Monday, May 11, 2015

The Forest, the Trees and The Songwriters Equity Act of 2015

Often,  I can’t see the forest for the trees.  For some reason an article from a December, 2014 issue of The Tennessean showed up on my radar today.  The article, by Nate Rau was ostensibly about a band called The New Dylans but in reality it was about the decline of the music industry's middle class. I don’t know why I missed this the first time but it hit home today.

            Everyone who works in the music business or in a related field knows this.  The article focused upon the disappearance of the staff songwriter – the writer who receives a publishing advance to write songs for a music publisher.  We all know that these jobs are going away but the article contained a stark figure:  according to the Nashville Songwriters Association International, the number of full-time songwriters in Nashville has declined by 80 percent since 2000.  To quote Rau, "NSAI chalks up the decline of the songwriting profession to the rise in music piracy, the loss of album sales and the increase in popularity of consumption models like streaming that don't pay songwriters as well."

            Okay got it.  The part of the puzzle that I've been ignoring is that the newly reintroduced Songwriter Equity Act of 2015, a bill currently pending before Congress has the potential to remedy this situation somewhat.  It is easy to tune this out in the constant battle between the performing rights organizations, Pandora, Spodify, record companies, et cetera but the bottom line is that somewhere in the developments of the past 20 years or so, copyright owners and songwriters got screwed and this bill may be the first real shot to remedy that.

            The bill addresses two key sections of the Copyright Act: Section 114(f) and 115.  In Section 114, performance royalties are set by federal rate courts and for some byzantine reason, these courts are currently forbidden from reviewing evidence of sound recording royalty rates when setting rates for songwriters and composers.  For this reason, music publishing owners receive less money than sound recording owners when a song is "streamed."  Maybe there is some empirical reason that the rates are not equal but to not allow evidence of the sound recording rates is just weird and wrong. 

            The proposal to amend Section 115 of the Copyright Act is even more interesting.  The bill proposes to change the compulsory licensing statutory rate, which is currently set by the Copyright Royalty Board according to a schedule first devised in 1909 to a formula that considers market value or "rates and terms must clearly represent the rates that would have been negotiated in the marketplace between a willing buyer and a willing seller."

            In a related move, major publishers have been slowly but surely moving away from BMI, and ASCAP in order to license their works directly to these new broadcasters. Entrepreneurs like Irving Azoff are setting up their own performing rights agencies. This is so complicated that I wasn’t sure how I felt about it until I realized that if the majors stay honest and account to their writers, this can only help the songwriter.

            Surely the stakeholders who will be most affected by these changes will continue to try and block them but consider for a minute what applying free market standards to the statutory royalty rate might do (cynically, all lawyers know what this will do the controlled composition clause of a recording agreement) or if Pandora and Spotify had to pay publishers as much as it does sound recording owners.  The idea that songwriters might get a fair shake is really appealing to those of us who work with them.  This is a serious issue which needs to stay in front of Congress and I'm happy to see Tennessee's representatives on both sides of the aisle supporting the legislation.  This is a good time to become involved in the process.