Once upon a time, we spun the same vinyl records night after night. Then, we spent our allowance on as many cassettes and CDs as we could afford. Now, all that stands between us and thousands of hours of streaming music is an internet connection. One could assume that this innovation, which has wildly changed the ways in which we consume music, would have spurred some seismic shifts in licensing and copyright laws. Unfortunately, that is not the case.
Considering there hasn’t been a change to music’s copyright laws since 1998’s Digital Millennium Copyright Act, it’s not hyperbole to call it woefully outdated. Compact disc sales fell to less than one hundred million units sold in 2016, while digital streaming services—such as Spotify and Apple Music—saw its subscribers stream more than 252 billion songs, according to Standard & Poor’s. While that makes for much more listening enjoyment, songwriters’ digital royalties have not kept the same pace.
Enter the Music Modernization Act, a substantial piece of legislation introduced in December of last year by Congressmen Doug Collins and Hakeem Jeffries. Since then, it has been embraced by a bipartisan group of US Representatives and Senators, as well as a number of industry luminaries. The bill modernizes outdated royalty standards so that songwriters receive a fair market value for their music when it is streamed or downloaded online, as well as creates a new, simplified mechanical licensing entity that makes it easier for digital music companies to obtain a license and play songs.
“It’s exciting that in our historically deadlocked Congress we seem to have some momentum,” says Clara Kim, executive vice president and general counsel of the American Society of Composers, Authors, and Publishers (ASCAP). “What’s amazing is that we have the performing rights organizations, the publishers, record labels, and the Digital Media Association—which represents the digital audio services such as Spotify, Apple Music, and Pandora. It’s a historic consensus that has been built here, and that’s very promising for everybody involved.”
As a membership society, ASCAP is governed by its members and is the world’s foremost performing rights organization, having done its part over the past century to license copyrighted works for public performances and distribute royalties to its roughly 650,000 members. As such, the organization has long advocated on Capitol Hill for updates to licensing and copyright laws. But according to Kim, although ASCAP has long had policymakers from both sides of the aisle willing to stand by the organization, the political will and climate needed to pass legislation hasn’t existed until recently.
That’s changed now, though, as a multitude of senators, including Republicans such as Orrin Hatch, Bob Corker, and Lamar Alexander, as well as Democrats such as Doug Jones, Sheldon Whitehouse, and Dick Durbin, have introduced the bill to the Senate. Kim is hopeful that the bill could make it onto President Donald Trump’s desk before the end of the year.
ASCAP has been pushing for two main provisions in particular to the bill, both of which surround consent decree rules that have rarely been updated in their nearly eighty years of existence. The first, Kim explains, is rate court reform, which centers on rate setting disputes. Currently, ASCAP reports to one designated rate court judge for all disputes, but the new provision would ensure a “wheel” approach that folds in a rotating cast of judges, as is the case with regular claims in federal court. In the digital age, when new industries are emerging and using music in new ways, the “wheel” system should be more responsive to changing market conditions as they arise.
The second provision changes Section 114(i) of the copyright law, which bars the federal rate courts overseeing the consent decrees of ASCAP and competing performing rights organization BMI to consider supplementary evidence—such as sound recording royalty rates—when setting performance royalty rates for songwriters and composers. By amending this provision, judges would be free to consider the impact and intricacies of the modern music landscape, as well as ASCAP’s proposed rates, when making their decision.
“The hard part is agreeing on the appropriate rate,” Kim explains. “There’s a big disparity between what the recording artist makes and what the songwriter, composer, or publisher makes for the same digital streams. A song can be played on Spotify, and the recording artist will get paid as much as fourteen times more than the songwriter. Our change to Section 114(i) of the Copyright Act would simply allow us to introduce the rates charged for sound recordings so the rate court has all relevant evidence when making a decision about songwriter compensation for digital streaming.”
These potential advancements align with another landmark—a multiyear agreement between ASCAP and YouTube, which will find the two entities sharing data as a means of better identifying and paying royalties on ASCAP members’ works performed on the platform.
“We entered into a licensing deal and strategic alliance with them, whereby we are leveraging our vast database of musical works through their rights claiming system to ensure that more money goes to our songwriters, composers, and publishers,” Kim says. “We’ve put forth an enormous amount of technology resources to make sure that the music creators who fuel the digital economy benefit from it through higher levels of monetization and transparency.”
Considering ASCAP is responsible for hundreds of thousands of licensing arrangements, technology has been an ongoing focus of the organization. Kim notes that having a functional, easily navigable website is a major priority. When you have more than ten million registered works, she says, ensuring that the organization’s repertory is searchable via computer or mobile device is key for continued success.
“ASCAP is highly focused on innovation to create more transparency and to best serve our members and licensees,” she says of ASCAP’s approach to technology. “We want to help people enjoy music.”
But, more than anything, Kim and her team want to drive money into pockets of ASCAP’s members whose works are the foundation of the entire music industry. And while legislation and technology are a key part of that, so too is the leadership team, which underwent a transformation in 2015 with the appointment of CEO Elizabeth Matthews. The organization now has a leadership team that is more diverse than ever before, with women and men now equally represented.
“That’s unique in the music industry, which is traditionally very male-dominated,” Kim says. It’s about time. As the Music Modernization Act proves, the industry’s due for some change.
Photo: Courtesy of ASCAP
Patterson Belknap is proud to represent The American Society of Composers, Authors and Publishers, an organization of over 650,000 songwriters, composers and music publishers. We admire the organization for its mission to uphold the value of its members’ music. We congratulate Clara Kim and her team on this well-deserved recognition. To learn more about Patterson Belknap, visit www.pbwt.com.
Hoguet Newman Regal & Kenney and Randi May congratulate Clara Kim on her career achievements and her successful leadership at ASCAP. For more than 15 years, we have been a proud strategic partner to ASCAP, providing labor & employment counsel, particularly as technology continues to impact ASCAP’s dynamic culture.