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Music Modernization Act Seeks Sweeping Royalty Reform

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While legislative gridlock seems to be the order of the day, a new legislative effort to institute a comprehensive reform of music licensing regulations is pushing ahead in the U.S. Senate with bipartisan support.

On Wednesday, the Music Modernization Act was introduced in the Senate, with co-sponsored from both parties, including Sen. Orrin Hatch, R-Utah, former chair of the powerful Senate Judiciary Committee, and Sen. Dick Durbin, D-Illinois, who also serves on the committee.

The proposed legislation seeks to improve digital royalty payouts to songwriters and publishers, while also reducing the legal liability that companies such as Spotify and Apple Music over past music licensing practices.

Under the new legislation, the bill would create a new blanket mechanical license for streaming services that would be overseen by the Mechanical Licensing Collective, a regulatory body that would be governed by publishers and self-published songwriters. The legislation also calls for the creation of a publically accessible song database with ownership information and ends the bulk Notice of Intent (NOI) process through the Copyright Office, which can sometimes be a roadblock for songwriters to be compensated for their work.

The legislation would also dispense with statutory rates and instead seek to foster a ‘free market’ approach and would allow judges to consider sound recording royalty rates as a relevant evidence when setting performance royalty rates for songwriters and composers.

The Senate bill closely follows a similar measure that was passed by the House of Representatives in December.

“The Music Modernization Act is bipartisan legislation that represents the first major consensus legislation that has the support of songwriters, music publishers, digital music companies and record labels,” Republican Senator from Tennessee Lamar Alexander said. “More importantly, this legislation will have a real impact on the thousands of songwriters in Tennessee in three ways: First, the legislation creates a simple licensing system for digital music services to reflect a changing music industry. Second, the legislation will make it easier for songwriters to be paid when their music is played or someone buys a song they wrote. And third, the legislation will allow a songwriter to be paid the fair market value for their work.”

“Songwriters, music publishers, and digital music companies have reached a consensus, now it is up to Congress to provide a solution. This is why I am working in a bipartisan way to pass the Music Modernization Act this year and help give Tennessee – and our nation’s – songwriters the fair pay they have earned,” Lamar added.

The legislation appears to have broad support from the recording industry.

“For too long, songwriters have had to work within an outdated system that over-regulates and undervalues their music. ASCAP and our members have long advocated for a more flexible framework that can adapt to the realities of the modern music marketplace. We thank Congressmen Collins and Jeffries for introducing this legislation which is the result of compromise between stakeholders from the music and tech sectors. We are glad to see provisions that address rate court reforms, which should ultimately result in compensation for our members that reflects the true value of their music. We will continue to push for reforms that can help move the entire music industry forward,” ASCAP CEO Elizabeth Matthews said in a press statement.

“We thank Congressmen Collins and Jeffries for their introduction of the Music Modernization Act of 2017 and for always working to protect the rights of the American songwriter. While we believe there is still more to do to protect the value of the performance right, we are gratified that the Music Modernization Act contains two important provisions that create a more level playing field when determining the fair market value of our songwriters’ music; a wheel assignment for rate court judges and the repeal of 114(i). BMI also takes comfort that the bill’s new mechanical licensing provisions were the result of an important collaboration between the subject matter experts in this area—the mechanical rights holders and the digital services who rely on those rights. While we know this bill is not yet final, we believe it is an important step forward in modernizing music licensing and we look forward to working with all of the interested parties,” added BMI President & CEO Mike O’Neill.

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