Despite heavy pressure from the NMPA and songwriters, SESAC and its owner, Blackstone Group, and doubling down on their MMA protest.
Last week, SESAC and its parent company, Blackstone Group, issued a sharp counter-proposal to the Music Modernization Act, a challenge that could threaten the bill’s passage. The protest revolves around the MMA’s creation of a government-sanctioned entity known as the Mechanical Licensing Collective, or MLC, which Blackstone feels is extremely unfair to competing mechanical licensing organizations.
That includes the Harry Fox Agency (HFA), which is now wholly-owned by Blackstone. Accordingly, the MMA would effectively wipe out HFA overnight, and probably force Blackstone to assume tens of millions in losses while firing more than 100 employees.
Ironically, HFA was sold to Blackstone by the National Music Publishers’ Association, or NMPA. That’s a bitter pill for Blackstone, given that the NMPA is playing ringleader in the efforts to pass the MMA in Congress. And that includes the creation of the competition-killing MLC.
But this gets worse. Prior to dumping the toxic company, the NMPA is accused of structuring a disastrous partnership between HFA and Spotify, one that ultimately contributed to a major crisis involving billions in potential damages. Apparently Blackstone felt it could resuscitate the troubled HFA, though the company now feels that the NMPA is effectively burying the company it sold just a few years ago.
That raises serious ethical questions, especially given the heavy revenues that the MLC would drive towards the NMPA and its top constituents.
SESAC (and Blackstone) have now issued a far broader statement clarifying their position on the Music Modernization Act.
There has been a lot of misinformation and misrepresentation this week regarding SESAC. We’re setting the record straight so truthful answers can dispel unfortunate distortions about our position on MMA.
If SESAC thinks it has a better proposal than the MMA – why did it wait nearly 2 years and at the very end of the process to offer it?
This is not a last-minute effort. The legislative process is designed to be open, iterative and deliberative so legislation can be reviewed and improved with input from all stakeholders before it becomes law.
- We have been an active part of this legislative process all along – supporting the broader AMP Act since it was introduced in July 2015 and the Classics Act since it was introduced in July 2017, which are now part of the Omnibus Music Modernization Act.
- The single collective idea was introduced in the House on Dec. 21, 2017. SESAC actively stated in meetings as early as last winter that we never endorsed or supported the portion of the Bill that creates a national monopoly to administer online rights, despite continuing pressure to do so. Since then we have had dozens of meetings with Members of Congress and senior staff, and have had hundreds of communications with policy makers and others in an effort to improve the Bill, not derail it.
If SESAC thinks its proposal offers a middle ground, why doesn’t any other music organization support it?
The SESAC proposal is a compromise, accommodating all of the outcomes desired by the Bill’s stakeholders. Not to be confused with the Cruz Amendment, our proposal – clearly outlined below – enhances the Collective, maintains competition, and ultimately drives better royalty distributions to songwriters.
How does SESAC think its proposal can pass Congress when every major digital streaming company – Apple, Amazon, Google, Spotify and Pandora opposes it?
We believe our proposal, once clearly understood and evaluated on the facts, will earn the support of the majority, and that outstanding issues can be resolved through the legislative process. We continue to support the goals of the MMA and feel confident it will be enacted into law by the end of the year.
Here’s a summary of what was proposed:
- SESAC’s proposal for the MMA promotes competition and accountability—that ultimately benefit songwriters, not insiders
- The proposal authorizes independent Certified Administrators (CAs), chosen fairly based on their track record of delivering results for songwriters, to handle the administration and distribution of royalties
- An honest, open marketplace – as proposed by SESAC – empowers choice of who can best handle royalty distribution.
- SESAC’s proposal does not change the provisions that ensure digital giants like Amazon, Google and other DMPs are held accountable, and that royalties and copyrights are handled responsibly.
- SESAC’s proposal strengthens the Collective by reinforcing it as the sole authority for:
- filing blanket licenses
- resolving song disputes
- establishing and managing a comprehensive, definitive copyright database
- administering and distributing unmatched (Blackbox) royalties.
We respect all songwriters and wholeheartedly support the goals of the MMA. Read The Facts.
Our position on the MMA is that preserving competition will help songwriters. The only change in the compromise SESAC has offered is that the Private Certified Administrators must compete to be hired to process and distribute the royalties based on the database maintained by the Collective. It is our belief that this change ensures healthy free market competition, which will drive better and more accurate royalty distributions to songwriters. Additionally, the proposed amendment will not impact any other aspects of the law, the governance of the Collective, or payments to songwriters in any way. Here are the facts:
- Songwriters keep all their seats.
- It does not change the governance or structure of the Collective.
- Digital music companies continue to pay for the Collective.
- The Collective remains the administrator of unmatched (or Blackbox) royalties.
- The Collective remains the single place for filing notices of blanket licenses.
- The Collective remains the curator of the authoritative database for mechanical licensing.
- The Collective remains the judge of conflicting claims under blanket licenses.
It is because of our dedication, loyalty and commitment to our songwriters that we stand by this compromise and continue to wholeheartedly support the goals of the Music Modernization Act.
SESAC Supports Songwriters: SESAC’s Statement Regarding the MMA: July 25th, 2018
“SESAC is America’s 2nd oldest PRO. We have a long history of advocating on behalf of songwriters and providing a premium value for their work unavailable at other PROs in the U.S. since the 1940s. SESAC is a driver of competition that benefits ALL songwriters. SESAC wholeheartedly supports the goals of the Music Modernization Act and wants those goals made law – just like you do. We are concerned that a lack of competition might damage not only our business, but songwriters too. We’ve suggested a simple amendment to improve competition so we can continue to ensure that ALL songwriter and publisher royalties continue to grow. Any assertion to the contrary is simply dishonest.”