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Pandora, SoundExchange, ASCAP, RIAA, Sirius To Testify Before Congress

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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.

AMA

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).

hand April 28: Congress Wants To Hear Your Songs And Stories To Help Fix The Copyright Law

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.

RIAA

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.”

Pandora

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.

SoundExchange

Michael Huppe, President and CEO of SoundExchange will testify on behalf of sound recording rights owners, artists and performers.

hand May 8: SoundExchange Is Screwing Me Out Of Money And There’s Nothing I Can Do About It

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).

ASCAP

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.

handJune 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.”

Sirius XM

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

 

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Comments (29)
  1. Anonymous

    All those licensing talks, old and planned by RIAA “legal improvements” are total horse shit inferior to communist USSR 5 year plans.

    ALL WE NEED IS “NEW FAIR USE DOCTRINE” THAT WILL LOCK THE MUSIC IN VIRTUAL WALLS!

    Once we make music merchandise again and get to $100B sales level there will be no need for government imposed nonsense. Technology can pay out fractions of a pennies to all involved parties for every event with every tune at any place.

    Top priority is to remove from the music fields free ranging mooches like Shazam, Soundhound, The EchoNest, Google Music Search and all lyrics ID providers. If we reward them and convert them to cashiers of the industry 2 billion users they have will convert from looters to buyers of music.

    More numbers I see, more convinced I am that we can have $100B industry at just 25¢ per tune.

    Pandora, XM, all Radio and all streamers have to become simple music stores. YouTube can continue as a discovery platform with limit on free/ad supported runs and become a provider / wholesaler of coded tunes to all broadcasters. Those coded tunes would allow to make monthly payouts to all parties coded into specific tune.


    Reply
    1. Me

      Oh, Tune Hunter… why are you suddenly going anonymous?


      Reply
    2. smg77

      Nobody is going to pay 25 cents per song on Shazam. You are delusional.


      Reply
      1. TuneHunter

        They will pay with pleasure for seamless no tricks addition to playlist, 25¢ is painless even in Zimbabwe.

        …and I am not hiding, just accidental omission of name. I’ve very clear and profitable vision of the industry – so there is no reason for hiding! – I wish those 10 guys who created this mess and still RULE would have HONOR and PRIDE to LISTEN.

        Next step, time permitting will be banging on the stockholders door – just like musicians they are ROBBED in the daylight.


        Reply
  2. A2IM

    Ouch Paul. Indies relegated to the back of the bus? I guess I’ll have to spring for breakfast next time we get together. :-)

    For anyone interested, Darius Van Arman (co-owner of Secretly Canadian, Dead Oceans, Jagjaguwar, Numero Group and board member of A2IM, SoundExchange and Merlin) will be representing independent labels during today’s congressional hearings.

    Darius will be discussing the damaging effects on digital royalties for artists and indie labels due to the licensing practices and market concentration of the major labels, expanding the scope of the compulsory license to insure that every song is valued the same whether owned by a major or released independently with numbers of plays being the sole determining factor as to which song earns the most aggregate revenue, supporting the need for an AM/FM radio performance right, supporting the current system under section 115 for mechanical licensing, and the abuses of the DMCA safe harbor in particular by Google/YouTube.

    Darius’ full testimony to Congress can be found at http://judiciary.house.gov/_cache/files/0f007c39-4b39-4604-8c62-79e58af436a8/final-a2imdariusvanarman0621.pdf.


    Reply
    1. Ari Herstand

      All on me, not Paul. My apologies. After reading through nearly a hundred pages of written testimonies I just had no more juice to keep going and get it posted in time. Thanks for giving the link to the testimony! You’ll be the FIRST I review next time :)


      Reply
      1. Ari Herstand

        I take my eggs over easy


        Reply
        1. A2IM

          Apologies Paul. Ari, understood & stop by the lower east side NYC anytime for your eggs. ;-)


          Reply
  3. Versus

    “unfairness that satellite and digital radio should be required to pay sound recording royalties while terrestrial radio doesn’t have to”

    Abolishing this “unfairness” is easy: Require terrestrial radio stations to pay sound recording royalties as well, here in the US, as they do in the civilized world.

    (As, of course, other parties will be testifying).


    Reply
    1. Casey

      That’s the thing. It’s not easy. Terrestrial radio does not want to pay royalties and the major broadcasters along with the NAB have a ton of influence over lawmakers


      Reply
  4. Dave 5000

    I’m kind of new to music licensing so forgive my ignorance for asking, but why exactly does terrestrial radio allegedly pay nothing for music while the internet radio stations are being forced to? Is there a valid reason for this and is it actually true?


    Reply
    1. Versus

      A good reference on this by the Future of Music Coalition:
      https://www.futureofmusic.org/article/fact-sheet/public-performance-right-sound-recordings

      “The US is one of the few industrialized countries — if not the only one — that does not have a terrestrial broadcast performance right for sound recordings. At least 75 nations, including most European Union member states, do have a performance right. This means that foreign broadcasters pay royalties to songwriters/composers and performers. But since there is no reciprocal right in the US, foreign performance rights societies cannot distribute these royalties to American performers. This leaves tens of millions of dollars of royalties on the table annually rather than in the pockets of American artists.”


      Reply
  5. Anonymous

    Just adjourned. That was pretty badass.


    Reply
    1. Anonymous

      Summary?


      Reply
      1. Anonymous

        Basically it was everyone after their own interests.


        Reply
  6. Versus

    Excellent session. I listened to most of the testimonies. Let’s hope some real progress results, including the
    Songwriter Equity Act
    http://www.digitalmusicnews.com/permalink/2014/04/28/songwriter-equity-act

    and the Respect Act:
    https://beta.congress.gov/bill/113th-congress/house-bill/4772

    As for those radio stations that claim they cannot stay in business while properly paying sound recording royalties, the answer is: they should go out of business. Radio stations in the rest of the world are able to pay properly and stay in business, so those which cannot do so are mismanaged, and must either reform themselves or bow out.

    Also the DMCA must be replaced with laws that truly deal with the problems of piracy/infringement.


    Reply
  7. Versus

    There is an organization (and possibly others) supporting proper compensation for pre-1972 music:

    Project 72
    http://www.project-72.org

    (I have no affiliation with the site; just discovered it myself, but I did click the link and voice my support to Congress)


    Reply
    1. Anonymous

      How about we just make it all public domain like it should be?


      Reply
      1. um...

        yeah, why not just make it all public domain? It’s not like the people making it really need to be compensated. They can all piss up a rope if they actually think we value art these days. And besides, good music doesn’t cost any money to create anyway, so why should we pay for it?


        Reply
        1. Anonymous

          You mean made? All pre-1972 music was made 42+ years ago. It is absolutely ludicrous to be compensated for something you did nearly half a century ago.


          Reply
          1. David

            If you rent your home, try telling the landlord that you won’t pay rent because it was built more than 42 years ago. Better pack your bags first.

            If a records is still worth listening to after 42 years, it is still worth paying for, and the people who actually made it should share in that payment.


            Reply
            1. Anonymous

              Only in a very warped world are a home and a recorded song even remotely comparable.


              Reply
            2. Anonymous

              Why do drug companies and inventors get the short of the stick here? Shouldn’t their intellectual property last forever too?


              Reply
        2. Anonymous

          Copyright like patents is suppose to offer a limited time monopoly over a work. This was set to 14 years (with a optional 14 year renewal) for most of America’s history.


          Reply
      2. Versus

        That’s fine. As long as we make all other employment, service, and products “public domain”, that is, unpaid, as well.


        Reply
        1. Anonymous

          Okay, we will pay artists for their pre-1972 works. But like all other all other forms of employment, services, and products they need to physically do work and perform their works EVERY time it is listen to. That includes all the artists who are long dead and gone. No more of this getting paid for doing absolutely nothing business.


          Reply
  8. hippydog

    Quote “Harrison will also ask Congress to create a master database, hosted by the Copyright Office ”
    Actually, thats a pretty good idea.. Even better would be some sort of international one (but not likely)

    Quote “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. ”

    I agree, (having all the aspects under one roof would clean things up a LOT)
    but the whole monopoly thing makes things go bad also.. I cant help wondering if the whole thing shopuld just be controlled be copywrite board..


    Reply
    1. Anonymous

      Yes, I would like to get rid of ASCAP/BMI/SESAC entirely and replace it with SoundExchange, which has 50%-75% less admin fees and actually pays artists far more fairly.


      Reply

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