Tuesday, May 1, 2018

Music Modernization Act alters how old recordings are reimbursed by Apple Music & Spotify

Written by Stephen Silver — The new Music Modernization Act bill has passed the House of Representatives that aims to bring laws for music licensing and royalty payments into alignment with modern technologies, like streaming through Apple Music and Spotify.

H.R. 5447, known as the Music Modernization Act, aims to do three things- modernize music licensing, compensate "legacy artists for their songs service and important contributions to society" and allocate to music producers. Key provisions include the streamlining of the musical licensing system and royalty protection for music made before 1972.

The Act combines three previous pieces of legislation —the CLASSICS Act which applied to works written or recorded before 1972, the Fair Play Fair Pay Act, Musical Works Modernization Act for songwriters and publishers, and MP Act for producers and engineers.

The bill changes things for Apple Music and other streaming services in one key way: So long as the streaming services comply with the law including establishment of a data base of authors and composers for all the music they host, they cannot be sued for damages. Apple Music's competitors have faced suits about reimbursement in the past.

In 2015, Pandora paid $90 million to settle a royalties lawsuit from the major record labels over those pre-1972 recordings. Additionally, early in 2017, Spotify was sued for $1.6 billion in claims that it violated the copyrights of tens of thousands of songs, including work by Tom Petty, Neil Young and members of Rage Against the Machine and Weezer.

The National Music Publishers Association, the Recording Industry Association of America, the Recording Academy, ASCAP, and SoundExchange all support the bill. It does not appear Apple, or any of its direct competitors in the streaming subscription space, have taken a position on the Act.

"Today's vote sends a strong message that streaming services and songwriters can be on the same side —pushing for a better future for all," David Israelite, president and CEO of the National Music Publishers Association, said in a statement following passage. "We now look forward to the Senate advancing the MMA and it ultimately becoming law.

The bill passed the House unanimously, with 415 yesses; the remaining members of the House were not present for the vote. It was also sponsored by a wildly ideologically diverse coalition of lawmakers, including Bob Goodlatte (R-VA), Marsha Blackburn (R-TN, Darrell Issa (R-CA), Jerry Nadler (D-NY), Hakeem Jefferies (D-NY), and Ted Lieu (D-CA).

Several members of Congress, including Tulsi Gabbard (D-HI) and Steve Scalise (R-LA), tweeted their support of the measure while noting the specific musical heritage of their home states.

Billboard's Robert Levine argues in an editorial on April 20 that the Senate should tweak and pass the House's bill with the goal of "getting as much unclaimed royalties as possible to the publishers and songwriters who actually earned it."

The opposition

While most of the music industry supports the legislation, opponents unsurprisingly include Sirius XM and the music content provider Music Choice. Dae Bogan, who met with the Congressional Budget Office recently, expressed concerns about what the bill would mean for DIY musicians.

Bogan wrote that he had spoken to an analyst with the Congressional Budget Office, and the analyst had spent a total of two days learning about copyright and music publishing. Bogan added that "plenty of music industry professionals" have limited knowledge of these issues and how they work, so the government's speedy approach isn't rare, but is still not a good foundation to build a law on.

"In a word, I am all here for improving royalty rates, ensuring the fair treatment of music copyrights and moving towards a more equitable representation of music creators," Bogan wrote. "However, the MMA is not quite there yet and passing it as-is, with all of its ambiguity, would be a shame."

What it doesn't do

As is normally the case when a piece of legislation is passed by a massive bipartisan majority, the Music Modernization Act is far from radical, and leaves much of the status quo untouched. It addresses some problems with monetization by artists without solving all of them.

Musicians continue to be paid much less via streaming, with figures as low as $0.006 to $0.0084 per stream on Spotify according to one report. The new legislation seems unlikely to move that number significantly —unless you're an artist with a pre-1972 work.

The legislation does not address the primary means for artist revenue generation —concerts.

What's next

The U.S. Senate is set to hear the legislation May 15. The Trump Administration has not said whether the president will sign the bill.

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