Indie Songwriters Feeling Left Out as the ‘Music Modernization Act’ Moves to the Senate

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The ‘Music Modernization Act’ is being heralded as groundbreaking legislation for music and tech.  But indie songwriters and publishers feel like they’re getting the shaft.

Most music industry bills face brutal deaths, outmatched by stronger, smarter opponents.  The RIAA has been flopping on the Hill for decades, despite seven-figure salaries and pricey DC offices.

Somehow, opponents like Google and broadcast radio always seem to win.

All of which makes the ‘Music Modernization Act’ a surprising change.  Instead of another uphill battle, this bill has support from both sides, including Spotify and the tech lobby.  Major publishers, represented by longtime NMPA honcho David Israelite, are all voting yes.

Similarly, major labels are also on board, thanks partly to their significant equity stakes in Spotify.

The big three demanded those shares years ago, and now, the parties are mutually aligned.  A smashing Spotify success on Wall Street could bring billions to the balance sheets of Universal, Warner and Sony, not to mention continued royalty streams.

It’s a cigar fat enough for everyone to puff.

Accordingly, the Music Modernization Act puts away a pesky royalty nightmare for Spotify.  Instead of having to fight billions in publishing lawsuits, the Act draws a forgiveness line in the sand.  And forget about the troubled HFA — this bill calls for a brand-new collection system that will be created by the platforms themselves.

It’s a new, simple structure for paying publishing royalties and tracking rights owners — without the legal fees, class actions, and bad press.

Sounds great — unless you’re an independent publisher or songwriter.

Like Wixen Music Publishing, which recently dropped a $1.6 billion lawsuit onto Spotify’s lap right after Christmas.  The Wixen suit claims that Spotify not only failed to pay mechanicals, but that they systematically ignored the problem.  That is, until they were sued.

Wixen CEO Randall Wixen explained the rush job.  “On page 82 of [the Music Modernization Act] is a clause that says if you don’t file a lawsuit against a music streaming company by January 1st, 2018, you lose your rights to get compensated.  If that act was passed, and we hadn’t filed a suit by January 1st, we would have forfeited that right.

“It would retroactively give a free pass for a streaming service that has infringed on music rights in the past to build a service worth maybe $20 billion once it goes public.”

Richard Busch, an attorney actively suing Spotify, says the bill is blatantly unfair — and potentially unconstitutional.

In a guest article on Digital Music News, Busch pointed to a bill that satisfies the NMPA and its constituents, but few others.  “Limiting damages retroactively if a lawsuit has not yet been filed may very well be unconstitutional,” Busch explained.

“It also seems patently unfair to basically retroactively absolve Spotify of infringement damages, and willful infringement at that, just because a victim has not yet filed a lawsuit.”

I’m One of the Attorneys Suing Spotify. And Here’s Why the ‘Music Modernization Act’ Makes Little Sense.

Busch represents litigants controlling roughly 2,500 musical compositions, some with hundreds of millions of Spotify plays.

Others were less willing to go on the record.  But a number of publishers and songwriters speaking to Digital Music News are crying foul.  That includes accusations that major publishers are ramming through legislation that benefits themselves — and no other publishers.   “The NMPA doesn’t care about statutory damages, because they already got paid,” one source noted.  “So they’re happy to give them up.”

“But giving them up is not a concession [from the NMPA].  They are giving them up to get the DSPs [i.e., Spotify and Apple] to sign off on the bill that contains additional legislation that solely benefits the NMPA and its members at the expense of everyone else.”

And what are those other benefits?

One view is that the NMPA is merely sowing the seeds for another HFA, a company whose reputation took a serious hit after billions in unpaid mechanical rights started surfacing.  HFA was once owned by the NMPA, and according to sources, was presented as a solution to Spotify’s emerging mechanical licensing mess.

Music Publishers Offered to Help Spotify Figure Out Royalties. Now, They’re Suing Spotify for Taking Their Advice.

Years later, it was learned that HFA was paying only a portion of those licenses.  The Agency was ultimately sold — leaving Spotify with an even bigger liability nightmare.  All of which prompted another meeting with Boss Israelite.

(NMPA’s David Israelite has denied this sequence of events.  “HFA did not ‘create’ any of these problems,” Israelite told DMN back in July.  “They are not liable, and they are not the infringer.”)

Fast-forward to January of 2018, and critics are charging that ‘HFA II’ is now being constructed — with devious intent.

That’s where this whole thing gets even sneakier, according to critics.  According to one clause of the Music Modernization Act, any funds collected by ‘HFA II’ and not claimed automatically revert those properly registered.  In fact, the unclaimed money is simply divided by publishing marketshare, even if it involves someone else’s songs.

It’s an arrangement that works perfectly for those sophisticated enough to receive it.  Including every single NMPA member.

But even better: ‘HFA II’ gets the NMPA back into the mechanical licensing market, an area they once controlled through HFA (which they sold).  “When the NMPA sold HFA, they lost complete control over the mechanical royalty market,” one publishing executive explained.

“Now, [the NMPA] wants that control back, as well as any other financial benefit it can get for its members.  So they proposed the Music Modernization act (MMA).”

Actually, under MMA, the updated royalty database system would be built by the streaming platforms themselves.  But critics of the bill are wondering why a system has to be reconstructed all over again.

More urgently, they’re wondering why Spotify will still be permitted to play songs that don’t have the proper registration information — especially since that money ultimately flows back to the NMPA.

Of course, players like Wixen aren’t happy with any of that.  But indie songwriters are also taking note.  That includes George Johnson, who recently penned a letter to Representative Doug Collins, an original sponsor of the bill.  “The fact that [MMA] takes away the right to sue for copyright infringement should tell you this is not a songwriter friendly bill,” Johnson wrote.

“But David Israelite and Bart Herbison are not songwriters.  Only a lobbyist and a former DOJ attorney (who has consent decrees against us).”

Now, the question is what happens to several massive lawsuits filed before the January 1st cut-off date.  And, a torrent of suits that could be ahead — regardless of what the Music Modernization Act states.



16 Responses

  1. Remi Swierczek

    5 year plan in communist USSR made more sense than current music shenanigans in Congress and Senate.
    All we need is NEW FAIR USE ACT to lock music in virtual walls and have profitable to all $300B music industry by 2030. Only predictable loser: YouTube.

    Play the best sub and ad free and charge 49¢ for addition to personal playlist.

  2. Blobbo

    All this should do is make future star musicians KNOW to NEVER sign with a major ripoff zio-led entertainment corp. Do your own work touring to build your name, and f all the majors straight to hell. All they sell is tripe anyway. They will ALWAYS F you!

    • Son of Zion


      “….NEVER sign with a major ripoff zio-led entertainment corp.”

      This type of antisemitism (misdirected as it is) is welcome here at DMN?

  3. Jody Dunitz

    NMPA interests do not align with songwriters’ interests. NMPA’s role with the MMA is a culmination of pro-label lobbying activities, to the detriment of songwriters. There is no ‘S’ in NMPA:

    And …
    The pending publisher/songwriter lawsuits will force Spotify to pay outstanding claims, but they will do nothing to alter the meager share of the Spotify revenue pot that is allocated to song rights on an on-going basis.
    On a quarterly basis, the record labels receive more than 65% of Spotify’s revenue from “minimum guarantees,” advances, and royalty payments. The royalty payable by Spotify for musical compositions is a mere 15% of revenue – when it’s paid at all.

    There’s nothing in the MMA that can adequately fix that allocation.
    Songwriters can get more only if labels take less. Perhaps after the labels bank their share of Spotify’s IPO rewards, they will see fit to surrender a fair share of recurring revenue to songwriters, without whom there would be nothing to stream.

    • wurdo

      actually Jody, the MMA also changes the rate setting standard for compulsory licensing and requires rate court judges to be randomly assigned rather than appointed for life. We all know that DMN couldn’t survive without making indie musicians feel outraged over something, even if that something could very well benefit their career.
      The fact is, the current system isn’t working for songwriters and you have to compromise to get this done. Also, you’re talking about lawsuits from the past. If this bill passes, future songwriters will have a mechanism to get paid more fairly.

      • Anonymous

        The current system would work just fine if the streaming services actually bothered to follow the rules and WAIT to make music available until the songs were actually licensed. If the services don’t know who to contact, the music doesn’t get made available. The labels, who very much want that music to be made available, would then build the systems necessary to ensure the publishing information can be communicated to the services and their licensing agents.

        The problem is the labels don’t want to spend the money to build such systems, and they don’t want there to be any friction getting their product to market. The services believe they can’t run a competitive service if they don’t have all 50 million recordings available on their service, licensed or not. So the labels pressure the services to make everything available, licensed or not, and the services make it available, willfully infringing the vast majority of it.

        The MMA makes it so those rules no longer apply to the services and labels. They no longer have to know who owns the publishing rights. Services just pay everything to a centralized agency controlled by NMPA publishers, and whatever songs that centralized agency is unable to identify after three years, those NMPA members get to keep all the royalties those songs have accrued, WHETHER IT’S ACTUALLY THEIR MONEY OR NOT.

        The current system would work for songwriters if people followed the rules. The MMA will not benefit songwriters even if people follow the rules (with the exception of perhaps the biggest songwriters administered by NMPA publishers).

        Write to your representatives in congress folks. Tell them this bill is not going to work for songwriters. It only benefits the services, labels and biggest publishers. If the current rules are enforced, all songwriters would benefit. And if that creates friction getting products to market, so be it. That friction is what gets songwriters paid, and we need to have it.

        I do want to raise publisher and songwriter royalty rates, and give them a seat at the table. But there are better legislative solutions for doing so, and it’s got to benefit everyone, not just the NMPA members. This bill just won’t do.

  4. Funny Industry

    If by “independent song-writers” you mean plaintiffs’ lawyers and anyone else looking to make a windfall from the fact that an obscure song has been played a handful of times on Spotify, then you are right.

    • Anonymous

      I know, man. I mean, who the hell are Tom Petty, Neil Young and The Doors anyway? Does anyone listen to those obscure songs?

      • Anonymous

        Unless, of course, you’re referring to the Yesh lawsuits, in which case I’d say yeah, fuck those guys. They’re opportunists, and not really trying to promote positive change in the industry. But, those suits wouldn’t be nearly as much of an issue if the services simply followed the rules and not make the music available until the publishing rights were licensed.

        Despite popular belief, you don’t really need to have 50 million recordings on your service to stay in business. No one ever believes me though.

      • Anonimity

        “But, those suits wouldn’t be nearly as much of an issue if the services simply followed the rules and not make the music available until the publishing rights were licensed.”

        You mean, like the way the record labels do? Never releasing a track until all the publisher info is in, double-checked and confirmed and made available to their distributors?

        Yea…. You obviously know a LOT about how this actually works…

        “Despite popular belief, you don’t really need to have 50 million recordings on your service to stay in business. No one ever believes me though.”

        Yes. And YOUR wildly successful streaming service, which is currently challenging Spotify for market dominance clearly proves this.

        Oh, that’s right, you DON’T have a streaming service. You have NO IDEA what it takes to stay in business, much less actually be competitive, and you have no IDEA how the recorded music business actually works.

        Here’s a good idea: Maybe you should just stay quiet, or just ask polite questions about the things you don’t understand.

        • Anonymous

          You know… I think I might’ve touched a nerve right there.

          I know how the music business works. It relies on services and labels committing willful infringement. I just think it would be better to force the services and labels to stop willfully infringing on songwriters rights, as opposed to making that willful infringement legal.

          And if you, fellow anonymous internet dweller, happen to have one of those fancy streaming services challenging Spotify for market dominance… take a look at how many of those millions of recordings in your catalog have actually ever been listened to once. I’m gonna bet that half of that catalog has never even seen a single spin. If no one is listening to all the unlicensed songs a service makes available, what’s the point in having them, other than as a marketing gimmick?

        • Anonimity

          You should know that the only nerve you might’ve touched is an intolerance for people spouting off confidently foolish assumptions about topics they clearly don’t understand.

          No, you don’t “know how the music business works.”

          You said you understand that “It relies on services and labels committing willful infringement. I just think it would be better to force the services and labels to stop willfully infringing on songwriters rights, as opposed to making that willful infringement legal.”

          Do you really think that the SONGWRTERS are even remotely interested in making sure that what you erroneously call “willful infringement” –
          what is really the result of the attempts of everybody who is involved to get the quickest release of songs and recordings, while they are current – doesn’t occur unless and until every potential claiming songwriter has all their paperwork in and finalized?

          They aren’t.

          No one who stands to make bank on the tune wants to wait to see if the one of the 7 guys who were in the room while they were doing the drum programming is going to demand a 10% interest in the song, before they put it out. Least of all the major songwriters.

          Be clear, here: NO ONE is interested in holding up the business until all the “T”s are crossed and the “I” are dotted, in order to satisfy archaic statutory requirements.

          And I can tell you that my fancy streaming service that is challenging Spotify for market dominance has relatively few of the many millions of recordings in my catalog that have actually never been listened to, once. Waaaaaay less than the “half of that catalog” that you would so foolishly bet. And just to try to help you wrap your head around this issue: if even ONE person listens to ONE song my service makes available, that others don’t, well, then that’s an additional subscriber that MY service has, that my competitors don’t have.

          THAT’s the point in having them.

          OF COURSE it’s a marketing “gimmick.”

          Again, do you know ANYTHING about how the music business works?

          • Anonymous

            You have described how the music business works perfectly. You have also illustrated why independent songwriters suffer. Those “i”s and “t”s aren’t just there to satisfy archaic rules. Those “i”s and “t”s are an independent songwriter’s livelihood. We must stop brushing them aside in the name of a quick release. We must change how the industry works, not normalize it.

          • Anonimity


            And for good reason.

            You are myopically hanging on to the existing rules, rules that are clearly borne out of a long-by-gone era.

            No, we absolutely SHOULD NOT bend the business – slow the inevitable advancement and progress of it – so that we can adhere to out-dated statutory dogma that was dreamed up back when people literally checked for copyright ownership by thumbing through a card catalog in the Library of Congress.

            If you have any ability to embrace the future at all, you have no choice but to acknowledge that we really HAVE to change the system. Indeed, it should have been done, LONG ago.

            That is actually one of the attractive things about the MMA. Yes, indie songwriters and publishers are absolutely right that the whole scheme for uncollected funds to be held for 3 years and then distributed by “market share” is patently unfair. I imagine it would be relatively easy to get Congress to see that, since the major publishers will be the FIRST ones to sign up and diligently collect all of the fees due to them, then they should really be the LAST ones who get the unidentified and uncollected funds, too. And we should also push back on the provisions that absolve Spotify and others for past infringements (that provision might very well be an unconstitutional taking).

            But, the idea of allowing distributors to release recordings ASAP, as long as they pay the appropriate fee, affording time for songwriters and publishers to suss out the ownership interests in order to collect the already-paid royalties, is pretty unassailable. It’s what we should ALL WANT (except for the leeches who’s business model is to lie in wait and exploit the failure to properly adhere to the arcane rules). Anyone with a legitimate business interest in the commercial distribution of music should be demanding a streamlined system such as this.

            Have digital music services (and record labels, too) release every song they can find – as long as the HAVE TO pay for each of them, at the same time, to do so – and then the songwriters and their publishers can sort out who is entitled to what, in their own good time, all the while knowing that the money is already there, just being held “in escrow” for them.

            Why would ANYONE want to hold up releases, in the name of paperwork (let alone paperwork that is so out-dated, that it literally describes a digital stream over a wireless network as a “mechanical reproduction” like a piano roll)?