The US House of Representatives Judiciary Committee will be holding Part 2 of the Music Licensing Under Title 17 hearing, Wednesday June 25th at 10AM EDT.
You can live stream the hearing here.
Rosanne Cash will be the first to testify on behalf of the Americana Music Association (AMA). She will discuss how difficult it is for musicians to make a living in today’s environment. She will mention that the US is the only country (other than China, North Korea and Iran) that does not have a performance right for terrestrial radio (AM/FM) play for sound recording artists.
She will also advocate for the Songwriter Equity Act (SEA), that seeks to update Sections 114 and 115 of the US Copyright Act, allowing ASCAP and BMI to negotiate fair market value rates for their licenses. The SEA will also update the statutory rate for mechanical licenses – which was set at 2 cents per reproduction in 1909 and is only 9.1 cents today (the rate for streams is a bit more complicated and based on the total number of subscribers the service has).
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She will also discuss the lack of federal copyright protection for pre-1972 sound recordings. Works recorded prior to 1972 are protected by state laws so they don’t enjoy the digital sound recording performance royalty provision of the federal copyright act. This allows digital services (like Pandora and Sirius XM) to refuse to pay for any sound recording performance that was recorded before 1972. The RESPECT Act, HR 4772, is proposed legislation to fix this.
Cary Sherman, CEO and Chairman of the Recording Industry Association of America (RIAA) will testify on behalf of the major record companies. He will also advocate for a performance right for sound recordings from terrestrial radio. He will discuss the need for an update to the ASCAP and BMI consent decrees which prohibit these PROs from licensing anything other than performance rights. As contrast, performing rights organizations worldwide collect mechanical royalties in addition to performance royalties.
Like Cash, he will also advocate for the RESPECT Act.
He will also ask for an “across-the-board market-based rate standard.” He will note that Sirius XM, Music Choice and Muzak pay below market royalty rates (per 801(b) of the US Copyright Act) for their use of sound recordings because they were “grandfathered in.”
Chris Harrison, Vice President of Business Affairs at Pandora, will plead their case to keep the copyright law as it is – with ASCAP and BMI consent decrees intact. The recent ruling of the ASCAP rate court judge ruled that Pandora could continue paying the rate it had been paying, 1.85% of its annual revenue to ASCAP songwriters and publishers. ASCAP asked for 3%.
Harrison will also ask Congress to create a master database, hosted by the Copyright Office, that would list all copyright ownership information.
Having a master database would enable anyone to search a song title and find the complete ownership of every aspect of the song: who owns the sound recording (label or artist), who owns and administers the composition (songwriter or publishing company), who can license the performance rights (ASCAP, BMI, SESAC or publishing company), etc. No master database with this information currently exists.
Michael Huppe, President and CEO of SoundExchange will testify on behalf of sound recording rights owners, artists and performers.
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He will advocate for the RESPECT Act, the need for terrestrial radio stations to pay performance royalties for sound recordings, and he will mention that, contrary to the ASCAP and BMI consent decrees and statutory mechanical licenses set in Sections 114 and 115 of the US Copyright Act that don’t work for songwriters or publishers in today’s environment, the statutory licenses for sound recordings (set in Sections 112 and 114) are working and should be maintained.
These statutory rates set for sound recordings are significantly higher than the rates set for compositions. Huppe wants to make sure that if Congress decides to balance the rates for sound recordings and compositions that the sound recording rates don’t go down (the ones which SoundExchange administers).
Paul Williams, President and Chairman of ASCAP, will testify on behalf of the 500,000 songwriters, composers and publishers ASCAP represents. He will discuss the need to update the 73 year old ASCAP Consent Decree. The Department of Justice is currently reviewing both ASCAP and BMI’s consent decrees.
June 10th: The Department of Justice To Review ASCAP and BMI Consent Decrees
He will mention the Songwriter Equity Act, which seeks to update the restrictions of ASCAP and BMI to cite other royalty rates (like the current sound recording rate) when pleading cases to their rate court judge about what is a fair rate for composition performance royalties.
He will discuss how ASCAP would like to be able to administer the rights for not just the public performance of a song, but all other aspects: mechanical, synch, print – like other performing rights organizations worldwide can do. The system as it is setup in the US is quite messy and very difficult for anyone attempting to license music for multiple mediums (video, streaming, download, radio). ASCAP would like the ability to be able to be a “one stop shop” for composition rights. This is currently not possible the way the copyright law is written.
Williams also will discuss how the recent rate court rulings prevents publishers the flexibility to directly license part of their catalog. The rate court judge decided that members of ASCAP and BMI must either be “all in or all out.” As a result, Williams will mention, copyright owners must either choose to remain a member of their PRO and “reap the benefits of collective licensing, but through a regulated system that does not compensate them for the true value of their performances of their works or leave the PRO system altogether, achieving competitive rates in the marketplace, but losing the efficiencies of collective licensing (and leaving unlicensed performances of thousands of music users they cannot affordably individually license.”
David J. Frear, CFO of Sirius XM satellite radio will testify on behalf of his company. He will discuss the unfairness that satellite and digital radio should be required to pay sound recording royalties while terrestrial radio doesn’t have to. He will defend the importance of the ASCAP and BMI consent decrees stating that without them it would “violate antitrust laws.”
Frear will also mention the “importance of the 801 (b) rate-setting standard.” Sirius XM of course believe they should enjoy the lower rates they were “grandfathered” into.
The National Association of Broadcasters (NAB), The American Association of Independent Music (A2IM) and the Radio Music License Committee (RMLC) will also testify. Tune in to hear their statements.
This will be an interesting hearing to watch unfold with so many opposing interests and rates at stake. There have not been many updates to music copyright law over the past 100 years. The fact that Congress is open to so many changes (and the DOJ is currently reviewing ASCAP and BMI consent decrees) signals that serious change could be affected this year – which could change the course of the music industry for decades to come.
Watch the hearing at 10AM EDT here.
Photo is by Ttarisiuk from Flickr and used with the Creative Commons license.
Ari Herstand is a Los Angeles based singer/songwriter and the creator of the music business advice blog Ari’s Take. Listen to his new album, Brave Enough, on Spotify or download it on BandCamp. Follow him on Twitter: @aristake