Speeches & Floor Statements

Floor Speech: Music Modernization Act

Posted on January 24, 2018

MUSIC MODERNIZATION ACT

Floor Statement

  • Italy has its art, Egypt has its pyramids, Napa Valley has its wines and Nashville has its songwriters.
  • Songwriters are the lifeblood of Music City, thousands of them work as waiters, bus drivers or teachers as they build their songwriting career. Their paychecks ought to be based on the fair market value of their songs – so that when they write a hit heard around the world, they can see it in their billfolds.
  • The arrival of the internet has transformed the music industry, but it has also meant many songwriters aren’t paid royalties when their songs are played online. This is the first problem. The second problem is that when songwriters are paid, they aren’t paid a fair market value for their songs.
  • Senator Hatch, a senior member of the Senate Judiciary Committee and a songwriter himself, has long been an advocate for musicians. 
  • We have worked together for over a year with Rep. Doug Collins on the Music Modernization Act, which we are introducing today.
  • 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.
  • More importantly, this legislation will have a real impact on 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 get paid when their music is played or someone buys a song they wrote. 
  • Third, the legislation will allow a songwriter to get paid the fair market value for their work.

Why the Music Modernization Act is Needed (Story)

  • To give you an idea of what this really means for songwriters, a few years ago, I chatted with an older couple outside a pharmacy and I said, “How’re y’all doing?” and the lady said, “We’re just falling apart together.”
  • A few days later, I was with songwriters, Lee Brice, Billy Montana, and Jon Stone and told them the story. They said, "I think we could do something with that."  And they wrote a song called "Falling Apart Together,” and gave me 1/4th of the song for suggesting the title because that's the way Nashville works.
  • Lee Brice put it on one of his albums, and I was paid ¼ of the royalties each time the song was played.
  • Lee Brice is a pretty well-known singer so you might think that would add up to a lot of money, but in 2016 my royalties only added up to $101.75. 
  • If you are a songwriter living in Nashville, you can’t make a living on that. 
  • The other problem facing songwriters is that music is increasingly being played online. 
  • Companies such as Spotify, Pandora, Amazon and Apple Music offer listeners virtually unlimited access to digital music libraries that they can play using the Internet whenever they want.
  • According to Nielsen there are nearly 86 million paying subscribers to these types of digital music streaming services.  In 2016, these subscribers listened to more than 252 billion music streams, including repeated songs. 
  • In 2016, for the first time in history, “streaming” music services generated more than half the music industry’s revenues.  Digital music services such as Spotify, Pandora and Apple Music generated the majority, or 51.4% of the music industry’s revenues. 
  • While digital music streaming has been increasing, purchases of individual songs fell from 994 million song purchases to 751 million, or 24% between 2015 and 2016. 
  • Sales of compact discs fell below 100 million units in 2016, a 17% decline from 2015.
  • This means that it is getting much more difficult for songwriters to make a living because many songwriters aren’t paid royalties when their songs are played online.
  • While Congress can’t change the fact that the Internet and other new technologies have changed the music industry – Congress does have a responsibility to update outdated federal music licensing laws. 

How This Happened (1909 Copyright Act)

  • So how did we get into this mess and what laws are we talking about updating?
  • In 1909, Congress gave copyright owners of musical works the exclusive right to make, reproduce, and distribute their own musical works. At the time the works were primarily piano rolls.
  • Congress set the royalty to be paid to the owners of these piano rolls at 2 cents per copy.
  • The Copyright Royalty Board – a 3 judge panel at the Library of Congress – still sets royalty rates today.  The current rate is 9.1 cents and is based on a below market standard. 
  • Another problem is that ASCAP and BMI – the two largest performance rights organizations – are subject to 76 year old consent decrees with the Department of Justice.  These consent decrees never contemplated things like the Internet, and today they are harming Nashville songwriters.
  • The biggest problem with these outdated consent decrees is that songwriters don’t get paid the fair market value for their work.
  • Songwriters negotiate with radio stations for the right to play their music in exchange for a “reasonable” performance royalty. If songwriters and the radio stations can’t agree on a reasonable royalty rate the songwriters have to go to a “federal rate court” which means their case is heard by only two district court judges in New York.
  • Under current law, the judge is not allowed to consider what the song’s performer earns when he sets a “reasonable royalty.”
  • The Music Modernization Act changes that by allowing ASCAP and BMI to present new evidence about the fair market value of a songwriters work – like what the performer earns – to a federal rate court judge when there is a dispute about royalty rates.
  • The legislation also allows more federal district court judges to hear these types of cases. 
  • The music industry has changed dramatically in the past 109 years, and it is time to update our music licensing laws to ensure songwriters can continue to make a living off their talents for another 100 years.

What the Music Modernization Act Does to Solve The Problem

  • First, the bill creates a new simplified licensing entity to make it easier for digital music companies to obtain a license to play songs and ensure songwriters are paid when their music is played.
  • Instead of Spotify or Pandora tracking down each songwriter or a songwriter’s publisher to get permission to play a song—they will be able to submit one license and start playing a song right away. 
  • Transitioning to a blanket licensing for reproductions was recommended by the Copyright Office at the Library of Congress.
  • In a February 2015 report on music licensing reforms, the Copyright Office recommended a blanket license approach that is included in the Music Modernization Act.
  • The Copyright Office report concluded that “song?by?song licensing is widely perceived as a daunting requirement for new services and as an administrative drag on the licensing system as a whole.
  • The move to a blanket system would allow marketplace entrants to launch their services—and begin paying royalties—more quickly.”
  • Another important point is that the new licensing entity won’t be a new government agency – and the digital music companies will pay to set it up and keep it running, not songwriters.
  • The new licensing entity will be governed by songwriters and music publishers – giving songwriters a say in how their work is used for the very first time.
  • The new entity helps songwriters because it will collect royalties each time a song is played, look for the songwriter, and hold on to their royalties for three years until they can be found. 
  • This helps songwriters because it ensures they get paid royalties for their work whether they have a publisher or not.
  • This helps digital music companies because it makes sure songwriters get paid, which means fewer lawsuits.
  • The legislation also improves transparency by creating a publicly accessible database for all music works and requires digital music companies to pay songwriters their royalties every month.  Songwriters will get usage reports on music that is played to make sure the money is all there.
  • The new database is important because maybe a young, aspiring songwriter co-wrote a song under an alias or moved or simply cannot be located.
  • The legislation allows songwriters to audit the licensing entity once a year, if they choose.
  • Finally, the legislation requires the Copyright Royalty Board at the Library of Congress to use a fair market standard – what a “willing buyer” would pay a “willing seller” – when the Board sets royalty rates.  This helps songwriters get a fair market royalty when their song is played online.

Support for the Music Modernization Act

  • The Music Modernization Act is supported by the:

National Music Publishers Association (NMPA)

Digital Media Association ( DiMA)

American Society for Composers, Authors, and Publishers, (ASCAP)

Broadcast Music, Inc. (BMI)

Nashville Songwriters Association International (NSAI)

Songwriters of North America (SONA)

  • On January 8, these groups joined the Recording Industry Association of America (RIAA), the Recording Academy and more than a dozen music industry groups in endorsing the Music Modernization Act.  
  • The Music Modernization Act will help thousands of songwriters in Nashville and across Tennessee.
  • 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 nations – songwriters the fair pay they have earned.
  • I’d like to take a few more moments to thank Senator Hatch and his staff once again, because he has been working on this issue for some time.  Senator Hatch was an original cosponsor of legislation in the 114th Congress, titled the Songwriter Equity Act, and I am proud to work with him on this legislation we are introducing today.
  • I would also like to thank Rep. Doug Collins and Rep. Hakeem Jefferies, the sponsors of the bill in the House of Representatives.
  • Representatives Collins and Jefferies are leading the effort to get this bill through the House Judiciary Committee so it can be considered by the full House.
  • Finally, I would like to thank:

Bart Herbison with the Nashville Songwriters Association International

David Israelite with the National Music Publishers Association

Beth Matthews with ASCAP

Mike O’Neil with BMI

Greg Barnes and Chris Harrison with the Digital Media Association

  • These individuals have worked together and negotiated for months in order to develop industry consensus legislation to help songwriters and modernize the music licensing laws.