Forthcoming ‘MusicBus’ Bill Could Envelop SEA and RESPECT Legislation, Among Others, Says Nadler

The Respecting Senior Performers as Essential Cultural Treasures (RESPECT) Act, which would provide performance royalties for pre-1972 recordings played on digital radio, has eight House co-sponsors (http://1.usa.gov/1pelB2L). HR-4772 was introduced in May. The Songwriter Equity Act (SEA) (HR-4079) would update Copyright Act sections 114(i) and 115 that prevent “songwriters from receiving royalty rates that reflect fair market value” for their use, said a bill summary provided by the office of House Judiciary IP Subcommittee member Doug Collins, R-Ga. He is the sponsor of the bill, which has 22 House co-sponsors (http://1.usa.gov/UKb9Hb); the Senate version (S-2321), sponsored by Lamar Alexander, R-Tenn., has three co-sponsors (http://1.usa.gov/1uC8jOQ). HR-4079 was introduced in February (CD Feb 26 p13); S-2321, in May (CD May 13 p7). House Commerce Committee Vice Chairwoman Marsha Blackburn, R-Tenn., and House Communications Subcommittee ranking member Anna Eshoo, D-Calif., are the only ones signed on to the Protecting the Rights of Musicians Act (http://1.usa.gov/1ndFLr7) (CD May 8 p24). HR-4588 would deny the right to retransmission consent to a radio or TV station unless it agrees to provide compensation for transmitting a sound recording.

"A number” of the music licensing bills “would” fall under MusicBus, “maybe even most of them,” said Nadler. The “idea behind the ‘MusicBus'” is to make music licensing laws “rational” and “fair for performers and songwriters,” and “rational and consistent across different” types of music service providers, said Nadler. Other issues are being considered for the MusicBus, but Nadler declined to go into specifics.

Throwing “all the bills together” for music licensing “probably” isn’t the “best way” for a comprehensive approach, said Collins. He’s had “great conversations” with House Judiciary Chairman Bob Goodlatte, R-Va., on whether a “smaller comprehensive look” or a “bigger comprehensive” package down the road makes more sense, said Collins. If Congress works on only the bills that have been introduced, “you may be fencing out something that could put us back” in the “same boat” the committee is in, said Collins. “We're trying to take into account as many of the issues as we possibly can.”

The “RESPECT is a rifle shot to fix an urgent problem,” while SEA “tries to solve an issue that has a thousand strings attached to it” for “other parts of the puzzle,” said Vice President-Public Policy Julia Massimino of SoundExchange, which backed the RESPECT Act. Goodlatte has a “big-picture view” of both music licensing review and overall copyright review, she said. If SEA and RESPECT are included in a comprehensive bill, “that’s great,” but “I'd hate to see 70- to 80-year-old artists” continue to wait to be compensated for pre-1972 royalties while Congress negotiates, she said. “The Songwriter Equity Act represents an important step to inject fairness into a process that is undeniably stacked against songwriters and publishers,” said David Israelite, National Music Publishers’ Association CEO, by email.

'Discrete’ Bills

Congress is “introducing more discrete pieces of legislation” to highlight what it sees “as the most egregious problems in music licensing,” which include terrestrial performance royalties, said Ted Kalo, musicFIRST Coalition executive director. “But the reality,” as evidenced by the House Judiciary IP Subcommittee hearing on music licensing June 10, is that lawmakers understand there’s an “outdated, patchwork of laws that has been put together over time with spit and tape,” he said. If Congress tries to reform music licensing in a “piecemeal” fashion, they're just adding “spit and tape,” he said. “We strongly believe” SEA and RESPECT “should be included as part of comprehensive reform,” said Kalo. “Anyone who doubts the prospects of comprehensive legislation is viewing things upside down and perhaps is lacking imagination."

If one is “trying just to correct a mistake,” like not paying artists for pre-'72 royalties, it “doesn’t need to be attached to an omnibus bill,” said music industry attorney Chris Castle. Castle represents artists and musicians, but has also worked with digital music services. He’s had no involvement with current music licensing legislation. RESPECT and SEA aren’t necessarily “patchwork,” because they don’t create “new law” or change “the way the railroad runs,” he said: The bills aren’t “very far-reaching.” A truly piecemeal approach would get rid of consent decrees or Section 115 individually, he said. “Those are real substantive omnibus” issues, he said.

The “two main issues” expected to be covered in Nadler’s proposed bill are garnering performance royalties for terrestrial radio and overhauling or abolishing Section 115, said Castle. The terrestrial issue would be a “knock-down bloody bath,” and Section 115 “might not be quite as contentious,” but “would be complex,” he said. Given the enormity of the issues, “this is [a] next year, next session” bill, but the RESPECT Act could get through this session, said Castle.

NAB is sympathetic to how the Internet has “crippled” the music industry’s business model, but “that’s not the fault of radio stations,” said Dennis Wharton, NAB executive vice president-communications, in an interview. Radio “airplay drives massive records sales” and “creates artists every day,” he said. “No one denies that the U.S. has the most vibrant music and broadcast industry in the world” and a “large part” of the reason is that the “radio industry isn’t hit with crippling fees,” including terrestrial royalties for labels and performers, he said. Broadcasters pay $330 million in terrestrial royalties to songwriters annually and between $60 and $100 million to labels on digital platforms annually, he said.

Nadler Slams Broadcasters

"Broadcasters will push back against anything that would allow the performers to get paid for terrestrial radio,” said Nadler. “It’s an indefensible position and it’s wrong.” Supporting the Local Radio Freedom Act (HConRes.-16) would prohibit “any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air” (http://1.usa.gov/1phG8VW). The resolution has 226 House co-sponsors and the Senate version (SenConRes-6) has 15 co-sponsors (http://1.usa.gov/1iFrja4).

"Members of Congress tend to focus on one particular aspect” of music licensing, but don’t “fully appreciate how one component is related to the next,” said Gregory Barnes, Digital Media Association (DiMA) general counsel. DiMA’s member companies include Amazon, Google Play and Pandora. DiMA Executive Director Lee Knife expressed opposition to RESPECT and SEA, in a June 10 hearing. The existing “Section 115 rate setting standard,” as opposed to the willing buyer/willing seller standard proposed by SEA, is “incredibly important to online music stores,” said Barnes. When a consumer purchases a 99-cent song online, 70 cents goes to “sound recording copyright owners and the owners of musical compositions,” he said. If SEA passed in a “piecemeal fashion, it would drive up the amount of money online businesses would have to pay to owners of the composition, but it wouldn’t do anything to adjust the rate for owners of the sound recording,” he said.

"Conceptually,” there are “a lot of reasons to get behind a more comprehensive update,” but the “industries and sub-industries are reluctant to lose their status quo,” said Casey Rae, Future of Music Coalition vice president-policy and education. “I don’t understand how Congress” would approach a comprehensive bill, as it would touch on so many issues, said Rae. Even if a comprehensive bill focused “solely on the music industry side, there would be some disharmony,” he said. Getting independent artists, creators, performers, songwriters, publishers and major labels to “agree” would be “phenomenal and completely novel,” he said: The “problem” is “compromise.”