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NAB Says Yes to Music Modernization Deal

Agreements with ASCAP and BMI pave way for Music Modernization Act

The chance for a major overhaul to music licensing affecting radio broadcasters in this country appears at hand now that the National Association of Broadcasters has given the thumbs up to a resolution previously introduced in Congress.

The Music Modernization Act, which would reform music licensing as we know it, was introduced in the U.S. House in December 2017 and later in the U.S. Senate, with NAB originally balking at the proposal. At first glance the group said several provisions in the bill “may unjustifiably increase costs for many music licensees, including radio and TV broadcasters, who otherwise receive no benefit from the legislation.”

However, NAB reached an agreement last week with ASCAP and BMI on what can be introduced as new evidence into the rate-setting process.

A source familiar with the broadcast/music industry negotiations says the original legislation previously introduced in the House and Senate would have changed current copyright law by allowing sound recording royalty evidence to be introduced in ASCAP/BMI rate court proceedings for all music licensees, including over-the-air terrestrial and digital streaming.

“The agreement struck Friday between NAB, ASCAP and BMI would narrow that change in law. It would only allow the introduction of sound recording royalty evidence for digital music services, eliminating the risk that this evidence could raise rates paid by terrestrial broadcasters,” according to the source.

The insider says the agreement greatly increases the chance for passage of the legislation this year. In fact, Kevin Goldberg, partner with Fletcher, Heald & Hildreth PLC in Washington, now says in light of the NAB agreement he believes it is “50/50” that Congress will pass the legislation this year.

A joint announcement issued Friday by NAB, ASCAP and BMI reads: “This agreement resolves NAB’s concerns with the potential introduction of new evidence into the rate-setting process while preserving ASCAP’s and BMI’s ability to seek meaningful compensation from the growing digital music marketplace.

“Our three organizations have enjoyed a long, unique and successful relationship, and as a result, we were able to work together to find a path forward on this important legislation that is fair to all parties.”

Observers say pressure has been mounting from music industry groups to pump up the licensing fees paid by radio stations for over their on-air broadcasts and digital streaming while broadcasters hope to toe the line on current rates.

Broadcasters have countered those music industry efforts with a resolution of their own in Washington. The U.S. House of Representatives appears to have enough support to pass the Local Radio Freedom Act, which is a resolution opposed to any new performance fee, tax, royalty or other charges of local radio broadcasters. A companion resolution has also been introduced in the U.S. Senate.