In testimony that continues to arrive following yesterday’s music licensing hearing in a subcommittee of the House Judiciary Committee, Public Knowledge, the Consumer Federation of America and the Electronic Frontier Foundation ask lawmakers to support policies to simplify and strengthen music licensing.
The goal, say all three, is to promote the development of new competitive services while providing reasonable artist compensation.
Online music services help musicians and their fans by giving listeners avenues to conveniently and legally access music. They can also give musicians new tools to create and distribute music, giving musicians the choice of forgoing traditional intermediaries to retain copyright ownership, collect a greater percentage of royalties, or simply maintain more control over their own careers, according to the groups.
“But if copyright law and licensing structures give traditional intermediaries the leverage to demand equity, enormous advances, or royalties disproportionate to their share of the marketplace, new online services will be beholden to the largest corporate rights holders and will only become a tool for further entrenching the inequities in today’s music industry. This would only lead to fewer new tools to empower musicians and less competitive and innovative options for the public trying to legally access music,” state PK, CFA and EFF.
The testimony from the three groups highlights the rate court dispute between Pandora and ASCAP, noting that the court found that Sony/ATV Music Publishing and Universal Music Publishing Group exerted market power “to extract supracompetitive prices” and both music publishers tried to withdraw “selective rights” from ASCAP “despite the fact that ‘[s]ongwriters, and at least some independent music publishers, were concerned about the damage that might be wrought’ with regard to transparency, payment disputes with publishers and overall problems of consolidation in the industry.”
The consent decrees currently in force with the two largest performing rights organizations, ASCAP and BMI, remain necessary to achieve the efficiencies of collective licensing while preventing abuses of market power, according to PK, CFA and EFF. ASCAP head Paul Williams told lawmakers the organizations want the decrees updated.
Also, while NAB issued a report saying radio airplay drives record sales, the Recording Industry Association of America submitted a report titled: “Labels at Work: The Music Business In The Digital Age.”
RIAA CEO Carey Sherman noted the recording industry has “embraced” the digital distribution of music, with the labels streamlining their operations and allocating a higher proportion of their revenues to investing in artist career development. “Record labels provide the investment on which everyone in the music value chain depends, ‘seeding’ the entire music ecosystem with $20 billion in U.S. talent investment — including artists, songwriters and music publishers — in just the last decade. The majors also invested an additional $6 billion over the same period to market recordings in the U.S,” Carey testified.
The recording industry representatives spent much of the hearing criticizing broadcast radio for not paying a performance royalty, not acknowledging that stations already pay royalties to ASCAP, BMI and SESAC.
Radio’s position has been that the labels were late to acknowledge and refine their business model as music sales moved from mechanical sales of CDs and albums to digital downloads and they want stations to help them stem the loss.
“Please understand that the radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital strategy that addresses a decline in its own brick and mortar income,” testified Radio Music Licensing Committee Chairman Ed Christian, who’s also Saga Communications President/CEO.