Index statutory mechanical royalties before inflation hits.Why Songwriters Should Care About Inflation Protection for Mechanical Licenses — Music Tech Solutions
For some reason, there’s a focus at the moment on songwriter royalties and in particular for streaming royalty rates. Notice that I said “rates” not “share” or the one I find particularly irritating, “share of the pie.” Let us be clear—there is no “pie” there are only “rates”. Or should be. Let’s investigate why.
To frame this idea (speaking for the U.S. market), let me take you back to a conversation I had with a Nashville session musician and hit songwriter many years ago back before physical mechanical royalty rates were frozen.
He looked at me and said, “Why do I have to take this government cheese royalty rate? I get double scale when I play a date, why can’t I get double stat?”
What he was really saying was why can’t I set my own price as a songwriter for mechanical royalties? And the answer is the same today as it was then: Because songwriters allow the U.S. government to set the price and terms for mechanicals. Or rather the “minimum statutory rate” which is a joke because the “minimum statutory rate” has never been a minimum, it has always been both a minimum and a maximum.
There has also long been an obsession with songwriters and publishers comparing their rates to what artists and record companies get. This comparison was only compounded in the digital era particularly for interactive streaming. If you combine song rates and recording rates, some people get a pie. Other people (like me) get an error message. I’ll explain why.
Through a LinkedIn email, I learned that a recent staffer on the Senate Judiciary Antitrust Subcommittee was recruited by Amazon’s public-policy arm this month. I took to Twitter to express my dismay, and quickly learned that another staffer on the Senate Judiciary Committee was recruited by Facebook’s competition policy arm in May 2020.
These two staffers are now working for the tech platforms, and presumably against my ideas, after having heard my ideas in a private setting.
It is important to note right here that I have no beef with these fine folks.
But I do.
I was fortunate to moderate an excellent panel at the SXSW Continuing Legal Education seminar this week. Our topic was “The Future of Mechanical Licensing in the U.S.” Little did we know when the panel was booked in September that this would be such a hot topic following the introduction of the deeply controversial Music Modernization Act on December 21.
One of the legal process questions the panel discussed was the MMA’s “reachback” safe harbor that retroactively limits infringement claims filed after January 1, 2018 without regard to when the MMA’s blanket license is actually available.
[Editor Charlie sez: This tinkering with the board seats changes the songwriter vote from 2/10 to 4/14, a change from 20% to 28% on the new collective created by the MMA, aka the self-licking ice cream cone. This board structure is still wildly out of sync with every other creator collective in the world and will no doubt be opposed by ex-US writers. Remember–the MMA covers all songs ever written or that ever will be written, including both US and ex-US works exploited in the US. If the last compulsory license is a guide, the MMA will last 100 years after the Spotify IPO. And still does nothing to police the mass NOIs that are filed every day. But good news about extracting support for Google-opposed Copyright Small Claims Court.]
What the law ultimately says is up to members of the House and Senate, who will write the legislation and the subsequent regulations, but in the meantime, negotiations…have resulted in a proposal that allows songwriters and composers to have four seats on the now-expanded 14-seat board of directors, instead of the initially allotted two seats for songwriters on a smaller 10-seat board; while the unclaimed royalties oversight committee will now be evenly divided between publishers and songwriters. It also has resulted in additional clarifications to how payouts from unclaimed funds are distributed.
While the…the NSAI and SONA…had already come out in favor of the proposed legislation, the Songwriters Guild Of America initially withheld endorsing the legislation, saying it had some reservations about elements of it. But now SGA president Rick Carnes says his group is on board….
As part of the proposed changes, Carnes says that exclusionary clauses in older songwriter/publishers contracts sometimes prevent songwriters from collecting royalties because that clause allows publishers to take the stance that they don’t have to share the money with songwriters if it comes in unattributed to a song. “We tried to clarify that language so songwriters can get their fair share,” Carnes says.
In another move, as part of the negotiations with songwriters, the publishing community has “pledged to lend its full support on Capitol Hill to secure quick passage” of the pending Copyright Alternative In Small-Claims Enforcement (CASE) Act of 2017, which will provide music creators with an alternative to a full blown copyright infringement actions against unlicensed users of music.