Sirius XM’s CEO: ‘We Simply Cannot Support the MMA In Its Current Form.”

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Sirius XM Radio chief executive Jim Meyer is doubling down against the Music Modernization Act, accusing its proponents of brokering ‘backroom deals’ and waging a disinformation war.

So who’s right?

Proponents of the Music Modernization Act (MMA) have accused Sirius XM Radio of selfishly attempting to sabotage the bill for their own financial gain.  But Sirius claims that they’ll get screwed by this bill, while traditional radio will continue to enjoy a free ride.

Accordingly, Sirius — along with cable-based streaming radio provider Music Choice — started lobbying against the MMA.  The crux of the pushback is that traditional ‘terrestrial’ radio stations are still getting a royalty exemption on broadcast recordings, while companies like Sirius are severely handicapped by digital recording royalty requirements.

Unfortunately, it looks like this isn’t a standoff that will result in compromise.  David Israelite, head of the National Music Publishers’ Association (NMPA) and a driver behind the MMA, has even warned the satellite radio giant to expect serious blowback from songwriters, publishers, and the entire ‘creative class’.

Everyone’s battling on deck, even if it sinks the entire boat.

Earlier, sources to Digital Music News pointed to an extremely-tight timeframe for passing this bill into law.  An earlier standoff with Blackstone Group and its wholly-owned Harry Fox Agency created a multi-week delay, and crunched the timetable accordingly.

Now, the MMA is getting squeezed between competing bills and high-stakes midterm elections, not to mention an extremely-distracted President.

Add Sirius to the list of time-draining challenges.

Just this morning, Meyer vowed to stand firm against the MMA, the NMPA, and the imbalanced provisions of the bill.  In a stern op-ed on Billboard, Meyer pointed to ‘backroom deals’ designed to discredit Sirius XM Radio, and feed a disinformation campaign to the media.

That didn’t work against Blackstone/HFA, which stood its ground despite heavy protest against the company.  And it isn’t working against Sirius.  Specifically referring to the MMA’s sub-bill, the CLASSICS Act, Meyer pointed to an unfair imbalance with traditional radio.  “Our position on the CLASSICS Act (now part of the MMA) has been clear since its introduction,” Meyer noted.  “It’s bad public policy to make a royalty obligation distinction between terrestrial radio and satellite radio.”

The CLASSICS Act specifically calls for federal recording copyrights to expand beyond 1972, the cut-off date for current sound recording royalties.  But it doesn’t force traditional radio to pay any recording royalties, pre- or post-1972, thanks to a previously-arranged exemption.

In Meyer’s opinion, that’s a handout to a close competitor, simply because of slight differences in how the music is delivered (i.e., a tower vs. a satellite).  “Radio is radio,” Meyer continued.  “If SiriusXM and other ‘audio services’ pay pre-’72 royalties, then terrestrial radio should be required to do the same.  The same is true for post-’72 royalties.”

Meyer also quoted SoundExchange’s CEO, Michael Huppe, who has previously expounded upon terrestrial’s need to pay.

The subtext is obvious: Huppe, whose SoundExchange is widely expected to win a juicy ‘no bid’ government contract to manage the MMA’s Mechanical Licensing Collective (MLC), is also advocating for a bill that contradicts language like this:

“Nobody makes more money from recorded music than the $14 billion radio industry. Radio revenue blows away that earned by competitors like SiriusXM ($5.4 billion) and online streaming services ($6.2 billion in total). Music radio revenue has risen by nearly $40 million since 2013 and the number of music stations has increased every year for the past five years . . . if radio wants to have rules that reflect the music industry of today then that should apply across the board.”

Meyer is likely dragging Huppe into this discussion for a reason.  After all, if Huppe is so adamant about traditional radio paying its fair due, why is he also adamantly backing a bill that extends the free pass?

One explanation is the NAB, or National Association of Broadcasters, a powerful lobbying group that would ferociously fight any effort to make radio stations pay.  All of which raises the question of whether the MMA is simply too far-reaching, and therefore guaranteed to create conflicts like this.

Meyer also raised some other thorny problems, including a raft of pre-1972 deals that have already been made.

At this stage, it’s entirely unclear if those deals would be wiped out by the MMA.  “The current MMA language does not fully guarantee our prior pre-’72 settlements and license agreements and, as a public company, we cannot responsibly put nearly $250 million at risk,” Meyer noted.

That pushback sounds pretty similar to issues raised by Blackstone, which fought the MMA to avoid losing hundreds of millions of dollars — if not more.  Effectively, the MMA would largely make the Harry Fox Agency superfluous, and fractionalize the company’s value to Blackstone.

Unfortunately, this is just one attack on the CLASSICS Act.

Earlier, Oregonian Senator Ron Wyden proposed an entirely different bill, designed to counteract perceived flaws in CLASSICS.   Instead of broadening oldies copyrights beyond traditional expirations and preserving a blend of state and federal protections, Wyden’s ACCESS to Recordings Act would simply put all recordings on the same footing — pre-1972 or post-1972.

At this point, we’re not sure if Wyden’s counter-bill will impact the MMA’s chance of passage.  But the very serious question is whether players like the NMPA, Sirius, Wyden, and others can amicably reach a compromise on these disputes — in a fairly short period of time.



16 Responses

  1. W. Keating

    There is no reason that terrestrial AM/FM radio should not pay the heavy performance royalties that go to the recording artists whose records they play for profit other than Congressional fear in an election year of antagonizing local radio stations and their powerful lobby, The National Association of Broadcasters.

    Particularly disgraceful are the actions of SoundExchange CEO Michael Huddle, whose federal nonprofit is charged with collecting the royalties and paying them to the recording artists. The ambitious CEO, who is always calling out for more funds to be distributed to needy artists, here compromises away the payments of hundreds of millions of dollars that SoundExchange would receive from traditional radio stations that would be paid to the artists in exchange for expanding his little empire from covering only performance royalties to also covering royalties due to songwriters.

    • The Plainsman

      Ridiculous! Paragraph one contradicts paragraph two, and in paragraph two you are both bereft on the issues and simply do not even know the SX CEO’s name.

      Huppe is the leader on solving the problem you correctly cite in paragraph one. None are more outspoken nor more persistent about making radio pay for the sound recordings upon which their business relies.

      MMA is not the end of the pursuit of these royalties nor a compromise. It is quite simply an attempt to end the licensing problem confronting both songwriters and those in need of mechanical licenses.

      Applaud everyone backing MMA for setting aside some of their interests to get this job done. Had SX insisted upon all or nothing there would be no progress at all. Kudos to SX and its leadership.

      Your ad hominem attack on a fine leader who has shepherded billions to creators is as misguided as your attempt to remember his name. Shame on you.

      • W. Keating

        OK. So I butchered your CEO’s name. Your heroic Mr. Huppe is earning a million dollars a year to pursue his tiring and bloody campaign on behalf of recording artists.

        The elimination of the exemption of the $16 billion terrestrial industry from paying performance royalties would immediately add hundreds of millions of dollars a year to be paid to the artists whom Huppe claims to care about so much. The elimination of the exemption of terrestrial stations you know will never get through Congress standalone.

        Do you think that compromising away the exemption was in the best interests of the constituency that Huppe serves?

        • The Plainsman

          Not my CEO, not an SX employee.

          Your issue was not “compromised away” — reality says it awaits another day. Today there is consensus to fix problems with mechanical licenses.

          Insisting upon one issue, as you do, dooms the newly united coalition to failure on the broader agenda.

          No one is more passionate about terrestrial radio paying for sound recordings than is Mike Huppe. Full stop. He is relentless in pursuit of your goal, but not irrationally focused to the point of failure, which is your mistake.

          • W. Keating

            So you think that it was a good deal that Huppe got, trading away hundreds of millions more immediate dollars for the recording artists in exchange for extending his domain over mechanical royalties?

            You know that Congress will never pass any law that deals with only the elimination of the terrestrial exemption. Congressmen could vote for this MMA which abolished the exemption under the protection of coming to the aid of the pre-1972 recording artists and implementing long overdue reforms to mechanical rights. Alone, taking away the exemption has no chance.

            And Huppe is being deceitful in claiming that SiriusXM is opposing the legislation because they don’t want to pay the musicians. He knows that SiriusXM and Pandora have been paying performance royalties to the artists of pre-1972 recordings under a court settlement reached three years ago and they will continue to pay whether or not the Classics Act becomes law. SiriusXM and Pandora have no objection to paying the royalties, they just want terrestrial radio to pay along with them.

            Really, the above article lays out the case as well as anything.

            “After all, if Huppe is so adamant about traditional radio paying its fair due, why is he also adamantly backing a bill that extends the free pass?”

  2. Angelito

    If terrestrial radio is required to pay a royalty to the owners of sound recordings, does that mean the songwriters and publishers receive less? I think so. Who then is hurt? Songwriters and independent publishers.

    I agree—on its face, it seems unfair that digital must pay a SR performance royalty while terrestrial does not. But, there are collateral issues.

  3. Anonymous

    While one could cynically consider this a desperate effort for SXM to get out of paying more money to artists, they’re not entirely wrong. Broadcasters absolutely should be paying performance royalties for sound recordings. Once upon a time, back when physical products and digital downloads were selling, I’ll agree that radio did provide some promotional value to artists. But in the age of streaming, I don’t think that excuse for not paying cuts it anymore. Radio is making money from the exploitation of these sound recordings, and all artists get now is the chance for some YouTube and Spotify fractional pennies. Artists should be getting a portion of that radio ad-revenue.

    Is it fair that SXM should pay and radio shouldn’t? Not really. But does that mean that SXM shouldn’t pay pre-72 because of this? Hell no. There shouldn’t be any distinction between pre-72 and post-72. Copyrighted recordings are copyrighted recordings. Life isn’t fair. Get over it.

    I would certainly support adding language to the MMA that forces terrestrial radio to pay sound recording royalties. Except of course, that it would doom MMA to never passing, due to the NAB. Sometimes you have to pick your battles to make any progress. We need to fight the NAB on this, and we should right after the 2018 elections. But not now. There will be many more battles to come.

    • Angelito

      There is an enormous distinction between pre and post-1972 recordings. It is called US Copyright law, and the rights and remedies under that law do not apply to pre-1972 recordings. Don’t like it? Call your congressman.

      Also, you assume the power of terrestrial radio is insignificant. Bad assumption.

      • Anonymous

        The music industry did call their congressman. It’s why CLASSICS is in the bill, and why we’re talking about it.

        Radio isn’t insignificant, but it is certainly less relevant today than it once was. Also, are there any other industrialized countries out there that have the terrestrial exemption? There is no good reason US radio stations should continue to have it.

        • Angelito

          The broadcasters disagree. One good reason is that artists cannot sell product without terrestrial radio.

          I am fine if you want to change the law, but it is not a one-sided argument. And, I truthfully care less what other countries do. We have our own legislative process, and how Britain, France, or Timbuktoo approach copyright law is mostly insignificant.

    • W. Keating

      Actually, SiriusXM and Pandora have been paying performance royalties to the artists of pre-1972 recordings under a court settlement reached three years ago and regard this as an ongoing obligation.

      Your comment is very sound, but suffers from one flaw: Congress will never pass any law that deals with only the elimination of the terrestrial exemption. Congressmen could vote for this MMA which abolished the exemption under the protection of coming to the aid of the pre-1972 recording artists and implementing long overdue reforms to mechanical rights. Alone, taking away the exemption has no chance.

      • Anonymous

        True, though I think that settlement only covers a small subset of pre-72 tracks.

        Second paragraph certainly used to be true, and probably still is, but I don’t think that will last forever. Radio is becoming less relevant, as is its justification for the exemption. If nothing else, even if MMA passes, it’s not going to fix everything. More reform will ultimately be needed, so the exemption could be combined with something else.

        • W. Keating

          I can’t say for sure whether SiriusXM will pay more to the pre-1972 artists if CLASSICS passes, but the settlement was with all three of the big labels, Universal, Warner and Sony, who hold 85 percent of the copyrights that SiriusXM needs. It was a substantial amount of money.

          Terrestrial radio is having hard times. The 2nd largest owner of local radio stations (Sony?) was in and out of bankruptcy court last year and the largest, iHeartMedia, is still in bankruptcy court now, but will emerge and carry on.

          Some terrestrials have already begun streaming, and they have to pay the performance royalties. It is suggested that all the local radio stations will fold or begin streaming. Their strength is their local advertisers, for whom national radio cannot touch as for now.

          Perhaps the standoff will end when the weaker terrestrials cease operations and the stronger ones stream.

          One man with whom I exchanged comments on a Seeking Alpha article had been in local radio for 35 years and was very pessimistic about their future. He said that the sales personnel who had dealt with the local advertisers had retired or left. He was angry about the consolidation of terrestrials under a few big corporations. It took away the station’s independence and brought low morale to the employees.

          • Angelito

            Terrestrial radio’s hard times are only partially due to streaming. But, the numbers do not lie—terrestrial is the only way to get a #1 record.

  4. Paul Resnikoff

    The MMA ‘mega-bill’ is ambitious, but trying to tackle so many aspects of copyright law could be a mistake. Maybe it’s better to parse out CLASSICS separately?