House Judiciary IP Subcommittee Looking at Free-Market Policies, ‘MusicBus’ Music Licensing Bill
Changes to music licensing laws should come in a comprehensive bill that favors free-market policies, said House Judiciary IP Subcommittee members and some witnesses at Tuesday’s hearing on music licensing. Legislation targeted at specific problems within music licensing, such as the Songwriter Equity Act (HR-4079), could add another layer of complexity to an already entangled issue, they said. A free-market approach doesn’t guarantee improved efficiency and could give performance rights organizations (PROs) monopoly control over the industry, said Lee Knife, Digital Media Association (DMA) executive director.
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House Judiciary IP ranking member Jerrold Nadler, D-N.Y., is developing a “MusicBus,” or a “music omnibus” bill to “address various problems” in music licensing within “one unified bill,” he said in his opening statement (http://1.usa.gov/1kiBosU). The bill will ensure that “no particular business enjoys a special advantage against new and innovative technologies,” he said. It’s “incredibly unjust” that performance royalties aren’t being paid for songs played on terrestrial radio, he said. Nadler supported the Respecting Senior Performers as Essential Cultural Treasures Act (HR-4772) and SEA. Nadler welcomed the “much needed” review of consent decrees for the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) by the Department of Justice (CD June 5 p9).
The “Band-Aid” and “piecemeal” approaches for music licensing changes haven’t “served us well,” said Neil Portnow, Recording Academy CEO. A “comprehensive” bill for music licensing is “the way to go,” he said. Portnow backed the MusicBus bill earlier this year. It has received support from House Minority Leader Nancy Pelosi, D-Calif., and House Majority Whip Kevin McCarthy, R-Calif., said Nadler.
Music licensing legislation could be “one bill or four bills,” which may or may not fit into comprehensive copyright legislation in the future, said House Judiciary IP Subcommittee member Doug Collins, R-Ga., in an interview. “It’s really a Christmas tree effect.” Some want to highlight the “administrative costs for the collectives,” such as ASCAP and BMI, as if they're “sucking the songwriters’ money,” he said. Collins was referencing DMA’s Knife, who opposes the SEA. “The truth of the matter is that there is a disparity,” which needs to be “fixed in the rate system overall,” said Collins, lead House co-sponsor of SEA.
The “private sector needs to get more involved” in music licensing, because “if you can’t come up with a solution, then you're really not going to like what we legislate,” said House Judiciary IP Subcommittee member Tom Marino, R-Pa., in an opening statement.
"The consent decrees lead to significantly lower rates than what would happen in the free market,” said David Israelite, National Music Publishers’ Association CEO. “If you look at the 25 percent of our industry that is unregulated, the rate structures are significantly higher.” Israelite was referring to synchronization licenses, which aren’t regulated and allow for the use of a song for a visual medium. “There’s no doubt” a free-market structure would increase royalty rates for artists, he said.
"We're talking about a marketplace that needs transparency and efficiency,” and a “free market system” wouldn’t necessarily be “very efficient,” said DMA’s Knife. “Synchronization licenses happen individually” in a “rather slow and laborious process,” he said. “We have to balance the ideas of making sure we have an efficient marketplace that might include the collectivization of rights licensing and making sure that that collectivization isn’t used as an undue market power,” he said. “While many synchronizations are done on an individual basis, that premise is completely wrong,” said Israelite. “The largest music acquisition source on Earth is YouTube,” which was “completely licensed” in a “free marketplace,” he said. Rates of Google’s YouTube “are significantly higher” than regulated licenses, he said. There’s “a lot evidence” that the rates for broadcasting “locally produced programming” in a “relatively free market” are “much lower” than rates from PROs, said Will Hoyt, TV Music License Committee executive director.
An “enormous amount” of YouTube’s content is “unlicensed,” especially the content of smaller and independent creators, said Jim Griffin, OneHouse managing director. OneHouse works to transition analog content to digital platforms. Griffin recommended the creation of universal copyright registry for the “enumeration and recordation” of all copyrighted works. YouTube can’t license all of its content, because it can’t find all of the creators, which would be solved by a registry, he said: It’s like a “stock exchange without the listings.”
The SEA “continues down the road” of a “kind of piecemeal approach to updating” specific music licensing laws, rather than addressing “all the concerns” within the industry, said Knife. DMA member companies pay “probably over style billion in royalties” for licensing yearly, “yet we still hear complaints about songwriters at the end of that system not being compensated appropriately,” he said. “That requires us to look at the entire system and not just an individual approach,” said Knife. “Perhaps that’s because we're not operating in a free market context,” said House Judiciary Subcommittee member Hakeem Jeffries, D-N.Y. There’s “200 plus years of record evidence in the United States of America that a free market system” is “efficient when properly regulated,” said Jeffries.