[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
FIVE YEARS LATER:
THE MUSIC MODERNIZATION ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET
OF THE
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
TUESDAY, JUNE 27, 2023
__________
Serial No. 118-31
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
52-954 WASHINGTON : 2023
COMMITTEE ON THE JUDICIARY
JIM JORDAN, Ohio, Chair
DARRELL ISSA, California JERROLD NADLER, New York, Ranking
KEN BUCK, Colorado Member
MATT GAETZ, Florida ZOE LOFGREN, California
MIKE JOHNSON, Louisiana SHEILA JACKSON LEE, Texas
ANDY BIGGS, Arizona STEVE COHEN, Tennessee
TOM McCLINTOCK, California HENRY C. ``HANK'' JOHNSON, Jr.,
TOM TIFFANY, Wisconsin Georgia
THOMAS MASSIE, Kentucky ADAM SCHIFF, California
CHIP ROY, Texas ERIC SWALWELL, California
DAN BISHOP, North Carolina TED LIEU, California
VICTORIA SPARTZ, Indiana PRAMILA JAYAPAL, Washington
SCOTT FITZGERALD, Wisconsin J. LUIS CORREA, California
CLIFF BENTZ, Oregon MARY GAY SCANLON, Pennsylvania
BEN CLINE, Virginia JOE NEGUSE, Colorado
LANCE GOODEN, Texas LUCY McBATH, Georgia
JEFF VAN DREW, New Jersey MADELEINE DEAN, Pennsylvania
TROY NEHLS, Texas VERONICA ESCOBAR, Texas
BARRY MOORE, Alabama DEBORAH ROSS, North Carolina
KEVIN KILEY, California CORI BUSH, Missouri
HARRIET HAGEMAN, Wyoming GLENN IVEY, Maryland
NATHANIEL MORAN, Texas BECCA BALINT, Vermont
LAUREL LEE, Florida
WESLEY HUNT, Texas
RUSSELL FRY, South Carolina
------
SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND
THE INTERNET
DARRELL ISSA, California, Chair
THOMAS MASSIE, Kentucky HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT FITZGERALD, Wisconsin Georgia, Ranking Member
CLIFF BENTZ, Oregon TED LIEU, California
BEN CLINE, Virginia JOE NEGUSE, Colorado
LANCE GOODEN, Texas DEBORAH ROSS, North Carolina
KEVIN KILEY, California ADAM SCHIFF, California
NATHANIEL MORAN, Texas ZOE LOFGREN, California
LAUREL LEE, Florida MADELEINE DEAN, Pennsylvania
RUSSELL FRY, South Carolina GLENN IVEY, Maryland
CHRISTOPHER HIXON, Majority Staff Director
AMY RUTKIN, Minority Staff Director & Chief of Staff
C O N T E N T S
----------
Tuesday, June 27, 2023
Page
OPENING STATEMENTS
The Honorable Darrell Issa, Chair of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
California..................................................... 1
The Honorable Henry C. ``Hank'' Johnson, Ranking Member of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of Georgia...................................... 2
The Honorable Scott Fitzgerald, a Member of the Subcommittee on
Courts, Intellectual Property, and the Internet from the State
of Wisconsin................................................... 4
The Honorable Jerrold Nadler, Ranking Member of the Committee on
the Judiciary from the State of New York....................... 4
The Honorable Ben Cline, a Member of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
Virginia....................................................... 5
WITNESSES
Kris Ahrend, CEO, Mechanical Licensing Collective
Oral Testimony................................................. 7
Prepared Testimony............................................. 10
David Porter, Award-Winning Songwriter, Producer, 2005 Inductee
to the Songwriters Hall of Fame
Oral Testimony................................................. 19
Prepared Testimony............................................. 21
Daniel Tashian, Award-Winning Songwriter, Producer, and Musician
Oral Testimony................................................. 24
Prepared Testimony............................................. 26
Garrett Levin, President & CEO, Digital Media Association
Oral Testimony................................................. 30
Prepared Testimony............................................. 32
Michael Molinar, General Manager, Big Machine Music
Oral Testimony................................................. 43
Prepared Testimony............................................. 45
Abby North, President, North Music Group, Co-Founder, Unchained
Melody Publishing
Oral Testimony................................................. 50
Prepared Testimony............................................. 52
APPENDIX
All materials submitted by the Subcommittee on Courts,
Intellectual Property, and the Internet, for the record are
listed below................................................... 76
Materials submitted by the Honorable Darrell Issa, Chair of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of California, for the record
A letter from Michelle Lewis, Executive Director, Songwriters
of North America (SONA)
An additional statement submitted by Abby North, President,
North Music Group, Co-Founder, Unchained Melody
Publishing
Statement from Emily Shackelton, Songwriter, Board Member,
Nashville Songwriters Association International
A letter from Till Janczukowicz (CEO, IDAGIO GmbH), Matt
Eccles (SVP, General Counsel, Napster), Daniel Hubbert
(CEO, Power Music, Inc.), Dan Mackta (Managing Director,
Qobuz), and Brandom Shevin (Chief Operating Officer,
General Counsel, The Beatport Group), June 26, 2023, to
the Honorable Darrell Issa, Chair of the Subcommittee on
Courts, Intellectual Property, and the Internet from the
State of California and the Honorable Henry C. ``Hank''
Johnson, Ranking Member of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
Georgia
A letter from Ashley Irwin, President of The Society of
Composers & Lyricists, and Rick Carnes, President of The
Songwriters Guild of America, June 26, 2023, to the
Honorable Darrell Issa, Chair of the Subcommittee on
Courts, Intellectual Property, and the Internet from the
State of California and the Honorable Henry C. ``Hank''
Johnson, Ranking Member of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
Georgia
A letter from The musicFIRST Coalition, June 26, 2023, to the
Honorable Darrell Issa, Chair of the Subcommittee on
Courts, Intellectual Property, and the Internet from the
State of California and the Honorable Henry C. ``Hank''
Johnson, Ranking Member of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
Georgia
A letter from The MIC Coalition, June 27, 2023, to the
Honorable Darrell Issa, Chair of the Subcommittee on
Courts, Intellectual Property, and the Internet from the
State of California and the Honorable Henry C. ``Hank''
Johnson, Ranking Member of the Subcommittee on Courts,
Intellectual Property, and the Internet from the State of
Georgia
A letter from The Black Music Action Coalition and Music
Artists Coalition
A letter from Pierre Schwob, CEO, Classical Archives, LLC,
June 22, 2023, to the Honorable Darrell Issa, Chair of
the Subcommittee on Courts, Intellectual Property, and
the Internet from the State of California and the
Honorable Henry C. ``Hank'' Johnson, Ranking Member of
the Subcommittee on Courts, Intellectual Property, and
the Internet from the State of Georgia
A letter from Elizabeth Matthews, CEO, ASCAP, and Mike
O'Neill, President, CEO, BMI, July 14, 2023
QUESTIONS AND RESPONSES FOR THE RECORD
Questions submitted by the Honorable Darrell Issa, Chair of the
Subcommittee on Courts, Intellectual Property, and the Internet
from the State of California, for the record
Questions and responses from Garrett Levin, President & CEO,
Digital Media Association
Questions and responses from Michael Molinar, General
Manager, Big Machine Music
Questions for Kris Ahrend, CEO, Mechanical Licensing
Collective
FIVE YEARS LATER:
THE MUSIC MODERNIZATION ACT
----------
Tuesday, June 27, 2023
House of Representatives
Subcommittee on Courts, Intellectual Property, and
the Internet
Committee on the Judiciary
Washington, DC
The Committee met, pursuant to notice, at 10 a.m., at
Belmont University, Gabhart Student Center, 1930 Belmont Blvd.,
Nashville, Tennessee, the Hon. Darrell Issa [Chair of the
Subcommittee] presiding.
Present: Representatives Issa, Fitzgerald, Cline, Johnson
of Georgia, and Nadler.
Chair Issa. The Subcommittee will come to order. Without
objection, the Chair is authorized to declare recesses at any
time.
We welcome everyone here today to a hearing on the now
five-year tendered Music Modernization Act. We are joined by
several of our colleagues today who could not sit on the dais
but may be joining us, and without objection they will be
allowed to sit and participate as time permits.
I will now recognize myself for a short opening statement.
Today we are taking a look at the MMA, the Music
Modernization Act, as it approaches its fifth-year anniversary.
Just five short years ago, the still-active, still-performing,
still-entertaining Sam Moore and Mike Love of the Beach Boys
stood at a signing ceremony and enjoyed the fact that their
music, 50 years after a reform that covered everyone post-'72,
would now cover them.
That portion of the act is settled law, and today we will
likely not speak much about it. Much of the other reform in
music modernization involved trying to get stakeholders who had
agreed to enhance, modernize, and more quickly solve the
critical problems of licensing musical works. Today we will
explore what has worked and what has not.
Music is important to America for many reasons, including
it is, in fact, a multibillion-dollar business that employs
millions of American. People around the world have been
inspired by our music, have learned the English language as a
result of our music, and we have enjoyed music from around the
world and for decades have rewarded artists enough that some of
them are not washing dishes.
Recording artists, musicians, sound engineers, producers,
and other professionals have, in fact, entertained the billions
of people around the world since time immemorial. Five years
ago, we knew that navigating the complex music licensing
ecosystem was too difficult for many of the creators to do on
their own, and legacy certainly impossible for the songwriters
to do without congressional action. Too many creators were
unable to collect the royalties they deserved because of legal
and logistical obstacles, and the digital music revolution was
proving to be too much for our outdated copy laws to handle.
So, both parties came together to pass the MMA. I want to
thank my fellow Members of the House and the Senate, many of
whom are here today, for the work they did. I also want to
thank and reward the stakeholders, some of whom did so without
direct financial benefit, but in fact knowing that their
industry could only thrive if they could improve that.
Stakeholders came from all parts of it to help make a decision
that was a compromise, and, in fact, an experiment into whether
or not we could make the system work efficiently enough to
reward the creators.
We are here today to listen to some of those creators and
other key stakeholders about whether the system we set up is
working properly and what more needs to be done. We are here in
Music City, home of The Mechanical Licensing Collective, to see
if The MLC is solving the problems it was intended to solve. We
are also here to further the work of this Committee and
especially the needs of the creators. Our Constitution makes it
clear that the rights that we statutorily give out come from
the benefit we receive. The fact is, inventions, works of art,
creative music, and, of course, our library of knowledge come
from the copyrights and patents that this Committee has for
decades caused to be available.
If it is to succeed, we cannot just grant a right. We have
to, in fact, make sure that right is rewarded in a predictable
way that allows for two business plans: The business plan of
those who take the license and the business plan of those who
create the music we will be talking about today.
With that I yield to the gentleman from Georgia for his
opening statement.
Mr. Johnson of Georgia. I thank the gentleman from
California for having this hearing and for bringing the
Judiciary Committee, the Subcommittee on Courts, Intellectual
Property, and the Internet to Nashville, Tennessee, the heart
of the music industry. The panel before us today is comprised
of individuals from many sectors crucial to the creation and
dissemination of musical works. I am looking forward to hearing
what they have to say about the State of the music economy five
years after the passage of the Music Modernization Act.
Music can be both an expression of culture shared across
every member of a community and a deeply personal experience
unique to the listener. It can come from both symphonies in
marble concert halls and lone performers on city streets, and
it can both lull us to sleep and inspire us to action. Music
can be many things to many people, and this centrality to the
human experience makes it even more important that the music
industry is and remains healthy for every link in the
production chain.
Many music creators call my district home. Atlanta,
Georgia, is the capital of hip-hop and R&B, with a vibrant
network of creators, writers, music labels, recording studios,
and music venues. That is just the beginning. Creators in
Georgia are making music in everything from rap to bluegrass to
gospel to classical music.
Georgia Tech found that in 2016, the music industry in
Georgia generated $3.5 billion and employed over 16,000 people.
Today, Georgia's music industry supports an estimated 45,000
jobs, with over 13,000 royalty recipients, and over 91,000
songwriters.
Five years ago, I joined Ranking Member Nadler and Chair
Issa as an original co-sponsor on the Music Modernization Act,
which passed the House unanimously in 2018. The MMA replaced an
antiquated, inefficient licensing system that was not able to
respond to advancements in technology where creators were not
fairly compensated for their works and publishers, labels, and
streamers were constrained by unclear licensing guidelines. By
creating The Mechanical Licensing Collective, or The MLC,
Congress sought to make it easier for digital services to
obtain licenses and creators to collect royalties by creating a
blanket license and coordinating royalty payments when a song
is streamed online.
The MMA would not have been successful if the entire music
industry had not united in agreement that something needed to
be done. That does not mean that we believe the solution to be
perfect. I am looking forward to hearing from our witnesses
about how The MLC is working and what improvements they believe
might be necessary.
In addition to creating The MLC, the Music Modernization
Act also sought to pay artists fairly for their work by
expanding the circumstances in which copyright royalty judges
apply a willing buyer, a willing seller rate-setting standard
and extending Federal copyright protections to works created
before 1972. Creators should be able to make a living, and I am
looking forward to hearing from our witnesses about their
experiences under the new standards.
The MMA would not have been possible without the
participation of nearly every sector of the music business, and
it is a success story that is instructive for how industries
can adapt to changes in technology that completely
revolutionize their medium. We cannot and should not want to
stop innovation. So, the question before us is how Congress can
work together with industries to protect intellectual property
rights even as technologies advance.
Finally, for the music industry, the challenges of the
modern era are not limited to technological innovation. When
COVID-19 made it unsafe to gather in large groups, many members
of my community who were dependent on live music performances
were left with no way to feed their families. In the Spring of
2020, I fought for the inclusion of Pandemic Unemployment
Assistance to help freelancers, gig workers, and others not
traditionally covered by unemployment insurance gain access to
those benefits, and later that year I co-sponsored a bill to
Save our Stages, which was incorporated into a COVID-19 relief
package and made $15 billion in grants available to live venues
struggling to make ends meet during the pandemic.
I am looking forward to hearing from the creators on this
panel as to how the pandemic affected their business and what
Congress can do going forward to keep their part of the
industry going strong.
Thank you again to all the witnesses for being here today,
and I am looking forward to hearing what you have to say, and
with that I yield back.
Chair Issa. Thank you. The gentleman from Wisconsin.
Mr. Fitzgerald. Thank you, Chair Issa, for hosting and
calling this field hearing. I always tell people being a Member
of the House of Representatives sometimes is tedious and a
little overwhelming because of the scope of issues, but every
once in a while you get to do something really cool, and that
is what this is here today. So, thanks to Belmont University as
well for hosting us, and I yield back.
Chair Issa. The gentleman from New York.
Mr. Nadler. Thank you, Mr. Chair, for holding this hearing
and for bringing the Subcommittee to Nashville, one of the
great music cities of the world. Music nourishes the soul. It
expresses powerful ideas and emotions, and it connects us
across cultures. It is also an important driver of economic
activity. According to one estimate, the music industry
contributes $170 billion a year to the American economy, and it
supports, directly or indirectly, $2.7 million jobs.
It is clear that artists, consumers, and businesses all
depend on a healthy music industry to thrive, and that is why I
was proud to join with my colleagues five years ago to sponsor
and pass the landmark Music Modernization Act.
Prior to the MMA, the copyright laws governing music
licensing had not been meaningfully updated in decades, with
laws that, in some cases, were written when piano rolls were
the dominant form of music, and that certainly did not
contemplate the rise of digital streaming services.
While music licensing remains a complex web of rights and
responsibilities administered and enforced by a variety of
different entities under a variety of different rules, the MMA
helped address some of those glaring inequities and
efficiencies in the music marketplace. I am pleased that we
have the opportunity today to examine how the law is operating
five years later.
The MMA contained three main sectors, each aimed at a
different segment of the music industry. The first part, the
Musical Works Modernization Act, addressed concerns expressed
by songwriters, music publishers, and digital streaming
platforms related to the efficiency and fairness of the
mechanical license for the reproduction and distribution of
musical works. This measure created the blanket licensing
system through the Mechanical Licensing Collective, based here
in Nashville, to coordinate payment for these rights when a
song is streamed online. This not only helped ensure that
proper payment is made to songwriters and publishers, but it
also helped provide certainty to digital platforms that they
would not face liability for failing to acquire all the
necessary licenses so long as they pay into the collective and
follow its rules. I am interested to hear from our stakeholders
here today whether The MLC is operating as intended and whether
any improvements are
needed.
The law also changed the standard for calculating royalty
rates for songwriters by eliminating barriers that kept rates
artificially low and made it difficult for songwriters to earn
a living. I hope to learn more from our distinguished
songwriters here today about the impact of this change.
The second part of the MMA addressed an enduring inequity
on the sound recording side. The CLASSICS Act, a bill that I
originally introduced with Chair Issa, resolve the longstanding
dispute over payment to artists for works recorded before 1972.
In many cases, these legacy artists were collecting no
royalties at all when their works were played on streaming
platforms, a fundamental unfairness. The CLASSICS Act addressed
this problem by bringing these pre-'72 works, which had been
protected previously only by State laws, within the Federal
copyright system. I hope that we will learn today whether this
provision has benefited these legacy artists as we had hoped.
Finally, the MMA contained a provision to help ensure that
music producers and engineers receive, in an efficient manner,
the royalties that they are owed for their important
contributions to the creation of music. Each of these
provisions was the product of debate and compromise by the many
stakeholders involved, forged over the course of many years of
tireless work.
Although we are here today observing the passage of the MMA
nearly five years ago, it was another moment 10 years ago that
is also worth recognizing. That is when former Chair Bob
Goodlatte first launched the Committee's comprehensive
copyright review. Over the course of five years we held
numerous hearings, roundtables, and listening sessions, and
heard from dozens of stakeholders. It was this exhaustive
bipartisan process that helped foster an environment in which
the music industry could reach consensus on many important
issues. Only then was critical legislation like the MMA
possible.
I hope that this hearing will serve as a reminder that
meaningful change is possible when we all work together. One
area in which I hope that agreement is possible is ensuring
fair compensation for artists when their work is played on
terrestrial radio. I consider this to be unfinished business,
and I look forward to continuing to work with Chair Issa on
this issue, but that is a matter for another day.
We have much to be proud of in passing the MMA, but no
legislation is perfect, and I appreciate the opportunity to
hear from our distinguished witnesses today on whether any
refinements are needed.
I thank the Chair for convening this important discussion.
I look forward to hearing from all our witnesses, and I yield
back the balance of my time.
Chair Issa. I thank the gentleman. We will now go to the
gentleman from Virginia, Mr. Cline.
Mr. Cline. Well thank you, Mr. Chair, for bringing the
Subcommittee to Music City. It is great to be here, and it is
great to be with my colleagues. I thank the witnesses for
appearing. I look forward to their testimony and to a great
discussion about the MMA five years later.
I came into Congress five years ago, so I have watched with
interest how the MMA has been implemented, how The MLC has been
developed and unfolded as well. There are many challenges that
remain. I look forward to discussing those today, but these are
challenges that we can meet, as former Chair Nadler said, if we
work together. Bipartisanship exists on this Committee. It is
one of the few areas we are an oasis, if you will, of
bipartisanship in a sea of partisan rancor. So, I am glad to be
here with all my colleagues and look forward to the discussion.
Thank you, Mr. Chair. I yield back.
Chair Issa. Thank you, Gentleman.
We will now introduce our distinguished panel of witnesses.
Mr. Kris Ahrend is the Chief Executive Officer of
Mechanical Licensing Collective. The MLC is a nonprofit
organization designated by the Copyright Office pursuant to the
Music Modernization Act to administer blanket mechanical
licenses for copyrighted musical works and collect and
distribute the royalties.
Prior to joining The MLC, he worked for 20 years in the
music industry, and is a former Warner Music Group and Sony/BMG
music entertainment alum.
Mr. David Porter is an award-winning songwriter, producer,
and singer. He was introduced into the Songwriters Hall of Fame
in 2005, and Rolling Stone magazine named him one of the 100
Greatest Songwriters of All Time. That award is still elusive
to me.
Mr. Porter has written more, and co-written more hits,
including ``Soul Man'' by Sam and Dave, a favorite of mine, and
he continues to write, produce, and perform music for over 60
years, with his credits spanning music from Aretha Franklin to
today, the most modern and current stars. Mr. Porter is also
the founder of a consortium known as MMT, a nonprofit
organization designated to fostering the music industry in his
hometown of Memphis, Tennessee, another hometown of another
well-known artist.
Mr. Daniel Tashian has been a songwriter, producer, and
musician for nearly three decades, a short time by comparison
to Mr. Porter. He has written or co-written songs for numerous
artists, including Lee Ann Womack, Tim McGraw, my favorite,
McBride, Josh Turner, and a host of others. His songwriting and
producing talents were recognized by not one but two GRAMMY
awards and an ACM award, and a CMA award, for his work on Kacey
Musgraves' album, ``Golden Hour.''
Mr. Garrett Levin is the President and Chief Executive
Officer of the DiMA, or the Digital Media Association, as we
also know it, and has been an association leader, particularly
in the streaming and streaming innovation. Mr. Levin previously
served as Senior Vice President and Deputy General Counsel for
intellectual law and policy at the National Association of
Broadcasters. Before that time, he served as the Senior Counsel
for one of my all-time favorites and patent innovator, Senator
Patrick Leahy, and as a copyright attorney at the PTO.
Mr. Michael Molinar is the General Manager at Big Machine
Music, the publishing arm of Big Machine Label Group. He has
nearly 30 years of experience in the music industry and has
recently been elected to a third term on the Board of the
National Music Publishers Association. He also serves on the
Board for The MLC, and as a result will get a lot of questions
today.
Last, and certainly not least, we have Ms. Abby North. Ms.
North is the President of North Music Group, which is an
independent music rights administrator, and she is a Co-Founder
of Unclaimed Melody Publishing. She has also nearly 30 years of
experience in music publishing catalog management. Ms. North
also serves on the board of the Association of Independent
Publishers and serves on the Los Angeles Chapter.
We welcome all our witnesses, and pursuant to the rules of
this Committee if you could please all rise to take the oath.
Your photo moment, even if you do not work for Big Tobacco is
now.
Please raise your right hand. Do you solemnly swear or
affirm, under the penalty of perjury, that the testimony you
will give today will be the truth and correct to the best of
your knowledge and information, so help you God?
Thank you. Please be seated. Let the record reflect that
all witnesses answered in the affirmative.
As you probably have heard or seen on C-SPAN over the
years, all your exhaustive written statements, and quite
candidly, additional ideas and information you want us to
receive afterwards, will be placed in the record. It will be
left open for at least five days after this hearing. Which
means that your five minutes, your precious first five minutes,
should be used for those things that may not fit neatly within
your opening statement, but you want to get them out before we
begin our line of questioning.
So, with that, Mr. Ahrend. I have got these things in
backward order. Mr. Ahrend.
STATEMENT OF KRIS AHREND
Mr. Ahrend. Good morning. Chair Issa, Ranking Member
Johnson, and Members Cline, Fitzgerald, and Nadler, my name is
Kris Ahrend. I am the Chief Executive Officer of The MLC, and
it is my pleasure to share with you today the progress we have
made toward fulfilling the vision and statutory mandates set
out in the MMA, which as several of you have already noted this
morning, Congress passed unanimously in 2018, with the support
of an historically broad coalition of industry stakeholders.
The creation of The MLC was a key part of Congress' vision
to modernize the compulsory licensing system for musical works
in the United States and to usher in a new era of more
effective, accurate, and transparent royalty administration.
That system assigned specific responsibilities to each of our
key stakeholder groups. The MLC often refers to this framework
of shared responsibility as ``playing your part,'' and reflects
a key tenet of the MMA, that improving the system would depend
on the continued participation by, and collaboration among all
stakeholders.
So how are things working? Happily, I can report that after
only 2\1/2\ years of full operations The MLC is making things
better, just as Congress intended. Here are just a few of the
metrics that evidence our progress to date.
We have enrolled more than 28,000 members, the large
majority of whom are smaller, independent publishers and
administrators, as well as self-administered songwriters, many
of whom were likely not participating in the system before the
MMA was passed.
We have established and maintained a public data base that
contains ownership information for more than 31 million musical
works.
We have helped nearly 60 digital services secure the
blanket license.
We have completed 27 monthly royalty distributions on time
or early, and we have never missed a distribution.
We have distributed well over $1 billion in royalties, and
we have achieved historically high match rates and high
distribution rates while providing this unprecedented level of
transparency.
We have accomplished all this while seeking to engage as
many stakeholders as possible, and we have done that in a
variety of ways, including by hosting or attending hundreds of
virtual and in-person events, which have enabled us to reach
nearly 30,000 stakeholders from every State in the country, by
providing one-on-one support through our support team, which
has responded to nearly 60,000 inquiries to date, by regularly
meeting with songwriters, publishers, administrators, and other
CMOs of all kinds to help them better understand how our
processes work and how to use the tools we have created for
them more effectively. Finally, by meeting regularly with a
wide variety of groups that represent the many different
stakeholders we serve, to ensure that we are always receiving
direct and unfiltered feedback from the broadest possible
cross-section of our industry.
That said, by no means are we done. Each month we continue
to work hard to enhance and improve our existing operations
based on the feedback we receive directly from our members. We
are also actively preparing to tackle two significant
challenges that involve the streaming rates for the five-year
period between 2018-2022. These rates are just now being
finalized by the Copyright Royalty Board and the Copyright
Office. Once these final rates take effect, digital services
will have six months under the existing regulations to deliver
any new data and adjusted royalties required by the final
rates. Once The MLC has received that new data, the first thing
we will be able to do is begin distributing matched historical
royalties from 2018-2020, plus interest from the date we
received those royalties from the services. That is because we
have already matched nearly 70 percent of the historical
royalties reported to us for those years. Taken together with
the historical uses from earlier periods, we have already
matched nearly 300 million of the historical royalties that
DSPs were not previously able to pay, and we will continue our
efforts to try to match even more of the remaining historical
royalties in the months to come.
At the same time, our members can continue to search that
data themselves and propose matches to the works they have
registered. This is possible because The MLC has fully
illuminated the black box of digital audio mechanicals for the
first time in history by making all the data for both the
remaining unmatched historical royalties and the remaining
unmatched blanket royalties that we have received available for
any of our members to search and act on, using our matching
tool.
The second thing The MLC will be able to do is start
processing adjustments for the blanket royalties from 2021-2022
that we previously distributed at the lower interim rates. Once
this very complex reconciliation process is completed, we
expect to be able to distribute a substantial amount of
additional blanket royalties to rights-holders for those two
years.
I will close my remarks by saying it has been both the
privilege and the challenge of my lifetime for me to have
played a part in helping build The MLC. Please know that our
entire team, our board, our advisory committees, and countless
others have worked tirelessly and in good faith over the past
few years to try to make your vision for The MLC a reality, and
we remain equally committed to building on the milestones we
have achieved as we continue to support work in the future and
make The MLC better.
Thank you for inviting me here today, and I look forward to
answering your questions.
[Prepared statement of Mr. Ahrend follows:]
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Chair Issa. Thank you. Mr. Porter.
STATEMENT OF DAVID PORTER
Mr. Porter. Thank you, Chair Issa, Ranking Member Johnson,
and Members of the Subcommittee. Thank you for inviting me to
speak to you today. I will skip over the credit information
that you said about me and get to the guts of--
Chair Issa. You have only got five minutes. You would never
make it all.
Mr. Porter. I will not even try.
Thank you for coming to Nashville for this important field
hearing. It is a great place, Music City, to hear firsthand
what is happening in music from songwriters, musicians,
executives, and experts. I would like you to check out my
hometown, Memphis, Tennessee, as well.
I understand one of the purposes of your visit is to learn
more about the impact of the Music Modernization Act. Thank you
for passing that landmark bill. Like a great song, the MMA
benefits so many people in so many unique ways, many of whom
have no idea just how much work it took to create. Whether you
are a music creator or a legislator, the goal is to make
something worthwhile that will endure and change lives, and
that is exactly what the MMA has done.
For recording artists, including many of the greats I have
worked with early in my career at Stax Records, the key
provision is found in Title 2 of the MMA, also known as the
CLASSICS Act. Because of a quirk in copyright law, recording
artists were generally denied streaming royalties for music
recorded before February 15, 1972. That includes some of the
classic music of all time--Motown greats like Smokey Robinson,
Stax greats like Otis Redding, Al Green of Hi Records, country
giants like Johnny Cash and Patsy Cline, and rock and roll
legends like Chuck Berry and Wilson Pickett. It was totally
arbitrary and unfair.
In the mid-60's, I wrote a song called ``Soul Man.'' Sam
and Dave recorded it and won a GRAMMY in 1968. When that
classic recording was streamed before the MMA passed, neither
Sam Moore nor Dave Prater's eState received any royalties. Even
crazier, when later covers of that song ``Soul Man''--like the
John Belushi/Dan Ackroyd Blues Brothers recording made in
1978--when that was streamed there was a royalty payment for
those performers. The CLASSICS Act section of the MMA changed
that, protecting legacy artists, and ensuring they get paid
when their timeless music is streamed.
MMA made other changes benefiting artists and songwriters.
It created the Mechanical Licensing Collective that is
streamlining digital royalties for songwriters and making life
a lot easier for streaming services too. It brought more music
under fair market rate standards, replacing outdated standards
that paid below-market royalties for satellite radio and other
uses of music. Though that was needed, more still needs to be
done. It certainly paved the way for producers to get their
fair share of royalties, creating a process for artists to
instruct SoundExchange to pay them directly.
I do not have to tell you that the MMA's success was in no
way assured. As we all know, copyright law, when not looked
into, becomes permanent. It took the entire industry--artists,
songwriters, labels, publishers, producers, collecting
societies, digital platforms, and others--working together to
make this historic change. It is testament to the fact that
when the music community comes together, and Congress acts with
certainty and strength it can make a real difference.
That experience may serve us all well facing the upcoming
challenges of artificial intelligence.
Today, huge AI computer models are copying and analyzing
virtually all the music ever made to generate what they are
calling ``new'' songs from the music of yesterday. Hopefully,
courts will see that copyright law does not allow this. AI
platforms and services must get permission before
rightsholders' work can be copied and used in this way though.
So far, very few have done so. No one at any AI company has
spoken to me, my label, or my publishing company. This is
wrong.
Our concerns extend beyond copyright. There is no greater
honor than to have an audience enjoy my music. Key to that
appreciation is that it is MY music. To have someone--or
something--take my voice, my sound, my persona without
permission and manipulate it or mimic my work is a personal
violation and a threat to the good I have built up over the
years. How can this be ``new'' when this has been taken from
songs written years ago? How is that new? I know I speak for a
great many songwriters who feel this way.
I do believe there is a place for AI. We appear to be going
down a path of appropriation, exploitation, and dehumanization.
I have been the benefactor of a great number of people who have
taken my songs and sampled them. They have my permission, they
pay a royalty, and they create something that adds a fresh
intention of my original work. This is not currently the case
for the majority of AI-generated songs. It is not just a threat
to existing works but to future generations of artists and to
culture itself. If all we have is machine-made music copied
from existing works there will be less and less creativity,
artistry, and soul to go around. What a penalty that would be
for future generations. What a shame.
Congress and the courts must assure that guardrails are in
place to protect creators' rights and their control over their
own work.
You have a model in the MMA process to make things right,
bringing the music family together with your own policy and
legal expertise to shape strong rules for healthy uses of AI.
Thank you for inviting me to speak to you today.
[Prepared statement of Mr. Porter follows:]
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Chair Issa. Thank you, with one second to spare, Mr.
Porter. Mr. Tashian.
STATEMENT OF DANIEL TASHIAN
Mr. Tashian. Hello, Chair Issa, Ranking Member Johnson,
Ranking Member Nadler, Mr. Fitzgerald, Mr. Cline, and Members
of the Subcommittee.
Thank you for the opportunity to speak about the Music
Modernization Act. My name is Daniel Tashian, and I am a
songwriter, producer, musician, and artist. As you mentioned, I
have worked with Tim McGraw, Demi Lovato, and the legendary
Burt Bacharach. I won two GRAMMY awards for my work with Kacey
Musgraves. I am also a member of the Recording Academy, which
represents thousands of music creators like me.
The MMA was a landmark piece of legislation that reflected
years of work by Members of Congress, stakeholders, and
individual music creators, and I have personally benefited by
all aspects of the law.
As a songwriter, I am grateful that the MMA changed the way
that we are paid by streaming services. This bill reformed a
previously unreliable and opaque system into one that provides
transparency and accountability. Since 2021, the Mechanical
Licensing Collective, The MLC, has paid out over $1 dollars in
royalties, as you mentioned, and has achieved a matching rate
of nearly 90 percent. These are remarkable outcomes that should
encourage every songwriter. I am personally grateful for the
work of The MLC. Even with this incredible progress there are
still opportunities improve.
First, The MLC is still holding on to hundreds of millions
of dollars in historically unmatched royalties. They must
continue their outreach efforts to identify every songwriter
who has money owed to them. The MMA requires that any unmatched
money will eventually be paid out by market share, but
importantly it gives The MLC the flexibility to take the time
necessary to match royalties to the correct songwriter,
including those who may be unidentified because they are
independent or unaffiliated with a publisher.
Second, now that we have finally resolved the dispute over
the Copyright Royalty Board's ``Phonorecords III'' rate
decision, The MLC must work expeditiously to collect and
distribute the back pay owed by the streaming services to
songwriters. The law is clear that once the final ruling is
published in the Federal Register, the DSPs have six months to
pay the additional royalties they owe. Songwriters have waited
long enough.
Third, Congress should remember that the MMA contemplated a
robust oversight role for Congress and the U.S. Copyright
Office over the operations of The MLC. The MLC is an
administrative body, not a policymaking body. Recent disputes
over songwriter termination rights illustrate that Congress and
the Copyright Office must continue to stay engaged to protect
the rights and interests of songwriters.
The MMA does more than reform royalty payments for
songwriters. I am grateful to have ``letters of direction'' in
place under the or ``LOD'' process under the AMP Act, which
recognized the important role of producers, engineers, and
mixers in copyright law. This provision codified the LOD
process by which producers can collect their share of digital
royalties directly through Sound-
Exchange, an important partner and friend to our community.
To make it easier for producers and engineers who do not
have management teams to help them navigate the paperwork, the
LOD application process should be streamlined and improved, and
additionally the artist community should be encouraged to more
widely adopt these agreements and the payments SoundExchange
facilitates.
Finally, I want to briefly mention the last part of the
MMA, the, the CLASSICS Act, authored by Chair Issa, which
provides for the payment of digital royalties for recordings
created prior to 1972. I have a personal connection because my
father, Barry Tashin, led the epic records act, Barry and The
Remains, who opened for the Beatles on their 1966 U.S. tour. I
applaud Congress for ensuring that my family and other legacy
artists are now fairly compensated for their tracks.
In conclusion, the MMA represents a generational reform of
music law. It also represents a sea change in the relationship
between the music community and Congress. For music makers like
me, we saw that you were willing to take the time to learn
about our complicated and often messy business. I hope this
work serves as a foundation, and we can continue to work
together to solve the challenges that still face us. Whether it
is resolving the historic inequity of performance royalties for
artists on broadcast radio or ensuring a fair CRB rate-setting
process for songwriters, I am hopeful for what we can achieve
together.
On behalf of the songwriters, producers, and artists like
me, we are counting on you to look out for our interests.
Thank you.
[Prepared statement of Mr. Tashian follows:]
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Chair Issa. Thank you, Mr. Tashian.
We will now go to Mr. Levin.
STATEMENT OF GARRETT LEVIN
Mr. Levin. Chair Issa, Ranking Member Johnson, Ranking
Member Nadler, and Members of the Committee, thank you for the
opportunity to testify before you today at this important
hearing on the Music Modernization Act at five years. My name
is Garret Levin, and I am the President and Chief Executive
Officer of the Digital Media Association, or DiMA, which
represents the world's leading audio streaming services.
The MMA was, and continues to be, necessary for today's
music ecosystem. The key provisions of the law, including the
blanket mechanical license, the centralized authoritative data
base, limitation on liability, and extensive reporting
requirements create efficiency in licensing and royalty
payments and provide legal certainty. The law is fundamentally
working.
Five years is a key moment to step back, acknowledge the
extraordinary resources and cooperation that went into creating
The MLC and this new licensing system, and to examine where
challenges remain. My written testimony provides more detail,
but I hope to leave the Committee with two key takeaways.
First, I applaud Kris Ahrend and the entire team at The
MLC, as well as my colleagues across the industry, including my
fellow The MLC board members here today, like Mike Molinar, who
have been and remain committed partners to the success of this
improved system. The results Kris cited in his testimony are
truly impressive, and the MMA is a model of how together we can
solve hard problems for the benefit of all.
Second, we should continue to diligently identify areas for
improvement to reach the full potential and intention of the
MMA, including two I will focus on today--ensuring that
regulatory and statutory positions reflect the MMA's critical
balance, and ensuring that The MLC's budget is reasonable and
cost effective.
The MLC sits at the heart of the MMA's blanket mechanical
license system. In its best form, The MLC can serve as a
neutral, level seat of a three-legged stool, administering the
blanket license system in an effort to balance the interests of
three sets of stakeholders--songwriters, music publishers, and
digital streaming services--a neutral administrator and best-
in-class back-office service provider that processes massive
amounts of data provided by digital music services, provides a
one-stop, authoritative shop for rights-holders to register
their works in a centralized public data base, matches more
works to sound recordings than previously possible, and
effectively and efficiently pays out hundreds of millions of
dollars in royalties every year to publishers who, in turn, pay
songwriters.
In the first year of operations, in particular, The MLC
worked bilaterally with services to ensure they successfully
transitioned to the new system. Unfortunately, on broad
interpretations of the statute and regulations, we have seen
several instances where The MLC has acted not as a neutral
partner but rather as arbiter or advocate on behalf of the
music publishers, just one leg of the stool.
Instead of siding with any one stakeholder, The MLC should
seek clarification from the Copyright Office and rely on the
authority the MMA granted to the office. To do otherwise is
contrary to congressional intent and produces results that
distort the necessary balance of the statutory licensing regime
in light of The MLC's power over all stakeholders. Guidance
from this Committee to ensure that The MLC acts as a neutral
administrator will help to advance the goals of the MMA and
improve the system for all.
This need for neutrality is paramount given the unique
funding structure of The MLC, which requires that licensees pay
for the costs of The MLC's operations on top of their royalty
obligations. This structure has actually led to the absurd
circumstances that the services are paying for both their own
advocacy costs and The MLC's costs in advancing arguments
indistinguishable from the music publishers. That was not the
intention of the MMA.
Twice now the services have agreed to fund the cost of The
MLC at the amount requested, even as those costs increase
significantly. The MMA explicitly provides that the services
are responsible only for the reasonable costs of running the
collective. The MMA did not hand The MLC a blank check.
The true measure of reasonableness will be material
improvements in efficiency and effectiveness in The MLC's core
functions--are more royalty-bearing works registered, are more
works matched, are more royalties paid through to the rights
owners, and is all of that done with increasing efficiency and
effectiveness over time.
Regular review by Congress of budgeting and spending
against ongoing performance improvements will help ensure that
the law lives up to its full potential and help the parties
avoid inefficient and expensive litigation over costs before
the Copyright Royalty Board.
The MMA was a major stride forward in improving music
licensing for the digital market. DiMA and its members were
proud to be a central part of the law's passage, and we
continue to support the law. Our member companies interact with
The MLC on a near constant basis, and we believe that they,
like us, fundamentally want to improve the system. DiMA's
members want The MLC to succeed. More than that, they need The
MLC to succeed.
When the MMA passed Congress, it was described on multiple
occasions as a once-in-a-generation measure to improve the
licensing system for all stakeholders. Five years in, we
continue to believe that is true.
I thank you and look forward to your questions.
[Prepared statement of Mr. Levin follows:]
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Chair Issa. Thank you. Mr. Molinar.
STATEMENT OF MICHAEL MOLINAR
Mr. Molinar. Good morning, Chair Issa, Ranking Member
Johnson, and Members of the Subcommittee. My name is Mike
Molinar, and I am the President of Big Machine Music, a leading
independent music publisher based here in Nashville. I am also
a current and founding board member of the Mechanical Licensing
Collective designated by the U.S. Copyright Office.
I am honored to appear before you today to provide my
perspective as an independent music publisher on the Music
Modernization Act. As a music publisher, I am responsible for
representing songwriters, the authors of musical works, and
helping to develop their careers, exploit their songs, and then
collect and pay them royalties when those songs are used.
It was during my college internship 27 years ago, just down
the street, where I discovered what a job in music publishing
entailed. I was immediately hooked at the idea of working with
the musical magicians who write the soundtrack of our lives and
whose hits are the bedrock of the entire music industry. That
fall, I began my first job in publishing as a catalog manager
and worked my way up to a creative publishing executive,
eventually starting my own independent music publishing
companies.
For the past 11 years, I have been proud to serve as the
head of Big Machine Music, which I launched at the request of
music industry titan, Scott Borchetta. Thanks to Mr. Borchetta,
our dedicated staff, and most importantly, a roster of
songwriter partners that are among the very best in the world,
Big Machine Music has thrived and prospered.
While developing songwriters and generating opportunities
for their songs is a big part of the equation, ensuring that
our songwriters receive royalties when their songs are used and
reporting to our writers on a timely and accurate basis remains
our core function.
That is where the MMA and The Mechanical Licensing
Collective that it created come into play. Musical work rights
are complicated and many of our rights are regulated by the
government. Prior to the passage of the MMA, the collection of
royalties under Section 115 of the Copyright Act at times felt
like an Easter egg hunt in a carnival funhouse maze of mirrors.
The process required sending paper licenses, called NOIs, for
every licensed composition. This worked when ten songs were
licensed for a record or CD, but it became impossible to
administer once ten million songs or more were licensed by
digital music providers such as Spotify.
Attempting to collect royalties meant registering with
multiple third-party vendors. There was no transparency, so the
system was ripe for abuse and unlicensed uses of our works were
frequent. There was no guarantee of song data being correct, of
timely payment of royalties, and virtually no recourse unless
we were willing to bring a costly legal action. For an
independent company, the administrative burden was stressful
for us and harmed the financial welfare of our writers.
Thanks to Congress' leadership and unanimous support, our
industry was provided with historic changes in the MMA,
including necessary reform to the way our rights are licensed,
administered, and paid through the creation of The MLC. In
exchange for a blanket license for all works played on their
platforms, digital music providers now fully fund a
centralized, transparent, and rightsholder-run collective that
allows music publishers and songwriters assurance that they
receive compensation for uses of their songs.
As a publisher, I am here to tell you today that The MLC
you helped to create is working and working well. Despite an
aggressive timeline set by the statute and through a global
pandemic, The MLC was developed from scratch and launched on
time.
Since April 2021, rightsholders have received monthly
payments of our mechanical royalties, and these payments have
been on time every month. With a fully public data base, we
have critical transparency into song ownership data, song uses,
and income sources for the first time. Through a centralized
claiming portal, we can claim and match our works, giving us
the control we need. Through their engaged customer service, we
have help to guide us through the process.
Finally, The MLC's right to audit to ensure proper payments
and to bring legal action to enforce rights benefits all
publishers, but especially independent publishers such as Big
Machine Music.
Make no mistake, there is effort necessary from each
publisher and administrator to make The MLC and its new blanket
license work. It is why The MLC promotes the slogan of ``Play
Your Part.'' Through the onboarding process, publishers like me
can maintain the fidelity of their ownership information, make
corrections where necessary, and discover discrepancies. In
short, it has made our data better and more reliable, which
means better payments to our songwriters. I can attest that Big
Machine Music has seen an increase in royalty collection due to
the direct efforts of The MLC.
As a founding board member, I am here to tell you that
being a small part of building The MLC is one of greatest
privileges of my career. It is rare to have an opportunity to
start an entity of this magnitude from scratch and get it
right, which is a responsibility felt by everyone involved.
The MLC's board is a mix of songwriters, independent and
major publishers, representing all genres of music and from
across the United States. The contributions from all board
members have been robust and respectful, in line with the
statute passed by Congress and with recognition of the
importance of the success of The MLC for the entire ecosystem
of our industry.
Thank you again for passing the MMA five years ago, and for
your attention to it today.
[Prepared statement of Mr. Molinar follows:]
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Chair Issa. Thank you. Ms. North.
STATEMENT OF ABBY NORTH
Ms. North. Mr. Chair, Members of the Subcommittee, I am an
independent music publisher, songwriter advocate, and
technologist.
My husband's father was a composer named Alex North. With
Hy Zaret, Alex wrote the 1955 standard, ``Unchained Melody.''
When our families had a worldwide recapture of rights in
``Unchained Melody'' we joined various foreign collectives, and
I learned global music publishing. I was able to view and
correct data and increase our royalty collections. Soon other
legacy songwriters and their families asked if I would
administer their works as well.
When I first heard about the MMA and blanket mechanical
license I was pleased and hopeful. I believe, and was promised,
that the intention of the MMA for a new, authoritative, gold-
standard data base to be engineered, with aggressively vetted
musical work and sound recording data.
The MLC, Inc., became the first The MLC and engaged the
Harry Fox Agency as its data and operations vendor. HFA has
been integral to the music because since 1927, but one dataset
is not enough. The MLC must license data from many providers.
To my knowledge, the promised new The MLC data base and new
dataset do not exist. The MLC uses slogans like ``Play Your
Part'' to drive music publishers to sign up with The MLC and
confirm The MLC's data. It seems that playing our part means
doing The MLC's job and devoting our own resources to the tasks
that DSPs pay The MLC to do.
A major part of The MLC's mandated role is to match sound
recordings to musical works. If a recording is not correctly
matched, the publisher and songwriter do not receive mechanical
royalties. Per The MLC, ``Unchained Melody'' has been recorded
by more than 30,000 artists. To perform due diligence, I asked
The MLC for a list of those recordings but was told it was not
possible to export. I was told if I had access to The MLC's
data dump then I could go find the information.
Well, fortunately I do have access to that data dump. I
paid thousands of dollars to create a data base that allows me
to analyze that data to identify gaps and errors. I review
matches on behalf of my clients. For one well-known legacy
song, 11 percent of the sound recording-to-composition matches
were wrong. For another, 20 percent were wrong.
After the MMA passed, the DSPs transferred roughly $424
million in unallocated, black box royalties to The MLC. If I
register my works with The MLC my money should not be in that
black box, but sometimes I have co-publishers who deliver
different data about our shared work that might overwrite my
data. Sometimes I do not know about a recording of the work,
and foreign and domestic songwriters, they may not know about
The MLC.
All CMOs have data gaps and errors, but by statute, The MLC
is mandated to aggressively apply its resources to reduce that
black box. We must prevent the wrong parties from receiving
Photo-records III royalties, which apparently will soon be
distributed.
Some U.S. publishers are even engaging the Canadian
collective, CMRRA, for a fee, to fix their problems at The MLC.
I have never heard of one collective cleaning another
collective's data.
Another problem I have with The MLC involves misclaimed
copyright shares by independent artists who distribute music
and deliver data through aggregators. At least on a monthly
basis, I must play Whack-A-Mole, searching The MLC's portal to
find new registrations of our work that make no mention of Alex
North, not Hy Zaret, and not our publishing entities. When I
cleaned these infringing registrations at The MLC, my
underlying registration goes into suspense. To make the above
even more complicated, there is no claim overlap or dispute
resolution portal within The MLC's website.
The MLC has the opportunity to create truly innovative
products, including at least a basic claim and overlap portal.
The MLC must stop creating unilateral business rules. The
terminations decision made by The MLC to ignore that the
derivative work exception does not apply in the context of
Section 115 would have benefited the major publishers, who
control the bulk of legacy copyrights. It would have harmed
songwriters and their families. Fortunately, the Copyright
Office stepped in to correct.
The MLC has made unilateral decisions regarding how it
treats public domain works. It invoices the DSPs for streams of
these public domain works, but no publisher is entitled to
these royalties.
I want The MLC to succeed, and we all need it to succeed.
The MLC must perform its mandated duty to create an
authoritative data base that is best gold standard. The MLC
must stop making unilateral decisions that affect the lives of
songwriters and music publishers. If there is a question
regarding a law, regulation, or internal policy, the Copyright
Office must be consulted.
Until we have our gold standard authoritative data base,
songwriters are being harmed. Thank you.
[Prepared statement of Ms. North follows:]
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Chair Issa. Thank you. We will now go to our first round of
questioning, and I will go the gentleman from Wisconsin first,
Mr. Fitzgerald.
Mr. Fitzgerald. Thank you, Chair.
Mr. Molinar, I continue, and I think other people continue
to believe that more can be done to improve data throughout the
music industry, including the public performance rights. It is
my understanding that performance and mechanical rights data is
typically identical, or near identical, I think, which came up
in the opening statements.
From your perspective, do you think having PRO affiliation
included in The MLC data base would help companies like Big
Machine get accurate payments from the PROs and The MLC, and
certainly probably enhance transparency as well?
Mr. Molinar. Thank you, Congressman, for the question. I
think to touch on what The MLC is doing right, as we can
attest, the publishers, as we are entering it in and cleaning
up our data, this data base is heading toward being the
cleanest data base that exists.
Unfortunately, I think that the complicated landscape of
these royalties--I was not around for the decision of when a
streaming mechanical royalty was decided to be split into a
performance and a mechanical, which just makes things all the
more difficult and complicated. I wish I could answer more to
the question of could we get that done, do I think that we are
on the right path at The MLC of creating a pretty authoritative
song data because of the way that publishers can interact with
their own data and see what is being claimed.
Much to Ms. North's comments, the reason she can play
Whack-A-Mole on issues that come up from new songwriters via
aggregators is because she can see it and that we have that
ability to act on it.
Mr. Fitzgerald. The transparency.
Mr. Molinar. The transparency part of this is something
that we have not had, particularly when we were, as I mentioned
in my testimony, when you had third-party vendors representing
each of the different streaming services. We just did not have
that transparency into it.
So, I cannot speak to the functions of some of our other
organizations such as PROs. The MLC, by statute, is not allowed
to collect performance royalties. So, I think we are just
concentrated on getting the data right for the purpose that is
under the statute.
Mr. Fitzgerald. Very good. Thank you for that.
Mr. Ahrend, I think we are aware that the different
stakeholders may have different interpretations of the statute
or regulations, and that, at times, The MLC has weighed in,
obviously, on that. Rather than weigh in on those specific
circumstances, has The MLC considered identifying, for the
Copyright Office, that there are stakeholders with differing
views, and asking the Copyright Office to share its position?
Mr. Ahrend. Thank you, Mr. Fitzgerald, for the question. We
speak regularly with the Copyright Office, and we talk with
them about the operational challenges we face and the issues
that we see and hear from our members. The terminations issue
was a great example. The MLC raised that issue in regulatory
proceedings the Copyright Office held in 2019 and 2020, and we
pointed out that we did not see that issue addressed by the MMA
and that there was not a clear answer on the law. We asked the
Copyright Office to weigh in on that issue at the time. They
declined to do so. We then sought a rule that would give us a
data point that we could use to implement a policy. We
ultimately did.
So, I think we do try to flag issues for the office, and we
welcome their guidance, where they are willing to give it. In
the meantime, we try our best to put in place operational
processes that do not decide questions of legal rights but
simply serve to come up with an operational plan in the interim
that will work for our members.
Mr. Fitzgerald. Very good. Thank you.
Mr. Tashian, how do record labels compensate their artists,
and how does the money flow in and out of what can be seen,
like the black box, that we were talking about earlier? Are
artists receiving kind of reciprocal increases in their
streaming and also in the digital service deals that currently
exist?
Mr. Tashian. Thanks for the question. I am really here as a
producer and a songwriter. I am also an artist. The level of my
streaming is not on the level of some of the artists that you
might be more interested to see how it has benefited them
financially. Does that answer your question?
Mr. Fitzgerald. Yes. Look, I think what we are trying to
establish is just the streaming portion of this functioning
correctly.
Mr. Tashian. I think in some ways. I think there is that
five-year, 2018-2022, that I know, as a songwriter, I am still
sort of waiting on the difference between what the rate was and
what it is agreed on now. So yes, I am still waiting on that.
Mr. Fitzgerald. Very good. Thank you. I yield back.
Chair Issa. Thank you. The gentleman from Georgia is
recognized for five minutes.
Mr. Johnson of Georgia. Thank you, Mr. Chair. The COVID-19
pandemic was devastating for many Americans, but artists were
some of the hardest hit in this country because live venues all
shut down. This meant that artists had to rely largely on their
royalties from streaming services to stay afloat.
Mr. Porter, can you describe what this experience was like
and whether artists can earn a living on streaming royalties
alone?
Mr. Porter. Presently, I do not feel that they can. I mean,
the numbers clearly are not as fair as I feel that they should
be as it relates to the contribution that artists make to the
well-being and the balance that people feel about their daily
lives. I think that there certainly should be much, much, much
done to bring that kind of income level up to a point where
people can feel comfortable with wanting to do it tomorrow, and
the next day. So no, I do not feel that we are there yet.
Mr. Johnson of Georgia. Mr. Tashian, what can you add to
that?
Mr. Tashian. Yes, I think it is a good thing to be, well, a
producer and a songwriter because the combined income of both
of those things makes it possible for me to have a family. I
think to be only a songwriter you would have to be in the top
5-10 percent, wouldn't you say, to really make a living. So
yes.
Mr. Johnson of Georgia. Thank you. What would you say has
been the biggest success of the MMA, and what has been the
biggest challenge that you have faced since the law came into
effect. Ms. North?
Ms. North. The success is really, in my opinion, to the
blanket mechanical license. The previous method of one-by-one
licensing absolutely did not work. So, the blanket license
brings us in parity with the rest of the world licensing model.
That was excellent.
The MLC is doing many things right, but the statute
requires it, or promises it, to be the gold standard, best in
class. So, it is good, but we need better.
The CLASSICS Act, no question that was a huge, huge benefit
to performance and owners of those pre-1972 recordings, and the
codification of the LOD process at SoundExchange unquestionably
is a true benefit.
Mr. Johnson of Georgia. Thank you. Mr. Molinar?
Mr. Molinar. Yes, I would agree with Ms. North that The MLC
has provided this opportunity to have one stop, one place for
your data for all these services. Again, as we have repeated,
being able to be in control of your data and having that
transparency to it.
Honestly, our challenges, as has been mentioned here, was
the timing of the statute. We had a very short window. This is
a technology company that meets creators. It is such a unique
institution, and we put it up in a 1-2 years, through a global
pandemic. So, it will continue to get better, but the fact that
it is doing the match rates that it is doing--and Mr. Ahrend
can speak to this a little bit more--in some reprocessing they
are getting over 90 percent match, and this just started in
April 2021. It is an incredible job that has already been done.
I think the other challenge is just, as has been touched
on, is the timing of the CRB, waiting for five years and 130-
plus days to get final rates, which came in last Thursday after
the period of time that this should have covered. We can spend
more time on that if you prefer, but that is incredibly
frustrating and incredibly disruptive to my business.
Mr. Johnson of Georgia. All right. OK, thank you. Mr.
Levin?
Mr. Levin. Thank you for the question. Let me just note,
for 1 second on the streaming compensation question, if I
might, that the services pay roughly 70 percent of their
revenue out to their rightsholder partners across labels and
publishers, and those entities then pay songwriters and
recording artists. We are very proud to have been part of the
settlement reaching the highest rates ever for mechanical rates
going forward for this period and the next, and moving forward.
So, the conversations around streaming economics are important
to have, and have on a holistic level.
From an MMA perspective, I think from the services I would
join with Mr. Molinar's comments about the data base and the
benefits of the data base. From the services perspective it is
really that legal certainty of being able to know that you have
that blanket license. The prior system simply did not work.
Mr. Johnson of Georgia. OK, and the challenges?
Mr. Levin. On the challenges front I really do think--sorry
to steal a line from Mr. Tashian's testimony--I think it is
navigating that line for The MLC between administering the
license and setting policy and rules. One is what the MMA
intended and the other actually goes beyond what they are
supposed to do.
Mr. Johnson of Georgia. All right. Thank you. Mr. Ahrend,
if I might, Mr. Chair?
Mr. Ahrend. Thank you for the question. Like the other
panelists, I think the fact that we have been able to set up
The MLC, begin operations, and to do that without missing
deadlines, consistently month after month, is a huge
accomplishment, and it is a huge shared accomplishment.
Hundreds, thousands of people have been a part of that.
On the challenges side there are many. You have heard
already from other witnesses here today there are lots of areas
where we can continue to do more to improve the system. We, as
an organization, are committed to improving. That is why we
talk so regularly with so many stakeholders. We want to
understand what works and what does not so we can continue to
make the organization better and to make it function more
effectively for the benefit of those members.
Mr. Johnson of Georgia. Thank you. I yield back.
Chair Issa. I thank the gentleman. We will go to the
gentleman from Virginia, Mr. Cline.
Mr. Cline. Thank you, Mr. Chair. I am going to followup on
this last line of questioning. Mr. Ahrend, we were talking
about the data base error rates. Can you say, with certainty,
over the last couple of years since you have started that the
error rates have gone down or are they consistently in the 11
percent range that Ms. North was talking about, and what steps
are you taking to address those?
Mr. Ahrend. Thank you for the question. Our ability to
match data, we are matching at a higher rate, a higher
percentage than ever before. There are errors in the data that
we receive, and there are sometimes errors in the matches we
make, and we monitor that actively. We give our members tools
that allow them to see where those may exist, and then we do
our best to fix them quickly.
We manage a massive amount of data, 31 million works and
data from well over 100 million sound recordings, and many,
many more millions of products derived from those sound
recordings. So, it is a massive undertaking, and we do monitor
it to try to make it better.
Mr. Cline. How do you respond to Ms. North's comments about
needing to be that gold standard and having to utilize the
Canadian system to address problems within our own system?
Mr. Ahrend. We absolutely aspire to be the gold standard,
no doubt, and that is not easy. One of the benefits of making
our data so widely available--and we do that not only through
the public search, the matching tool, but the bulk data
subscription program that the MMA required us to set up. Close
to 200 organizations around the world now regularly download a
full snapshot of all the ownership data on the musical works
side that we make available and the sound recording data. So,
they essentially get all the information they need to look for
errors and then to help people find and act on them.
Those companies are using that access to create businesses
where they can offer services to other companies that may
prefer to utilize those services, as opposed to doing it
themselves. So, organizations like the one that Ms. North
mentioned are taking advantage of the very transparency that
you sought to create to provide a richer, more vibrant
marketplace where people have access to services like that.
That is not a negative comment on The MLC. That just means that
more people are involved in the process of making the data
better, and that is, in fact, what is happening.
Mr. Cline. Switching gears, I understand that royalty funds
may be invested, but have royalty funds actually been used for
this purpose, and if so, how will The MLC handle any profits or
losses stemming from investments?
Mr. Ahrend. Royalties are never used to fund our
operations. One hundred percent of our operating costs are
funded separately by the DSPs through an assessment process.
The unpaid royalties that we have accrued we hold, and we hold
them until we are able to pay out the underlying royalties, and
then we pay those royalties with interest.
The moneys that we hold are invested conservatively through
institutional financial firms in financial investments intended
to deliver the rate of return the statute requires while
minimizing risk as much as possible. That is not an easy task,
but it is one that we have undertaken. We monitor it carefully.
We work with outside fee-based advisors who have no financial
benefit in the process either, to ensure that we are doing that
as effectively as possible.
Mr. Cline. Are the board members participating in that
process, in that decisionmaking process, or is that a
decisionmaking process that you are solely in charge of?
Mr. Ahrend. No. The board is fully involved in that
process. They adopted a policy, an investment policy, that
guides how we hold those moneys, and we update them regularly
on our progress, as do the advisors that we have hired.
Mr. Cline. Do you make public that information as well?
Mr. Ahrend. We have not made public the investment policy
because the policy contains not only the parameters that I just
described but also the specific guidance that our advisors have
given us on where to rest the money, and they have advised us
that it is not good for security purposes or for market
manipulation purposes to make public the information about
where we are investing the money.
Mr. Cline. Mr. Levin, I understand there is no mechanism
other than litigation to resolve conflicts or adjudicate a
substantive resolution or disputes. From DiMA's perspective, is
there a legislative solution that Congress should be looking to
resolve this issue?
Mr. Levin. Thank you for the question. You mean disputes as
between a service and The MLC?
Mr. Cline. Mm-hmm.
Mr. Levin. It is a great question. I do not know that there
are legislative improvements that need to be undertaken here. I
think if there is guidance to The MLC about where there might
be policy disputes as between the copyright owners, on the one
hand, and the services, on the other hand, or between the
publishers and the songwriters, that rather than impose kind of
a unilateral decision that they instead seek guidance from the
Copyright Office, which has broad regulatory authority under
the MMA, explicitly granted to effectuate the purposes of the
statute.
We think that the tools are already there to avoid some of
that costly litigation, particularly in a scenario where the
services are funding The MLC's operations and might find
themselves potentially in a litigation where they are paying
for both sides of the litigation. That does seem to be contrary
to what Congress intended through the MMA.
Mr. Cline. Thank you. I yield back.
Chair Issa. Thank you. Mr. Nadler.
Mr. Nadler. Thank you. My question I would like to address
to as many of the witnesses as can address it in the five-
minutes I have. New technologies like artificial intelligence
can present great opportunities for creative industries to
innovate, but they also present a set of challenges. Can you
talk about how AI and other burgeoning technologies are
affecting the music industry, and what do you think Congress
can do to address these issues?
We will start with Ms. North.
Ms. North. Thank you for the question. I believe that there
are tremendous opportunities with AI for creators--for
songwriters, for performers--but there also are deep, deep
challenges, and there is the threat of decimating their
careers.
To me, the greatest challenge, and maybe opportunity, we
have right now is to come up with a compensation model that is
different from anything that we have ever seen before, and I
what is we all have works and sound recordings that are used in
the ingestion to train these machine learning and AI generative
tools. We need to make sure that not just the IP but the
creators, that they are going to be paid for any derivative
uses or any derivatives that are generated by this technology.
Mr. Nadler. Mr. Molinar?
Mr. Molinar. Thank you. I think we need to prioritize human
creators as we look at everything. AI is still early, early
days, but it is moving fast. AI training should not be
considered fair use, should not be presumptively considered
fair use.
I saw an operation that had spit out songs in the style of
Songwriter Hall of Fame Liz Rose. To be able to write like her
the computer must have been fed her songs. That should not go
unlicensed, nor should it be uncompensated to Ms. Rose. We need
to make sure that where those examples happen that it is
considered infringement, and we need to preserve this direct
licensing market.
Mr. Nadler. Thank you. Mr. Levin?
Mr. Levin. Thanks for the question. It is such a massive
topic right now, and obviously a top of mind for everyone in
the industry. From the DiMA perspective, a lot of our focus is
on what happens on the output side, less on the kind of input
side of the training models and ensuring that whatever rules
are put into place and developed that we make clear that there
is an important data element to this. We have talked a lot
about data on this panel already today, and the music industry
has long struggled with metadata challenges. MLC is actually
bringing a lot of improvement in that area.
One of the things that we hear talked about sometimes in AI
is the idea that services like DiMA's members should somehow
differentiate between AI-generated works and other works. I
think absent information about what is AI generated, absent
information about clear lines as between what truly counts as
AI versus what counts as human conversations that we are seeing
at the Copyright Office around registrability, all those things
are fundamentally going to necessitate clear information that
is available and included within the works as they arrive at
the services.
I think this is an ongoing conversation in the industry,
and it is important that as we move forward that we are very
clear about the elements of this massive topic that we are
talking about and try to address them serially along that
continuum.
Mr. Nadler. Thank you. Mr. Tashian?
Mr. Tashian. Yes. I have been using AI for a long time. I
mean, Cher's ``do you believe in life after'' was a first sort
of AI hit because it asked the computer to specify what pitch
she was on, which it did. It said, well, I think it should be
on this, which is an algorithm that is built into the Antares
software. So, AI has been assisting musicians for decades, and
now we are sort of kind of wringing our hands a little bit and
saying what do we do about it.
Without taking too much time I have yet to sort of
experience an artwork created by a computer that gives me
goosebumps or gives me chills because it is so beautiful. So,
until that happens, I am just going to keep my head down and
keep doing my best at organic music and using computers when
they can help.
Mr. Nadler. Thank you. Mr. Porter?
Mr. Porter. I can only speak for creators whose main
emphasis is to try to do what they feel is a positive impact on
the public at large about emotions that they do not know how to
express through music, but these people do. Creators do not
want to have to try to figure out what the mechanics are that
would be correct for the fairness that they should receive in
doing what they do. They rely on others. That is why the
relationships that they have with companies, people who say
they are the business side of what they do.
I think that the fact that if we cannot safeguard the fact
that this process can compromise the future generations, their
creative motivations to feel that it can be appreciated,
respected, and done in a way that will not be compromised by
someone else's interpretation or what they feel it should have
been, then it can become extremely risky to the value of what
this whole process if AI can be. Because you want to have the
next generation motivated to want to take a path to do this,
and if you have a method that compromises the real legitimacy
of that, based on what that creator feels, then you are doing
something that is counter to what you may perceive as the good
that it does.
Mr. Nadler. My time has expired, but I would ask the Chair
if he would allow Mr. Ahrend to answer the question.
Chair Issa. Absolutely, Mr. Chair.
Mr. Ahrend. Thank you, Mr. Nadler. I will say briefly that
I agree with the other witnesses. It is imperative that we
ensure that whatever technological developments come down the
pipe that we are always protecting the rights of the human
creators from which all these works originate. Certainly, from
our perspective we see a growing correlation between the use of
technologies and fraudulent activities, so I think it is
important that Congress be monitoring that and to make sure
that we have clear and stiff penalties in place for people who
choose to use technology for fraudulent or other inappropriate
purposes rather than to elevate creative works.
Mr. Nadler. Thank you, Mr. Chair. I yield back.
Chair Issa. Thank you, and because of all the good work
done so far, as long as I do not blow it, we will have a second
lightning round. I want to announce for everyone to get your
questions ready.
This has been a good process so far, but I think Ms. North
pointed out a number of deep concerns, and I want to cover a
couple of them because I think in baseball if you hit a .700,
they do not have a place in the Hall of Fame for somebody who
is doing that well. A .900, amazing. If you are part of those
hundreds of millions of dollars stranded, or you are finding
yourself frustrated because you are entitled to money and not
getting it, then the batting average does not matter.
I want to start with one point, Mr. Ahrend. You are a
neutral arbitrator. You are designed to be not in anyone's
pocket but, in fact, to fairly match up the places where the
dollars should go and getting them there. So, I have one
question, which is you are currently using the same outside
counsel as the NMPA. Do you think that, at least from a visual
standpoint, that this was a good choice, and do you think that
the appearance of not being in any one side's pocket needs to
be taken further?
Mr. Ahrend. Thank you for your question. We have relied on
outside counsel with strong experience in this area to build
the organization. That was imperative. The number of lawyers
and law firms that work in this particular part of the business
is very small. Outside the lawyers we use, there are a handful
of others that digital services use. So, I think it would be
very difficult for us to find lawyers with that level of
knowledge and experience who were not already aligned with one
group of stakeholders.
That said, we do strive to implement the MMA in every day,
to the best of our ability, in a way that serves the need of
all our stakeholders, and I constantly talk with the digital
services about that. We want this to work for them as well as
for all the other rightsholders involved. So, I think we have
done our best to, I guess, stay toward the middle of that road,
recognizing, though, that there are times, and MMA does
envision, that our job is to advocate for the process and to
make sure that the digital services are living up to their
obligations under the law.
So, I do not think it is accurate to suggest that we should
never be in a situation where we are averse to the services. I
would like to think we are helping them meet the very high bar
you have set, and we do that, in part, by being transparent
with them about expectations and also making sure that where a
few of them are doing things differently from the others that
those outliers come into the fold and perform in the same way
that the other services in the market are performing.
Chair Issa. Ms. North brought up a point that I will key in
on, and that is that when someone is doing what substantially
you are doing, which is data base management, the accuracy of a
data base and the fact that there will be--if we go back 1,000
years to when I was writing software the first time, when the
card pops out of that IBM and it says this did not work, and
the whole thing shuts down, as fast as you can get it corrected
and back in is important.
Overwriting rather than showing a pairing error and a
resolution process that is communicating back to both parties
would seem to be the standard. Ms. North, if I see it
correctly, that is not happening. They are not coming back with
an error check saying we have a double claim and each of you
knowing who the other is and a resolution process, but rather
you can be overwritten. Is that correct?
Ms. North. So, I think there are two parts. First, is that
currently that process is entirely human, meaning there are
emails, there is an email chain, and there is a timeframe.
There is no actual software.
Chair Issa. At high administrative cost.
Ms. North. Correct, but also functionality. In terms of
reducing friction, it takes too long because we could do it so
much faster.
Second, yes, if I have my registration and somebody--we
test 30,000 sound recordings, right--and then somebody else
comes in with their one sound recording, claiming that
composition, mine goes into suspense and that just does not
make sense.
Chair Issa. It does not make sense. Can you make it make
sense here, in 30 seconds?
Mr. Ahrend. I will try. We are in the process of developing
a disputes and over-claims module in the portal that will allow
members to interact directly, in a more systematized way around
disputes. That is something that we began developing more than
a year ago, but based on the feedback we got from members we
place the priority on continuing to enhance the matching tool,
in particular, because that was a tool that members saw as most
directly allowing them to improve data for the benefit of
higher payments. We are going to complete, build, and launch
this portal hopefully before the end of this year.
In terms of the mechanism, if a work has been registered
with us for more than, I believe, 90 days, and a new
registration comes in that is not consistent with that, we do
not automatically override that, and we do give a preference to
the registration that has been in place.
Ms. North is correct. We do seek the view of both
rightsholders in that situation because we do not automatically
know which of those views is correct. In the case of a song
like ``Unchained Melody'' that is incredibly popular and is
covered tens of thousands of times, that process can be quite
challenging. So, I do appreciate that Ms. North has some very
unique challenges in managing a legacy work like that.
Chair Issa. OK. I will wait for the second round for
myself, and I will back to the gentleman from Wisconsin, Mr.
Fitzgerald.
Mr. Fitzgerald. Mr. Ahrend, I do not think we touched on
this. When foreign-owned record labels collect royalties on
music when it is played abroad do artists see their share of
the money on that right now? How is that working?
Mr. Ahrend. If you are talking the sound recording side of
the business, you said record labels?
Mr. Fitzgerald. Yes, right.
Mr. Ahrend. That is not a part of the business that The MLC
is involved in. I know there are other organizations that work
on the sound recording side, like SoundExchange. They do go and
collect sound recording payments for rightsholders around the
world. They would probably be in a better position to speak to
how that works and where there are opportunities to improve it.
Mr. Fitzgerald. OK. Very good. Does anybody else have a
comment on that? Yes, Ms. North.
Ms. North. That is completely outside of the realm of The
MLC, but I do want to raise AMFA, the American Music Fairness
Act, and the opportunity. Currently, our performers, sound
recording owners, do not receive a performing right for
terrestrial radio and other broadcasts, of a sound recording.
We are one of a few territories, like I think Saudi Arabia,
that do not have this right.
Mr. Fitzgerald. I think it is just Cuba and Iran.
[Laughs.]
Mr. Nadler. So, because you provided this opportunity, I do
have to plug AMFA, sound recording owners, and performers need
to have that right.
Mr. Fitzgerald. Very good. Thank you.
Mr. Levin, can you talk about how public performance rights
fit into what MMA did and did not do, and what remains to be
done to keep music simply affordable for consumers?
Mr. Levin. Thank you for the question. The MMA did very
little in the public performance licensing space. There are
some adjustments to how the dispute process can play out in the
rate courts that govern the BMI and ASCAP consent decrees.
There was also a provision about should the Department of
Justice ever seek to do away with those consent decrees, some
notice to Congress.
In general, there was very little kind of at the heart of
that licensing system, and it is one where, from the service
perspective, it is one of the many rights that DiMA's members
need to license to operate. The U.S. is unique in its number of
performing rights organizations. I think we are up to about six
now. That is not actually generally the way it works around the
world.
It is also, to kind of actually piggyback on Ms. North's
comment, while there are entities that do not pay for the
public performance of sound recordings, essentially anywhere in
the United States that publicly performs music, from bars and
restaurants to DiMA's members, need licenses from the PROs. So,
it is certainly a marketplace and a licensing space where it is
important to make sure that it is functioning properly.
I know Congressman Fitzgerald and Congressman Issa, along
with Representative Ross sent a letter last year to the
Copyright Office about the potential improvements on
transparency in this space. I think that remains an area--
again, we have talked a lot about data. It comes up all the
time in the music industry. Every licensee wants to know what
they are licensing. Every rightsholder deserves to get their
money efficiently and effectively.
So, finding improvements to make licensing more efficient
through improved data I think is a real area for shared
undertaking by the licensees, the PROs, and others.
Mr. Fitzgerald. Very good. Thank you.
Chair Issa. Thank you. Mr. Johnson.
Mr. Johnson of Georgia. Thank you. My last question had to
do with successes and challenges, and thank you all for your
answers to all our questions today. I would like to ask you, as
our challenges that you noted, what do you see Congress' role
being in meeting those challenges. Ms. North?
Ms. North. I think the first one is oversight. We brought
up a couple of things. One is there have been unilateral
business rules applied regarding issues that are already
defined by statute. Section 115 is clear about the derivative
works exception. That should not have ever been an issue. We
know how public domain works, are controlled, or not. That
should never be an issue.
So, I think that Congress and the Copyright Office need to
pay attention to how The MLC is functioning, and most
importantly, create guardrails so that The MLC remains a
neutral, pass-through entity. That is what it is supposed to
be. It is not supposed to be a judge or arbiter.
Mr. Johnson of Georgia. Thank you. Mr. Molinar?
Mr. Molinar. Yes. I think in terms of improvements my
comments are less about The MLC but more about The MLC cannot
pay out and the streaming services cannot pay the royalties if
we do not know what the rates are and if we do not come to some
market definition quicker and earlier. So, my improvements
would be focused on CRB reform and looking where we can support
the CRB system, whether that is more funds or more resources
for them so that we can have these decisions for our rates
timelier, smoother, and quicker for the entire process.
Mr. Johnson of Georgia. Thank you. Mr. Levin?
Mr. Levin. Just to followup on Mr. Molinar's comment, the
great news is that because of the settlement reached last year
that the rates are set for 2023 and going forward, which allows
for, I think, a more robust conversation about whether and
where improvements might be needed in the CRB process.
In terms of the challenges that we see with The MLC, I
think that oversight and ongoing engagement from Congress
around MMA and The MLC's operations, as well as from the
Copyright Office, are vital. This hearing is an incredible
opportunity to talk about it, to check in, to hear about the
incredible progress, and to also identify where challenges
exist. So, I hope this is not the last time that this Committee
continues to engage, whether it is in a hearing or otherwise. I
think The MLC exists solely as a creature of the Music
Modernization Act and solely to effectuate the license that was
created in that, so ongoing engagement is vital.
Mr. Johnson of Georgia. Thank you. Mr. Ahrend?
Mr. Ahrend. Thank you. I agree with Mr. Levin. I think the
ongoing engagement is imperative. We have sought that out
whenever we can. As a number of you know, we were up on the
Hill earlier this spring, providing updates to staffers. We did
a virtual update at the end of last year. Right before COVID I
came up at the very beginning of the process. So, we welcome
the engagement with Congress, we seek it out, and we enjoy
regular conversations with the Copyright Office, and as I said
in my remarks, we speak regularly with a number of groups in
the industry that represent a large number of stakeholders so
that we are constantly receiving as much feedback as we can.
Then we take that back and we undertake the immense challenge
of trying to reconcile all that feedback, from all the people
that have been interested in what we do, and try to come up
with policies and practices that meet the needs of as many of
those stakeholders as possible. Thank you.
Mr. Johnson of Georgia. Thank you. Mr. Porter and Tashian.
Mr. Porter. I do not have comments. I think challenges have
already been addressed. I applaud this Committee and what you
are doing, because for the future generations who have
aspirations to do music, their whole thrust is doing what they
feel is a contribution coming from their heart that hopefully
will have an impact with people who listen to it. They do not
go into the analytics of what the business process will be and
all those kinds of things. They have hopes, the future
generation would be, that there will be committees such as this
and others who would have sensibilities to want to be sure they
are treated fairly with their gifts, in a world that recognizes
their value and would adhere to that.
Mr. Johnson of Georgia. Thank you.
Mr. Tashian. Echoing what a lot of people have said, but it
is just great to work together, and I hope that all of you will
take your passion for music. You mentioned, Mr. Issa, Mike
Love, and your enjoyment of the music of the Beach Boys. I am
sure everybody has their own version of that.
Mr. Johnson of Georgia. I am good with Tim McGraw too.
Mr. Tashian. Tim McGraw. Yes. I hope you will think about
your favorite artists, writers, and songwriters and then stay
engaged with the community, and listen and hear people out. I
think it is a good thing to just kind of stay connected to
that. Thank you.
Mr. Johnson of Georgia. Thank you, and kudos to Chair Issa
for bringing the hearing on the road, to Nashville.
Chair Issa. Thank you. Mr. Cline.
Mr. Cline. I echo those comments. Thank you, Mr. Chair.
Ms. North, I want to go back to the statement you made, how
we want The MLC to be a neutral pass-through entity and not an
arbiter. The MMA mandates that The MLC board of directors
consist of 10 publisher representatives and four songwriters.
Can you comment on whether you think The MLC is able to achieve
that neutrality with its current makeup, and the interests of
songwriters are balanced against those of publishers when they
disagree?
Ms. North. Well, I think the interests of songwriters are
not balanced, just simply by makeup of that board. It should be
more equal. It should be an equal number of songwriters to that
number of publishers.
More importantly, the major publishers, they have voluntary
direct licenses with the services, so they do not even use The
MLC in the same way that an independent music publisher does,
who does not have the opportunity to enter into voluntary
licenses. So, to me, we need fewer majors and more indies, and
included in the Indies are self-administered songwriters. I
think we do not have enough.
Mr. Cline. Thank you. Mr. Ahrend, do you want to comment on
how The MLC balances the interests of stakeholders, and given
the imbalance in its membership?
Mr. Ahrend. Yes, thank you. I think as Ms. North just
noted, independent publishers represent a unique set of
stakeholders who often have interests that are very different
from the largest publishers. So, our board is, in reality,
divided among those three stakeholder groups. We have
representatives of songwriters, independent publishers, and the
larger publishers. In that respect I think we hear from all
three of those stakeholder groups, and I do think the views
that we receive from those reps reflect and effectively
represent the interests of those three groups.
I also would just note that the amount of royalties flowing
through direct licenses now is only a few million dollars each
month. It has dropped dramatically since the first distribution
we did. So very little of the royalties that we administer flow
through direct licenses. The overwhelming amount of royalties
flow directly through The MLC. Several of the largest ESPs
ended the practice of entering into voluntary licenses when The
MLC began operation. So, again, voluntary licenses are a very
small part of what we do today.
Mr. Cline. All right. Let's talk about the termination
rights. Can you explain The MLC's stance on termination rights
and the payment of royalties to a publisher after its rights
are terminated by the songwriter?
Mr. Ahrend. As of today, we are holding royalties pending
the outcome of the Copyright Office's rulemaking process, so
that is where we stand at this moment.
Mr. Cline. What has The MLC done now that the Copyright
Office issued its proposed rule contradicting The MLC's view,
and what are MLC's plans with respect to getting involved with
the Copyright Office's process for issuing a final rule?
Mr. Ahrend. The Copyright Office did not contradict our
rule so much as it weighed in and offered a proposed rule that
would clarify what previously the law had not clarified, which
was the answer to the ultimately question. In doing so we
recognized that the best thing for us to do right now is to
hold moneys pending that outcome. We participate in the
process. Our only view in participating in the process now is
to ensure that the office has the operational perspective that
we can provide so that whatever rule they ultimately issue we
can effectively implement it.
Mr. Cline. The Copyright Office has issued a notice of
inquiry regarding when late fees are triggered for payments by
DSPs. What is The MLC's position with respect to whether late
fees should be paid when a DSP's estimated royalty payments
turn out to be short, and how did The MLC go about deciding
that?
Mr. Ahrend. Our view is that late fees should be paid, and
we based that, in part, on the fact that there are digital
services that have already been paying late fees on that basis.
So, again, this is an area where we provided a perspective of
what the current practices are, and our belief for how those
practices should be normalized so that all DSPs are adhering to
a consistent standard.
Mr. Cline. OK. I yield back.
Chair Issa. I thank the gentleman. Mr. Nadler.
Mr. Nadler. Thank you, Mr. Chair.
Mr. Tashian and Mr. Porter, one of the changes contained in
the MMA was to require the Copyright Royalty Board to use a
willing buyer or willing seller standard in determining royalty
rates for songwriters. Can you explain what it means to you to
be recognized for the value of your music and why it is
important to artists that they are paid on a free market basis?
Mr. Tashian. This landscape is changing all the time. I
listened in on the call a little bit yesterday. Mr. Issa, you
were talking about how hard it is to determine the value and
for stakeholder to make those decisions.
I think it is something that we just have to stay on top
of, but was the question about how do you do that? What was the
question about, how do you do that?
Mr. Nadler. No. The question was sort of the balance of
money of willing buyer, willing seller. Is it making a
difference to you?
Mr. Tashian. Yes. Well, I have not sold my catalog yet. It
is something that I hope to do, but I know a lot of people who
have. So, at that point I will let you know.
Mr. Nadler. Mr. Porter?
Mr. Porter. Well, I feel that--to be honest, I have sold my
catalog--I think for the future generations--I am 80 years old,
so for me, I am more concerned about what happens to the next
set of creatives who have a passion to be in this business
called music, and to do it from their heart, and to be sure
that what they are going to be given in the future will be
comparable to the lifestyle should be for those times.
I just feel like it is an ongoing process. For me, I always
feel that the writers and artists have never gotten the kind of
fair royalties that they should have gotten from the beginning.
It is always a positive change that is happening, and what this
Committee is doing and what you are doing is so vitally needed
for people to be motivated to want to continue to do this. I
applaud you for doing that, and I think it is an ongoing
process for the next generation to see examples of this, such
as sensitivities to what they are doing and being compensated
in a fair and equitable way.
Mr. Nadler. Thank you. Mr. Porter, the CLASSICS Act, which
provided protection under the Federal copyright laws to music
recorded prior to 1972 was an important component of the MMA,
obviously. Can you talk about the impact this provision has had
on legacy artists, and has it made a difference in your ability
to be fairly compensated for your work?
Mr. Porter. Without a doubt. I know of Sam Moore, who is an
artist that I worked with, he and Dave. I know what this
feeling is about, and I know, Chair Issa and others, he has
made this point known.
Chair Issa. I hear from his wife.
Mr. Porter. I can understand. It is just so, so important
that artists who--I remember years ago, artists were happy to
be the star singing up on the stage, and they did not realize
that the songwriter was getting royalties, and royalties would
happen when someone else would record the song in an ongoing
way. That was a plus for the writer whose name was in small
print on a record. They wanted to continue to do that.
If you are going to do this you want to be sure that
everybody is treated fairly, and prior to 1972 that was not the
case. The fact that so many artists have suffered because of
that, and this is a means of correcting and making some amends
to make a positive change for that in what you have done. It
has to be a better feeling, and in only five years for people,
in an ongoing way, to see what it is going to do for those
people that are still around to appreciate it, and certainly
for their estates, that they will be able to evaluate it.
It has been such a suffering of talents for many, many
years prior to this happening, that I applaud you for taking a
step to correct it.
Mr. Nadler. Thank you. Mr. Ahrend, The MLC is responsible
for distributing statutory royalties at rates that are set by
the Copyright Royalty Board. Can you discuss the importance of
those rate determinations being made on a timely basis?
Mr. Ahrend. Thank you for the question, Mr. Nadler. It is
imperative. Quite simply, we cannot pay out royalties
correctly, if at all, if we do not have the rates. It is a
fundamental component to the process. So, the lack of finality
around the rates for the 5-years leading up to the launch of
The MLC and the blanket license has been incredibly
challenging. We will spend hundreds of thousands of dollars and
countless hours of time putting together processes that we will
need to reconcile the rates when they are finalized with the
work that we have already done. I hope that we do not have to
do that again, so it is imperative.
Mr. Nadler. Thank you. My time has expired. I yield back.
Chair Issa. Thank you. Mr. Cline, you had a followup of one
of your questions.
Mr. Cline. Oh, I just wanted to give Mr. Levin the
opportunity to respond to Ahrend's comments. Mr. Levin, do you
want to respond to the question I asked Mr. Ahrend about late
fees?
Mr. Levin. Yes, I would be happy to. Thank you.
I think at heart this is a great example of what exactly I
have been talking about, about The MLC seeking guidance from
the Copyright Office rather than imposing a view. While I think
Mr. Ahrend raised the point that some services have paid late
fees, that actually does not answer the question of whether
statute and the regulations require them. The publishers and
songwriter advocates are fully within their rights and
prerogative to raise those concerns to the Copyright Office and
argue for a position on it.
I know some Members of this Committee, including yourself,
have weighed in with the Copyright Office on the substance of
the issue. What we actually saw in that scenario was The MLC
submitting comments that were essentially identical to the
comments submitted by the publishers, which does not actually
add value to the conversation, necessary.
To the extent that there are operational questions about
how to actually facilitate late fee payments, make sure those
payments go through, that seems squarely within The MLC's
wheelhouse. On the actual substance of what the statute
requires, that is something that the office actually does have
the authority to weigh in on and engage with the stakeholders
on, and for The MLC to subsequently operationalize.
Mr. Cline. Thank you.
Chair Issa. OK. Now a couple of closing questions from me.
Ms. North, you opened by talking about the fact that the PROs
are outside the original legislation. In your opinion, and we
will go through others, do you believe that is action that
Congress should take to bring them underneath this act, and now
that it is up and running, for benefit, either compulsory or an
opt-in?
Ms. North. That is such a difficult question.
Chair Issa. I saved the best for last.
Ms. North. So, here is what I think. Mr. Fitzgerald had
asked about whether including information about the PRO would
be helpful or which should be data that The MLC includes.
Personally, I think yes, because knowing the PRO of the
songwriter and/or publisher helps us disambiguate data. It
might tell me that one song called, I don't know, ``Just the
Way You Are'' is this song and not this set of parties.
However, the PROs function pretty well, and I do not think
they need additional regulation, and I would like to keep them
out of it.
Chair Issa. OK. Mr. Ahrend, one of the administrative
items, you are holding currently how much in hold-back money
for unmatched? Rough number.
Mr. Ahrend. I can be specific. We have $321 million in
pending blanket royalties, $403 million in historical unmatched
royalties.
Chair Issa. OK. Do you currently believe that you have the
authority to make a partial distribution, holding back
sufficient funds to assure that anticipated future matches
would still be paid fully? In other words, rather than being
forsaken, which Ms. North brought up, that the moment you issue
that money that it is no longer available to a future match-up,
and Mr. Porter and others that may come up with them, do you
believe you can currently split the baby, if you will, do a
disbursement which is to the benefit of rightsholders who have
come forward and hold back a sufficient amount for anticipate
future, or is that outside your purview?
Mr. Ahrend. I think it is an interesting question. I think
as a practical matter, were we to do that it would delay
significantly our ability to process and pay the back half of
that because we would have to build a separate, similarly
complex reconciliation process to then calculate the difference
between what we had initially paid out and what we would
finally owe for the historical moneys, and that would work
differently, in many respects, from the blanket reconciliation
we will have to do for 2021 and 2022.
So, in looking at that--
Chair Issa. So, it is fair to say that the act did not give
you specific guidance, which would be the reason that you would
not be able to split it and do a future one, as though you were
starting again.
Mr. Ahrend. I think it is fair to say that the MMA did not
contemplate this possibility because, of course, at that time
it was past the appeals.
Chair Issa. We thought you would be perfect and match every
single song. That is just the way it is in Congress.
Mr. Ahrend. Well, the CRB process that we have alluded to
before was five years earlier, and so I do not think we knew,
any of us knew that we would be where we are today, back then.
Of course, for us, we have been doing a significant amount of
work on all the historical royalties since we received that
data.
So, at this point, sitting here today, what I believe is
the best course is for us to allow the office and the CRB to
finalize the rates, something that we believe is imminent, for
the services, and then deliver the revised data, and then we
can begin paying out all the matched royalties accurately,
hopefully first thing in 2024.
Chair Issa. The CRB has rulemaking authority. Do you
believe that you have superior, concurrent, or simply separate
rulemaking authority under the act?
Mr. Ahrend. The MLC?
Chair Issa. Yes.
Mr. Ahrend. We are not a rulemaking body.
Chair Issa. You have been making rules, and that has been
Ms. North's complaint is that you have not sought the CRB,
which does have rulemaking authority, to make those decisions.
No question at all--what you have been making looks a lot like
rules.
Mr. Ahrend. With respect, I think we have put in place
policies that describe our operations, and we have sought from
the Copyright Office guidance where we think the Copyright
Office would be in the best position to weigh in. I think it is
the Copyright Office's role to ultimately issue regulations
that answer questions of policy, and they have done so, to
their great credit, in a myriad of ways, and, also, in a
relatively short period of time. So, we consult regularly with
the Copyright Office. I think they are the primary place where
we would look for that guidance where we need it, and we do.
Chair Issa. Do you believe you have authority under the act
to--you do believe you have authority under the act to issue
late fees. Do you believe that you have the authority to issue,
or should you have the authority to issue late fees that would
be sufficient to be used in excess of the fair reimbursement to
the person who did not receive their royalty in a timely
fashion, to also allow for general operations or other uses by
your organization?
Mr. Ahrend. No. The late fees that we collect are passed on
to members entirely. We do not use those for operating costs.
They are set by the regulations or the statute.
Chair Issa. So, the second half of the question was do you
think you should? In other words, the business of late fees is
not just statutory interest. It is intended to be, at least
partially, in a fair way, partially punitive, sufficient that
it causes people to be dissuaded from using you as a bank. If
you do not have that authority to collect essentially an amount
in excess, is that something you would like the authority?
One of the reasons we are out here is to look for ways that
we can enhance compliance, enhance the percentage of matchups.
Of course, when you are talking about revenues sufficient to be
able to do your job better, we are also looking at it not
coming out of necessarily the hide of the good behavior
individuals but perhaps revenue that would allow you to
innovate in the long run, service your beneficiaries better.
Mr. Ahrend. I certainly think that this is a question that
merits more conversation. We do see evidence that there are at
least a few DSPs who consistently deliver their usage and
royalty payments late, and they appear to be pushing the
bounds--
Chair Issa. I want to see a little anger. I want to see you
go, ``No, you are right. I really want to stop the bad actors,
and I have heard about them.'' Because the good actors, they
are paying, and quite frankly, it adds to your overhead, does
it not, and it adds to the frustration of the people who want
to run their businesses and cannot because the revenue is not
coming in.
Mr. Ahrend. Absolutely, 100 percent. So, if Congress or the
Copyright Office would like to give us more tools to ensure
compliance, we would gratefully accept them and use them with
the passion and vigor that you just expressed.
Chair Issa. OK. Well, I we have one minute left, and I am
going to take a privilege.
Mr. Porter, you are the senior member here. I am kind of
one of the senior Members here. Tell me, if you could ask us to
go away with one more thing that we should go work on, what
would it be?
Mr. Porter. It would be to continue with the spirit that
you are expressing right now. That is the spirit of wanting to
do more, wanting to do it right, and wanting to do it because
it is the right thing to do. That would be all I could say,
sir.
Chair Issa. Well, with that we stand adjourned.
[Whereupon, at 12 p.m., the hearing was adjourned.]
All materials submitted for the record by Members of the
Subcommittee on Courts, Intellectual Property, and the Internet
can
be found at: https://docs.house.gov/Committee/Calendar/ByEvent
.aspx?EventID=116155.