In advance of a House Intellectual Property Subcommittee hearing on music licensing reform being held today, ASCAP, BMI, SESAC and the NSAI are calling on Congress to address the concerns of songwriters and composers, whom the groups say are being disadvantaged by a misaligned regulatory structure, resulting in artificially low payments to America’s music creators. In a joint letter to Committee Chairman Bob Goodlatte and Ranking Member Mel Watt, the groups laid out their reasons for opposing the so-called “Internet Radio Fairness Act of 2012,” H.R. 6480 (“IRFA”), commonly known as the Pandora bill, while noting that any effort to reform music licensing should address a greater problem: the current disjointed rate setting systems governing digital services. This results in anundervaluation of the public performing right in musical works, harming America’s songwriters, composers and music publishers.
As stated in the letter, “This undervaluation of the public performing right runs contrary to global practices which often yield two times the fees generated by US license rates or more, when compared to equivalent economies, and represents a trend that is harmful to both America’s music creators and the larger economy. Any Congressional examination of online music licensing issues needs to address this serious, broader issue to ensure that the interests of writers and publishers – the very creative foundation fueling the music industry – are not further deteriorated.”
The letter points to the gross inequities that have developed in the music licensing landscape as a result of opposing rate setting systems applied to the amounts paid to songwriters, composers and publishers versus those paid to record labels and recording artists.
To illustrate this point, the letter notes: “Pandora’s 2012 annual report stated that it paid 49.7% of its revenue in royalties to SoundExchange, and 4.1% of its revenue in royalties to the US PROs, namely, ASCAP, SESAC, and BMI. In other words, from the total pool of monies paid for the performance of music and sound recordings, almost 92% of the money paid by internet radio flows to record labels and performing artists through SoundExchange, and only 8% of it is paid to songwriters and publishers…This almost 12-to-1 disparity in SoundExchange and PRO payments is unprecedented in the global music marketplace. Around the world, the opposite occurs; the public performing right in the underlying music composition is paid at far higher rates than the public performance right in the sound recording. In fact, the latter right is sometimes referred to as a “neighboring right,” in recognition that rewarding the creators of the musical work—when it is publicly performed—is a central tenet; without the creation of the underlying musical work, there would be nothing to record.”