Congress Is Making Headway on a Bill to Modernize How Musicians Are Paid

Doug Collins, a conservative Republican from rural Georgia in the U.S. House of Representatives, likes pretty much the type of music you’d expect from someone in his rank and station. His desert island albums are by Meat Loaf and the Eagles. He’s amped about having caught a couple of AC/DC live shows: “Any band that puts cannons onstage, that’s worth seeing.” He also happens to be a leading architect of what would be the biggest change to music royalties in the last 20 years.

In December, Collins introduced the Music Modernization Act (MMA), a 109-page piece of legislation he claims “would literally usher copyright laws into the 21st century.” A Senate version followed a month later. Born from a year of behind-the-scenes negotiations, the proposed law has bipartisan support and—unusual for music-related efforts in Congress—endorsements by lobbying groups representing a broad swath of the industry, from record labels and publishers to streaming services and FM broadcasters. (Some of the bill’s advocates have argued that it should pass because this time, for once, it could pass.) Collins’ bill is expected to move out of committee soon as part of a package that the Grammys’ policy chief has expressed “very high confidence” will make it onto President Donald Trump’s desk sometime this year.

Parts of music’s current copyright law date back to 1909, when policy was written for the age of player pianos; the last major overhaul came in 1998 with the Digital Millennium Copyright Act. So needless to say, the MMA is long overdue. But since it will likely shape how artists make money for decades to come, reading the fine print is crucial. Though lawmakers are describing the MMA as a “consensus bill,” most of that consensus appears to have been between lobbyists at the negotiating table. While publishing and record-label trade groups advocating for the MMA claim they have cosigns from more than 26,000 songwriters, some in the industry question how much these survey respondents were really told about the nitty gritty. This bill simply shouldn’t be crammed through before the rest of the music community understands what it is and offers ways to improve it. And it’s not just that working-class musicians haven’t been invited to the table—it’s also that the biggest artist advocates they could find are folks like Dionne Warwick and Steven Tyler, neither exactly representative of where songwriting is headed and where royalties should follow.

A quick music-copyright primer: There are two sets of copyrights on a piece of recorded music, one for the sound recording itself and another for the underlying musical composition (lyrics, notes, chords, and so on). The MMA focuses on the composition side, where the royalties are usually split between the songwriters and their publishers, and more specifically on mechanical royalties. To distribute someone’s song on any format (CD, vinyl, legal streaming services), you’re required to get a mechanical license from the copyright owner, and then pay mechanical royalties for every copy (or stream) at a rate set by the federal government. (There are also performance royalties, which are collected by groups like ASCAP and BMI when a composition is broadcast or used in public, but we’ll get back to those later.)

As streaming has grown to account for more than 60 percent of the recording industry’s revenue, securing mechanical licenses and paying out the royalties has turned into a huge mess. Songwriters and publishers have sued Spotify for allegedly using their songs without getting a mechanical license (one lawsuit settled last year for $43 million, and another asking for $1.6 billion is still ongoing). Spotify has thrown up its hands about the difficulty of finding out who owns the mechanical rights in the first place. The MMA would replace the current system, which involves streaming services filing millions of “Notice of Intention” (NOI) letters with the Copyright Office, by creating something called the Mechanical Licensing Collective (MLC). Streaming services like Spotify, Tidal, YouTube, and Apple Music would would pay the MLC for a “blanket” license that would allow them to use anything in its database, and the MLC would be in charge of divvying up mechanicals payouts to songwriters and publishers. Streaming services would also be protected from lawsuits over mechanical royalties and licenses for music streamed before January 1, 2018.

This alphabet soup of administration would be a lot simpler than the current system, but the details matter. As proposed, the streaming services would fund the MLC, and a board of publishers and songwriters would oversee it. At last (unofficial) count, the board would consist of 10 publishers and only four songwriters. In an open letter, songwriter and big-band leader Maria Schneider has called for an equal, 50-50 split between publishers and songwriters, along with assurance that songwriters would be able to choose their own board representatives. She has a point, and Congress should make the change.

Another snag is how the MLC would handle royalties when it, like Spotify before it, is unable to identify who owns the copyright. This would mainly affect smaller songwriters and publishers who might not know how (or want) to sign up with the collective. The current draft of the law would only require the MLC to hold onto these “unmatched” royalties for three years. After that, royalties would be handed over to publishers based on market share. As Schneider and others have said, this would be grossly unfair: DIY songwriters’ royalties shouldn’t go to giant companies that had nothing to do with their songs. Henry Gradstein, a music lawyer who won last year’s settlement against Spotify, goes further in a recent op-ed, contending that the MLC would have an incentive not to find the rightful owners so that it could keep the money. Gradstein claims this would disproportionately impact hip-hop and Latin music, which he says is more likely to be self-published. Congress should fix these glitches. And while lawmakers are at it, they should appoint someone to oversee the MLC itself, most likely the Office of the Inspector General.

The bill’s protection for streaming services against expensive copyright-infringement lawsuits, though likely necessary to win the tech industry’s support, also warrants a closer look. Robert Allen, a music publishing attorney who has represented artists suing SiriusXM, said that this aspect of the bill is “completely unfair to songwriters.” Richard Busch, a lawyer who has represented songwriters suing Spotify, has suggested that blocking lawsuits over infringement that may have already occurred could be unconstitutional. On the flip side, the big publishing groups already settled with Spotify years ago, so disarming their lawyers now might not be giving up much for them. But for independent songwriters and publishers, losing these legal rights is a serious concession. If there’s a common ground here that would be better for the little guys, Congress needs to find it.

The MLC is only the most prominent aspect of the MMA. The bill would also pave the way for songwriters to earn higher royalty rates (a must if streaming wants long-term sustainability), in part by allowing the the Copyright Royalty Board to set a fair market value at any given time. As for the other legislation that the industry is trying bundle with the MMA, it’s a little more straightforward. The AMP Act will, for the first time, give producers and engineers a legal right to a share of digital sound recording royalties, which they’ve so far had to negotiate in their contracts. The CLASSICS Act would extend federal copyright protection to sound recordings from before 1972, likely benefiting older artists who enjoy airplay on satellite and online radio stations like Pandora and SiriusXM. And the Fair Play, Fair Pay Act would finally require terrestrial radio stations to pay performance royalties to artists and record companies, not just songwriters.

Unsurprisingly, the Fair Play, Fair Pay Act is hotly opposed by the powerful National Association of Broadcasters. But the act also raises an interesting point to consider when discussing the MMA’s entire premise. Mechanical royalties stem from the outdated distinction between a composition and a recording, but that doesn’t reflect the reality of how songs are written today. It overlooks that musical elements you can’t write down as notes on a staff, from a certain beat to a particular vocal phrasing, can be as essential to a song as any melody. Do we really want to enshrine this weird relic in law for another 100 years? OK, what about songs written by artificial intelligence? And at a time when Berklee College of Music and others have been undertaking private initiatives to streamline music royalties, why are right-wingers like Collins and Hatch so gung-ho about government regulation of business here, anyway?

Collins, at least, is reportedly hoping to jump ahead in line to become the next chair of the House Judiciary Committee. Then again, if Republicans lose the House this fall, as started to look more likely after Democrats clung to a slim lead in a Pennsylvania special election this week, the No. 1 Judiciary Republican could have a very different job: defending Trump against impeachment. Before then, for this far-reaching piece of music legislation to pass, Congress and the industry should address its flaws.