by Michael Huppe, President and CEO, SoundExchange
The Music Modernization Act (MMA) now has the support of 76 Senators. As it nears the finish line, SiriusXM is going door-to-door in the Senate in a last-ditch effort to block the MMA, a bill backed by an historic coalition of thousands of music creators, songwriters, producers, labels, publishers and digital music services—all of whom have been working for years to get Congress to reform music licensing laws.
For longtime advocates, it will come as no surprise that SiriusXM is trying to scuttle the MMA at the last minute. This is, after all, precisely what they did 20+ years ago when Congress first enacted legislation giving performers the right to be compensated when digital services use their music. Back then, Sirius stepped in during the final throes of the legislative process to argue that having to pay for music—their primary product—could “disrupt” their nascent business plans. They argued for a special royalty rate–one that effectively forced artists to subsidize their business and gave them a competitive advantage against other companies. That special treatment has gone on for over two decades ago now. We don’t think such a sweetheart deal was justified back then; but it’s indefensible now.
Once separate companies, SiriusXM is now the sole satellite radio company in the U.S. It generates revenue well over $5 billion annually, the huge majority of which comes from its more than 32 million subscribers. To put that into context, U.S. wholesale revenue for the entire record industry was $5.9 billion in 2017. Yes, a single company, SiriusXM, makes nearly as much from subscribers in the United States as all record labels and artists combined make from all sources.
Make no mistake about it: SiriusXM would not have a business without recorded music. And yet, SiriusXM has profited for decades by getting music at a special market distorting rate set under a different standard than all its thousands of internet radio competitors. Specifically, the rates set for internet radio are established under a “willing-buyer/willing seller” standard – another way of saying artists and labels are supposed to be paid a fair market rate for their recordings. When setting satellite radio rates, by contrast, the government can – and has – set rates lower than fair market value based on four amorphous policy factors. The impact is not academic: the lower rate standard has cost creators billions of dollars over the last 20 years.
Multi-billion dollar companies should not be subsidized by musicians – and all competing streaming platforms should play by the same rules.
Seems obvious right? It is, and that’s one of the reasons the Music Modernization Act passed the House of Representatives unanimously (as in 415-0; think on that for minute) and is on the verge of passage in the Senate.
The music community is united around the MMA because it ensures fair treatment for music creators and a level playing field for digital radio services. It is a win-win, and the compromises SiriusXM has proposed are inconsistent with the principles upon which the bill is centered. We look forward to the Senate moving this bill — and with it all of music — forward.
September 17, 2018
Dear Senator Wyden,
Being a musician isn’t easy. We spend months on tour, play late night shows, and spend hours, even days, on end in the recording studio. We sacrifice time with our families and money that could be made in more lucrative, stable jobs. While certainly not an easy decision, we make these sacrifices freely, because this is what we love to do. We don’t ask for special treatment or undue assistance.
All we ask is that you have our back.
The CLASSICS Act, incorporated in the Music Modernization Act, gives elderly artists what they deserve – what they’ve earned. It’s an injustice that just because someone’s career began before 1972, they don’t earn money the same way that other artists do.
Aging artists who recorded music prior to the 1972 cutoff are suffering. They’ve worked decades, making the sacrifices that we all do, only to be robbed when it harms them the most. They’re not asking for a handout, just for the income they’ve earned.
The CLASSICS Act fixes this, eliminating the arbitrary 1972 cutoff. Not only does it make things fairer, it will help older artists in retirement who are struggling without regular income. Millions of seniors in the US live in poverty – we should be working to cut that number, not exacerbating the crisis.
The overall Music Modernization Act would benefit music creators of all ages across the country and provide certainty to digital services. That’s why an unprecedented coalition of songwriters and publishers, record labels and performers, and digital services has joined together to support the bill.
Oregon is home to thousands of musicians of all ages who are counting on you. Support us by supporting the CLASSICS Act as part of the Music Modernization Act.
Amber Sweeney | Bruce Fife | Carrie Brownstein | Corin Tucker
Janet Weiss | Kathy Foster | k.d. lang | Laura Veirs
Maggie Vail | Neko Case | Peter Buck | Scott McCaughey
Sam Coomes | Scott Magee | Ural Thomas | Westin Glass
[Editor Charlie sez: The return of the “Hoffa clause”]
Major music publishers are expected to reap a massive and near-immediate windfall if the Music Modernization Act (MMA) passes into law, according to sources. But critics say that this unclaimed money doesn’t belong to them.
As the Music Modernization Act moves closer to a final vote in the Senate, critics are pointing to language in the bill that could unfairly benefit major music publishers.
Specifically, major publishers like Sony/ATV Music Publishing, Universal Music Publishing Group, Warner/ Chappell Music, and others stand to gain an estimated in $1.5 billion in unclaimed mechanical royalties within the first year of the bill’s passage, according to details shared by sources close to the legislation.
Earlier, controversy surrounded a clause that would distribute unclaimed mechanical royalties after just three years, based on existing marketshare. As part of the MMA’s payout process, streaming plays that are reported but not claimed will sit in an unmatched pile administered by the Mechanical Licensing Collective, or MLC, which would be created by the Music Modernization Act.
Effectively, that means that the MMA will distribute unclaimed royalties to publishers that do not actually own the copyrights.
[Editor Charlie sez: Here’s a shocker…Trump says he won’t sign “The Amazon Bill”!? Who in the world could have predicted that!]
Amazon is at the forefront of a well-funded, powerful, Silicon Valley-led push to force the federal government to nationalize the music industry, thereby creating a system where the government props up certain companies — such as Amazon — to be beneficiaries of and have control over, while also profiting from, music production….
Sources close to the White House and those in regular contact with President Trump and his closest associates say the president has a serious problem doing anything to help Amazon — especially creating a special government board that would allow the company billionaire Jeff Bezos owns to profit, with government assistance and control, from music royalties.
“The president was irate when he heard about this,” a source close to the president said. “He’s calling it ‘The Amazon Bill.’ There is no chance he will sign that bill that passed the House.”
[Editor Charlie sez: Fasten your chin straps, free marketeers are starting to come out against the Mechanical Licensing Collective part of the Music Modernization Act.]
Rather than foster the growing marketplace addressing this complex issue, the bill imposes a Washington top-down approach that ostensibly benefits crony lobbyists and corporations while short-circuiting creative innovators. It is a classic example of a backroom swamp deal that robs Peter to pay Paul. In this case, Peter is the American people, and Paul is the biggest crony actors in the music industry.
[Editor Charlie sez: What SESAC says about not endorsing the Mechanical Licensing Collective portion of the bill rings true based on other things we’ve heard.]
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.
From the Nashville Songwriters site:
WHY BLACKSTONE/HFA/SESAC PROPOSAL WILL KILL
MUSIC MODERNIZATION ACT
PLEASE HELP AND DO YOUR PART – CONTACT SESAC TO HELP SAVE THE
MUSIC MODERNIZATION ACT! (CONTACT INFO BELOW)
The Music Modernization Act (MMA) provides a simple answer to a very complex problem in music licensing. One of the main reasons the streaming companies have agreed to a fair rate standard that will likely result in a royalty hike for songwriters is efficiency; so they won’t have to go to a large number of multiple sources to obtain mechanical licenses. Instead they will get one blanket license from the new Music Licensing Collective (MLC) run by songwriters and music publishers.
Blackstone’s (parent company for SESAC who purchased The Harry Fox Agency in 2015) proposal would legally require each streaming service to hire another company to issue licenses, collect and distribute royalties IN ADDITION to the MLC. This added step would be costly to songwriters, who will pay NOTHING to the MLC and collect 100% of their royalties, because we’ve already negotiated with streaming companies to get them to pay the admin costs!
This proposed amendment is an attempt to make sure The Harry Fox Agency keeps their current business by forcing the death of the MMA, or gets more business because their proposal FORCES streaming companies to hire an agency IN ADDITION to the MLC to issue and administrate mechanical licenses.
The Digital Media Association has said they will not support the Blackstone proposal, nor pay for it. Neither will music publishers, record companies, NSAI or anyone else who worked for years to create a bill that Blackstone is trying to kill at the very last minute.
Under the MMA, The Harry Fox Agency will have every opportunity to become a vendor and do business on behalf of the MLC if they prove they can do a good job, thus promoting efficiency and competition. Instead, they want the government to REQUIRE and guarantee them business.
Blackstone owns both HFA and SESAC. Concerned songwriters should CONTACT SESAC and ask them to withdraw this proposal and support the Music Modernization Act as drafted. Call them at (615) 320-0055, email: firstname.lastname@example.org or tweet @SESAC to express your concern. Tell Blackstone, SESAC, Harry Fox to work with us so together we can find a mutually agreeable solution and pass the most important songwriter legislation in decades.
[And a Tweet with guidance from the top music lawyer who is the driving force behind the legislation:]