by: Holly Sadler
Intellectual property has long been a driving force of innovation, creativity, and economic growth for America. And intellectual property protections have been an important part of that growth. Without a right to fair compensation for work or property, the incentive to create is reduced significantly.
Unfortunately, over the years, as technology and other sectors have rapidly advanced, laws have failed to keep up and properly ensure the protection of those rights for some property holders.
One example of this is in the music industry, where the rise of the Internet and digital delivery services (like Spotify, SiriusXM, Pandora, and others) have blurred the rules of the road. Copyright laws were already in need of reform, but now reform is absolutely essential.
This week, the House Judiciary Committee is considering some bills designed to finally address a few of the most problematic copyright issues in this area. These bills share a broad consensus among stakeholders, but it is important that they move forward together to ensure the rights of all creators, not just some. Here are some of the key changes being proposed:
The Music Modernization Act (H.R. 4706)
The Music Modernization Act would create a Mechanical Licensing Collective (MLC) that would maintain an accurate database of songwriters so that they can be compensated in a timely manner by services such as Spotify and Pandora. This is a vast improvement over the current environment where digital delivery services can have difficulty locating songwriters to compensate. This will protect songwriters by ensuring compensation, as well as the digital distributor by providing a mechanism through which they can ensure they are consistently complying with copyright law.
Perhaps even more importantly, this bill would also adjust the rate standard that is currently used to determine compensation for songwriters when their work is copied or recorded. For years, this rate has been artificially kept very low by government price-controls. The new standard would take a more market-based approach. While not perfect, any move toward a market-based solution is a significant improvement over the current standard.
The AMP Act (HR 881)
The AMP Act creates a mechanism to allow a streamlined process for creative artists to voluntarily direct a portion of their royalties to producers, mixers, or sound engineers that collaborate on a project. This bill would establish a process for producers, mixers, and engineers to receive direct payments of these royalties by submitting a letter of direction to the SoundExchange (the company that manages royalty distribution). We value this approach since it is voluntary – not mandatory – and does not require subdivision of royalties, but makes it possible for those who wish to subdivide to do so in an efficient way. This is a common sense reform that returns some control to creators.
The CLASSICS Act (HR 3301)
Finally, in 1976 when the Copyright Act was passed, it exempted works created prior to 1972. That means many classic songs recorded by performers like Bob Dylan, The Beatles, and Johnny Cash do not receive the same protection and compensation as others. As a result, digital delivery services have been playing pre-1972 works without permission or proper compensation to copyright holders for years. This bill would extend existing federal copyright protections to pre-1972 copyright holders, allowing them to be compensated under the new market-based standard for royalties. Additionally, the CLASSICS Act would provide a streamlined process for resolving existing lawsuits stemming from the issue. This is a huge step in evening the playing field for all copyright holders and one we favor.
Copyright reform has been needed for a long time. The Music Modernization Act, AMP Act, and CLASSICS Act significantly improve the current copyright protection standards by implementing a more market-based approach to determining royalty rates, making it easier for digital distributors to comply with copyright law, extending copyright protections to sound recordings made prior to 1972, and returning some control to creators. More work on copyright is needed, but this is a great start to addressing some of the most pressing issues. We urge the House Judiciary Committee to move these bills forward as one package so that the rights of all creators can be appropriately protected.
by: Holly Sadler