[Congressional Record Volume 164, Number 159 (Wednesday, September 26, 2018)]
[Senate]
[Pages S6334-S6335]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MUSIC MODERNIZATION ACT

  Mr. HATCH. Mr. President, I wish to enter a few remarks into the 
Record

[[Page S6335]]

regarding section 103(a) of the Music Modernization Act, which the 
Senate recently passed.
  By striking current sections 114(f)(1) and (2) of title 17 and 
substituting a new section 114(f)(1) based on current section 
114(f)(2), section 103(a) of the bill creates a uniform ``willing 
buyer/willing seller'' rate standard in section 114. This fair standard 
requires that performing artists and copyright owners be appropriately 
compensated for the use of their works under the statutory license 
because rates under this standard are to be set at a level that best 
approximates the rates that artists and copyright owners would have 
been able to negotiate in a free market. It has long been a goal of 
Congress to move toward a free market standard for the statutory 
license and to move away from the 801(b) standard that permits the 
copyright royalty judges to set a nonmarket rate for satellite digital 
audio radio services, (SDARS), and preexisting subscription services, 
(PSS). Discounted nonmarket rates harm artists and copyright owners, as 
well as the competitors of SDARS and PSS. As a transitional matter, 
however, the bill amends section 804(b)(3)(B) of the Copyright Act to 
continue, through 2027, 2018-2022 statutory royalty rates for PSS that 
are finally determined in the rate proceeding currently pending before 
the copyright royalty judges.
  The bill also continues through 2027 the statutory royalty rates for 
SDARS set forth by the copyright royalty judges on December 14, 2017, 
in their initial determination for the rate period ending on December 
31, 2022. The remainder of my statement today will address the PSS 
category.
  After 2027, the PSS will remain a distinct category of service under 
section 114. We have chosen to retain the PSS category as a distinct 
category because, over the last 20 years, the PSS have been treated 
distinctly from other types of services for purposes other than the 
rate standard, such as in the statutory license reporting regulations 
in 37 C.F.R. 370.3. We express no view as to the merits of those 
particular provisions or as to whether it makes sense to continue to 
treat the PSS differently from other types of services as to reporting 
requirements or any other matter besides the rate standard.
  One consequence of retaining the PSS category after 2027 is that, so 
long as there continue to be PSS in operation, statutory royalty rates 
for PSS will continue to be set in proceedings separate from those in 
which rates are set for similar ``new subscription services'' that also 
provide music channels delivered over cable and satellite networks as 
part of cable and satellite subscription packages. Statutory royalty 
rates for such new subscription services have always been subject to 
the willing buyer/willing seller rate standard and are currently found 
at 37 C.F.R. part 383. The difference in the timing of rate proceedings 
for PSS and similar new subscription services is simply the result of 
keeping each service on the same 5-year cycle of rate-setting 
proceedings that has applied to the service in the past and does not 
reflect a judgment that the royalty rates for PSS and similar new 
subscription services should be different. The intent of this 
legislation is to eliminate the rate-setting preference that the PSS 
and SDARS previously enjoyed under section 114(f)(1) and require all 
services to pay statutory royalties reflecting the fair market value of 
the recordings they use without regard to regulatory categories or the 
schedule of rate-setting proceedings. We expect that similar services 
will pay similar market rates.
  During the period through 2027, when the PSS may continue to pay 
statutory royalty rates that have been set at below-market levels 
depending on the outcome of the pending rate proceeding--eligibility 
for the PSS rates will continue to be limited to the category of 
services eligible for grandfathering under the old rate standard when 
the PSS category was created, so as to protect pre-1998 investments in 
the particular service offerings at issue.
  Mr. President, I now wish to enter into the Record a few remarks 
regarding section 105 of the Music Modernization Act, or MMA, which the 
Senate recently passed.
  An important policy objective of the MMA is to bring legal certainty 
to areas of the music licensing marketplace where it is lacking today 
in order to benefit songwriters, recording artists, music users, and 
ultimately listeners. In the market for the public performance of 
musical works, where no governing statutory framework exists, that 
certainty has long been provided by the Department of Justice, DOJ, 
consent decrees with ASCAP and BMI.
  To ensure that certainty remains in that market, section 105 of the 
MMA creates a process that will enable Congress to exercise an ongoing 
oversight role over decisions by DOJ to review, modify, or terminate 
the ASCAP or BMI consent decree. Terminating either of these decrees 
without a viable legislative alternative in place would create the very 
market uncertainty that the MMA seeks to remedy.
  For that reason, in the event DOJ elects to undertake a review of the 
ASCAP or BMI consent decree, the MMA instructs DOJ to consult with and 
report to Congress throughout that review. Such a process will enable 
Congress to act on any needed legislative improvements or replacement 
of the consent decree framework as a precursor to DOJ action to 
terminate the decrees.
  Importantly, in the event that DOJ decides to move to terminate 
either the ASCAP or BMI consent decree, including through a motion to 
sunset the decree after a specified period of time, the MMA requires 
DOJ to notify the House and Senate Committees on the Judiciary of its 
intent to file such a motion ``a reasonable time before'' filing the 
motion. The purpose of this provision is to provide adequate time for 
congressional consultation and any legislative action that may be 
necessary as the result of a motion to terminate the decree. The bill's 
sponsors believe that such notification is required under section 105 
and that ``a reasonable time'' means at least 90 days before a motion 
to terminate is filed, in order to provide adequate notice to Congress.

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