Experts weigh in on the path ahead for copyright reform
It’s been three years since Congress began holding committee hearings about the possibility of reforming music copyright laws.
Those hearings cultivated optimism that reformed laws — which would lead to more favorable streaming royalty rates for artists, songwriters, record labels and music publishers — was on the way. When the Department of Justice followed the committee hearings by electing to review the consent decrees that govern music licensing organizations ASCAP and BMI, hope for reform was at an all-time high.
But the last year has seen the momentum behind music copyright reform evaporate. Instead of changing the consent decrees to allow songwriters to negotiate more favorable deals with the top streaming services, the DOJ instituted a controversial ruling that would have overhauled music licensing.
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The ruling, which would have enforced 100 percent licensing and required ASCAP and BMI to license a song no matter how small a percentage of the copyright they represent, has since been rejected by a federal judge. Even after the favorable ruling, some advocates are pushing Congress to include in a potential reform package a provision to outlaw the DOJ’s interpretation of the consent decrees.
Critics say 100 percent licensing would complicate music licensing and damage collaboration because publishers would be nervous for their songwriters to co-write songs with a songwriter represented by another licensing organization.
And in the meantime, streaming has emerged as the preferred medium for Americans to listen to music. According to the Recording Industry Association of America, streaming eclipsed all other forms of buying music to become the No. 1 revenue generator for artists and record labels in 2015.
Despite their growing popularity, Spotify and Pandora have disclosed that they still are not yet profitable. They say over-reaching reforms could stifle the promising growth of their services.
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To get a sense of why copyright reform is needed from Congress, The Tennessean surveyed an array of experts — trade organizations, entrepreneurs, thought leaders and lawmakers — to get their take on where the situation stands.
The questions were posed before federal Judge Louis Stanton reversed the DOJ action on the consent decrees.
Why do you feel like music copyright reform is needed and how urgent is the need?
Ann Sweeney, Senior Vice President of Global Policy for BMI: BMI is seeking targeted changes to that law to assure that, regardless of format or technology, the composers, songwriters and music publishers we represent receive the fair value for what their music brings to music service now and in the future. Because copyright reform encompasses far more than music issues (it includes software, photography, graphic arts, books, games, and more) and because the issues are complex, we know that reform takes time. We are grateful to (House Judiciary Chairman) U.S. Rep. Bob Goodlatte, R-Virginia, for his leadership on copyright, and hope that in the 115th Congress, we can achieve the momentum necessary to bring music copyright reform to reality.
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Chris McMurtry founder of Nashville music metadata company Dart Data: There is a difference between copyright reform and a reform of the business practices involving copyright. The market is rightly demanding more transparency in the reporting and accounting of the money that flows through to copyright owners. The smart players will work toward providing more value to the consumer and provide the most information about consumption in an effective and efficient manner to the copyright owners. Correct metadata and attribution will facilitate the timely and accurate payment of monies to the right parties.
Daryl Friedman, Chief Industry, Government & Member Relations Officer of The Recording Academy: Music licensing is broken. No matter where you stand in the music ecosystem, that is one thing every party can agree on. Even the Copyright Office says it’s “ripe for resolution.” Varied and below-market rate standards recordings and compositions are hindering progress and simply prevent music creators from effectively doing business. We have seen lots of lawsuits unfold, proposed legislation come to the table, the DOJ ruling on consent decrees, so much activity, and all stakeholders are waiting for Congressional action. The legislation that governs our music industry was developed when a stream was just a body of water. We need to bring music legislation into the 21st century. The time for a comprehensive revision is now.
U.S. Sen. Lamar Alexander, R-Tenn: In the new internet world we live in, songwriters are getting paid a small amount for their creative work. Let me give you an example. I suggested the title of a song, “Falling Apart Together,” that Lee Brice put on one of his albums. Just for suggesting the title, I received a 1/4 interest in the song. That is just how it works. It has been played a lot of times, and you might think the royalties would add up to a lot every year – but my share of the royalties last year was $78.50. This is the case for many songwriters, and it is hard to pay the bills when you write a song everyone hears, but you only get a puny amount.
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What is the most pressing area of need and why?
John Barker, CEO of ClearBox Rights and co-founder IPAC (Interested Parties Advancing Copyright): The most pressing need is to begin to swing the pendulum the opposite direction toward free-market negotiations into the licensing space rather than continuing to add additional layers of governmental oversight. The recent DOJ decision is just the latest example of blowing an opportunity to peel back some governmental control. Unfortunately, another layer was added from an agency who has very little understanding of the complexity of the music licensing space.
U.S. Rep. Marsha Blackburn, R-Brentwood: This latest ruling regarding the ASCAP and BMI consent decree is unacceptable. Someone told me they were in a meeting with DOJ, before this decision was released, and some bureaucrat asked what the difference between a songwriter and artist was. Really? No wonder they got this ruling so wrong. And if we don’t get it cleaned up, then it is going to harm our songwriters. I will be working with my colleagues to address this.
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Is there an existing piece of legislation you support related to music copyright reform, and why?
Cary Sherman, Chairman and CEO, RIAA: We support the Fair Play Fair Pay Act as a sensible, bipartisan starting point. We also recognize the need to ensure that songwriter and publisher royalties and rate-setting mechanisms are updated for the 21st century by reforms such as those in the Songwriter Equity Act. These do not address every inequity or unfairness in the copyright and music licensing laws — such as the now hopelessly outdated DMCA — but they are a good start.
Derek Crownover, Nashville-based entertainment law attorney: I think the Songwriter Equity Act in general would make a valuable impact on the music industry — especially for creatives. Right now, songwriters and composers argue that they don’t receive royalties that reflect the fair market value of their work. The Songwriter Equity Act would allow a rate court to consider other royalty rates as evidence when establishing digital performance rates. This would promote fair market value of intellectual property, not just license fees, which may represent only a fraction of what a song is actually worth. Such a measure would support the creative talent in the industry — rather than exploiting it—and maybe balance the scales better.
How does the recent DOJ ruling affect copyright reform?
U.S. Rep. Jim Cooper, D-Nashville: It highlights the need for swift copyright reform. The Department of Justice put the ball in Congress’ court, and I hope we can get more people to pay attention. Copyright laws are under the jurisdiction of the House Judiciary Committee. The committee began a bipartisan review of U.S. copyright laws in 2013, and we are waiting to see what they recommend. I hope it’s a complete overhaul that modernizes the law and not just small fixes.
Charles Alexander, Nashville-based CEO of Outside The Box Music and co-founder of Streaming Promotions: I think the recent DOJ rulings do present a huge challenge. Especially to songwriters and publishers in particular. But, truthfully, ASCAP and BMI have contributed in part to how the DOJ perceives these negotiations. The 100 percent licensing rule is going to be disastrous. But, in practice, that part of the statute has existed in that form for a long time.
The issue of music copyright reform has been discussed in Congress and among music industry stakeholders for several years. Why do you think meaningful reform has not happened yet despite general agreement it is needed? Are you confident music copyright reform is attainable?
U.S. Rep. Doug Collins, R-Ga: We’ve taken these issues up and had plenty of hearings. Now, it’s time for the stakeholders to come and see what we can fix.
U.S. Rep. Jim Cooper, D-Nashville: There are a lot of stakeholders and it’s hard to get everyone on the same page. But I think everyone agrees on 90 percent of what we need to do. It’s the last 10 percent that's hard to figure out.
Mark Montgomery, Nashville-based music and technology entrepreneur: Meaningful reform is impossible without a hard look at the empirical data. We are now at a point where all the plumbing is (nearly) hooked up in a way that we can really understand who is adding value, and who is not. That will be an interesting day now won't it?! And many people in the traditional entertainment business have been trying to stick that horse back in the barn for a hell of a lot longer than June 1, 1999 (Google it). It's time to reboot the U.S. Copyright system and pay the creators, directly.
Bart Herbison, executive director for Nashville Songwriters Association International: Copyright reform has more layers than an onion. Agreements between the musical work and sound recording copyrights are difficult. Then you add in substantial powerful digital, broadcast interests and the American public, who in the case of the STOP ONLINE PIRACY ACT sent so many emails to Congress it jammed their email servers — all of that presents almost insurmountable obstacles. No one is confident of copyright reform. We should know if and how bold such reforms will be, probably by the end of this year.
Michael Huppe, president and CEO of SoundExchange: There may be general agreement within the industry that change is necessary, but there are a lot of other voices out there on the side of those who profit off of the work of music creators, and they argue that the existing laws work fine. I am confident reform is attainable, but it will require tremendous engagement from all corners of the industry to make it happen. Creators will never have the resources that billion-dollar tech companies have. What they do have is their voice. We can achieve reform if those involved in the creation of music use those voices to tell Congress there is an urgent need for reform. Every artist, label, producer and other creators must engage in this debate and deliver the message that reform is overdue.
Reach Nate Rau at 615-259-8094 and follow him on Twitter @tnnaterau.