Like House, Senate Expected to Pursue Music Modernization Package

Grassley told us the committee is getting close to moving the bill. Asked about the House package, Grassley said, “I think the way that this thing has evolved here that we’re in a pretty good position to move it regardless because there’s really unconventional consensus that developed that kind of surprised me. I think it should be easy to move.”

It's believed that Hatch’s bipartisan, bicameral legislation could pass the Senate alone without controversy, but there are issues with the two additional bills included in the House package. “Enacting a much larger music licensing bill also remains a possibility, provided we play our cards right,” said Digital Media Association General Counsel Greg Barnes.

One music industry lobbyist suggested Hatch would prefer to pursue his bill alone, but because there are so few opportunities to pass copyright reform, senators will want to attach the other bills. With their retirements approaching, Hatch and House Judiciary Chairman Bob Goodlatte, R-Va., have additional incentive to pass copyright legislation, the lobbyist said. With the growth of interactive streaming services, stakeholders across industries have a lot of incentive for compromise, as well, and lawmakers have the option to split off any bills that are too controversial, the lobbyist added.

Jay Rosenthal, a Mitchell Silberberg lawyer who represents music industry content owners and former general counsel at the National Music Publishers’ Association, said it’s clear House sponsors are pushing for a Senate package. Recording Academy Chief Industry, Government & Member Relations Officer Daryl Friedman said his impression is the Senate will oblige. The academy sent more than 100 Grammy nominees and winners to Capitol Hill Thursday in a visit spanning 25 Senate offices, including those of Hatch and co-sponsor Sen. Lamar Alexander, R-Tenn. “We expressed our interest in seeing this all come together as a package, as it has in the House, and our impression was that the senators were willing to do that,” Friedman said. “We are really going to be furiously lobbying the Senate and make sure every office is comfortable with the package.” NMPA CEO David Israelite called the legislation “the best hope for achieving fair rates for music creators,” and the group looks forward to a House vote, Senate consideration and ultimately the president’s signature.

Included in the House package is the Compensating Legacy Artists for their Songs, Service and Important Contributions to Society (Classics) Act (S-2393), a uniform royalty system for digital transmissions of pre- and post-1972 recordings. With support from the Recording Academy, the third bill is the Allocation for Music Producers Act (S-2625), for higher royalty payments for music producers and engineers. Post-'72 recording artists termination rights let them renegotiate contracts with record labels 35 years after signing, so formerly fledgling artists can renegotiate. Some musicians want to extend this right to all artists, which record labels oppose. SiriusXM opposes the Classics Act because it would make it pay for use of all pre-'72 sound recordings, with CEO Jim Meyer in Billboard calling it a “massive subsidy ... to terrestrial radio.” Meyer said SiriusXM has paid $2.2 billion for use of post-'72 works, terrestrial radio nothing. The House bill also includes a change in Copyright Act Section 114 rate-setting standard, to a “willing buyer, willing seller” standard, which would require satellite radio to pay more.

A blanket license for internet companies would be administered by a new mechanical royalty collective that's “essentially a quasi-governmental organization with extraordinary powers and no real oversight,” said music industry attorney Chris Castle. “For independent songwriters to have confidence in the transparency of the collective, the back office functions need to be tied down in advance by bringing in a substantial third party like a SoundExchange to handle the accounting and administer the money.” All parties can agree to fix the pre-'72 loophole on digital royalties and largely codify SoundExchange’s practices for record producers, he said.