Music Copyright Bill Sails Through House Panel (1)

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By Anandashankar Mazumdar

The House Judiciary Committee has approved legislation that would revamp digital music licensing rules, teeing it up for House floor action.

The Music Modernization Act ( H.R. 5447) would create a new royalty-collecting organization that would give streaming services like Spotify a one-stop shop to get permission to play recordings, rather than having to obtain licenses individually.

“This legislation, which is the first major update to our music licensing laws in decades, brings early 20th century music laws for the analog era into the 21st Century digital era,” committee chairman Robert W. Goodlatte (R-Va.) said in a statement.

Lawmakers approved the measure on a 32-0 vote without amendments. A senior House aide said the full House may vote on the bill within the next two weeks.

The measure also would create royalty rights for owners of copyrights in pre-1972 recordings played on digital services, and would give sound engineers and music producers royalties for use of recordings on which they worked.

Goodlatte combined three other bills to create the measure the committee approved. Three bills similar to the earlier three House bills are pending in the Senate.

Broad Industry Support

The breadth of support for the bill on the Judiciary Committee indicates that it has enough backing to pass the House, according to Chris Harrison of the Digital Media Association, whose members include Spotify, Pandora, YouTube, Apple, and other major digital music services.

DiMA; the National Association of Music Publishers; the Songwriters of North America; the American Society of Composer, Authors, and Publishers; and the Recording Industry Association of America are among the 20-plus industry organizations supporting the bill. They represent a range of interests, including streaming services, music publishers, songwriters, and music labels.

Critics Remain

Ferras Vinh, policy counsel for the Center for Democracy and Technology, a technology policy group, told Bloomberg Law that the inclusion of protection for pre-1972 recordings, which was known as the CLASSICS Act when it was a separate bill, may complicate the chances for enactment of the bill.

“As a standalone bill, the MMA would likely have a better chance of passing both houses of Congress,” Vinh said, referring to the earlier House legislation. “But the addition of the CLASSICS Act is a new wrinkle that may complicate its chances of passage.”

Public advocacy organization Public Knowledge sent a letter to House and Senate Judiciary Committee leadership last month objecting to the pre-1972 recordings provision in part because it “would apply coverage terms of up to two centuries to sound recordings that have already fallen into the public domain by any reasonable calculation.”

Public Knowledge also objects to a provision of the committee-approved bill that would direct the Copyright Royalty Board to determine royalty rates for statutory music licenses under what is called a “willing buyer, willing seller” standard. Under that standard, the board would recreate licensing fees that would have been negotiated between licensees and licensors in a market free of compulsory licenses.

Currently, the board sets royalties paid by Sirius XM Radio Inc. and a handful of older services under guidelines set by Section 801(b) of the Copyright Act, which includes considerations such as whether the copyright owner is getting “a fair return” and whether the music service is getting “a fair income.”

Digital music services Sirius XM Radio, Music Choice, and Mood Media Corp. objected in an April 9 letter to the jettisoning of the Section 801(b) standards in a letter to Goodlatte and the committee’s top Democrat, Rep. Jerrold Nadler (D-N.Y.).

“There is no legitimate reason for now disrupting the current long-standing licensing regime through this unrelated change and sacrificing companies that provide valued music offerings to millions of customers and a meaningful outlet for artists and songwriters to share their music,” the three services said in their letter.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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