The CLASSICS Act fixes a problem that arose from a conflict between old laws and new technologies, creating uncertainty that has resulted in discriminatory treatment against older artists for digital performances of recordings made before February 15, 1972. Records made before that date are protected under state law, because Congress did not grant federal protection to sound recordings until 1972, and that protection was prospective. In 1995, Congress created a blanket statutory license for the digital performance of sound recordings, intending that services who use the license would pay one fee for all the music they play. While most digital music services do pay under that license for all the music they play, including pre-72 recordings, some companies have targeted classic recordings. They argue they don’t have to pay to digitally perform classics because those recordings are subject to state protection and the license is a federal creature. They also argue, however, that state law does not apply to digital performances of pre-72 works. It’s a circular argument that creates a windfall for digital services at the expense of legacy artists and their labels.
Artists sued these services to protect themselves in several states so they could receive just compensation for the use of their music, which should not depend on what platform is used to deliver it. The results have been mixed, causing uncertainty for digital services who may have to face dozens of lawsuits for several causes of actions in different states, with no uniform exceptions and limitations, potential punitive damages, and unclear rules on secondary liability. Out of this uncertainty on both sides, the CLASSICS provisions of the Music Modernization Act were born. It is a practical, narrowly-tailored solution, supported by both digital services and creators, that provides certainty and protection to both creators and users. Because of that, it has overwhelming support.
Glazier then outlined several examples of how some digital services refuse to pay to use pre-1972 versions of classic songs, like Frank Sinatra’s recording of “My Way” and Louis Armstrong’s version of “What a Wonderful World,” while agreeing to pay for later, less-iconic versions.
“It’s time to modernize music law to assure that the artists who created these works, which are some of the most popular on streaming services, receive the compensation intended, while protecting the services that deliver them to fans on national and global digital platforms who desire business certainty, licensing efficiency and clear rules on liability,” he said. “That’s what CLASSICS does.”
Glazier also made his case for market-based rate standard for sound recordings.
The Music Modernization Act also includes a provision important not only in the context of pre-72 sound recordings, but with respect to all compositions and sound recordings: it applies the well-established “willing buyer-willing seller” rate standard to both songwriters and artists in both music licensing sections of the Copyright Act. This provision ensures platform parity and a market-based rate standard, which all creators deserve for their work.
That standard is a vestige of the past, and this package finally brings the music licensing system into the modern age, recognizing the vibrant competitive marketplace for music.
The willing buyer-willing seller standard is not only the right thing to do for creators, it also finally unshackles the digital music market from the patchwork of provisions applied to different technologies developed at different times. That has led to unfair competition between platforms based on the technology they use to deliver music and the year they were created. The Music Modernization Act finally, after years in the making, moves the industry forward, favors no platform or company over another, does not discriminate based on the year a company came into existence, encourages robust competition, looks to the market as a benchmark to pay creators fairly, and allows the music and technology industries to move forward together as partners.