Hey everybody! Back in February, the United States Copyright Office released a 245 page report entitled “Copyright and the Music Marketplace,”(http://copyright.gov/docs/musiclicensingstudy/). This report suggests that the current music licensing framework is outdated and should be significantly reformed. This report represents an outgrowth of the severe disappointment of songwriters and publishers with the payments received under the current music licensing system.
The reason why songwriters and publishers are so upset is that the mechanical license fees that are received for sound recordings are greater than the mechanical license fees received for songs by a ratio of 9:1!
As a result of this great disparity, songwriters and publishers are looking to level the playing field by advocating for a rate setting framework that would allow song licensing fees to be set based on a “willing buyer/willing seller” standard that is currently being used to set rates for sound recording uses in a non-interactive webcasting format -e.g. Pandora. These rates are handled and paid out via Sound Exchange. Of course, if this rate setting system goes into effect, it will produce significantly higher fees to songwriters and publishers which would make them very happy. However, this would make the streaming services very unhappy, especially in view of the fact that the streaming services already feel that the fees paid for sound recordings are excessive. This would also mean that in all likelihood, the streaming services will raise the subscription fees paid by consumers to meet the requirement for higher payouts to songwriters and publishers. I am in favor of any system that will result in more money in the pockets of songwriters. Hopefully, there won’t be a backlash of reduced use of streaming by consumers because of the higher charges for use of the services. I anticipate that a happy medium will be reached where streaming services will charge more, but not to the point that it will discourage consumer use of the services.
The overhaul of the music licensing system would be part of what would become known as the “Songwriter Equity Act” which was introduced in congress as a bill (H.R. 4079) by Rep. Doug Collins (R-GA) in February. If made into law, the bill would amend section 801 (b) (1) of the copyright act, and would call for the Copyright Royalty Board to set the statutory mechanical rate for the licensing of songs based on what a “willing buyer/willing seller” would negotiate based on a fair market rate which will result in higher fees to be paid to songwriters and publishers for licensing of their songs .
Stay tuned for more developments in this exciting area. I believe that change is needed to balance the playing field of music licensing for songwriters and publishers; and I think the proposed reforms are moving us in the right direction. See you next time!