Statement of Ranking Member Jerrold Nadler for the Committee on the Judiciary Markup of H.R. 5447 “The Music Modernization Act”

Apr 11, 2018 Issues: Intellectual Property/Technology

WASHINGTON, D.C. --Today, House Judiciary Committee Ranking Member Jerrold Nadler (D-NY) delivered the following opening statement for the markup of  H.R. 5447, “The Music Modernization Act.”

“Thank you, Mr. Chairman. I am very pleased to partner with you on the Music Modernization Act.  This comprehensive bill is comprised of several measures intended to resolve some longstanding inequities and inefficiencies in the music marketplace. 

“Many thought this day might never come. It has been five years since the Judiciary Committee, under Chairman Goodlatte’s leadership, launched its comprehensive review of the Copyright Act. After holding numerous hearings, meetings, and roundtables, as well as considering various initiatives that I and other Committee colleagues offered, we have finally come together in support of a common music policy agenda. It is no small achievement that we have been able to resolve some very complex and sensitive issues to get to this point today.

“The bill we consider today is a combination of bills introduced by me and others on this committee to address both sound recordings and musical works.

“To address a number of issues governing the licensing of musical works, the package includes the Music Modernization Act (H.R. 4706) introduced by Mr. Collins and Mr. Jeffries. That measure significantly reforms Section 115 of the Copyright Act. For the first time, it would create a blanket license for mechanical reproduction royalties, administered by a single entity, which will help ensure proper payments to songwriters and publishers. This new entity, the mechanical licensing collective (MLC), would be paid for by the licensees, and it would create a database of ownership information, which will increase transparency, and help identify music creators owed royalties. Importantly, this new system will end the flawed Notice of Intent (NOI) process, which allows streaming services to play music without paying royalties for the musical work.

“The bill also establishes a fair market rate standard for musical compositions under Section 115, and it repeals Section 114(i), which prohibits rate court judgesfrom considering sound recording royalty rates as evidence when setting performance royalty rates for songwriters and composers.  In addition, it would require judges to be randomly assigned for ASCAP and BMI rate setting proceedings in the Southern District of New York.

“A number of new provisions have been added to this version of the bill. Notably, the new mechanical licensing collective will have to make public an annual report regarding how the collective operates, and how royalties are collected and distributed. And the bill now clarifies that at the conclusion of the collective’s dispute resolution process, an aggrieved party can bring a claim in federal district court.

“Over the last few years, I have introduced the bipartisan Fair Play Fair Pay Act (H.R. 1836) to create a uniform system for sound recordings that levels the playing field for all radio services, and ensures fair payment for all artists regardless of when the music was recorded or where it is played. Three of the four major provisions of that measure are included in some form in the bill before us today.

“First, the bill includes The CLASSICS Act (HR 3301), an updated pre-1972 provision, introduced by Chairman Issa and myself. This bill resolves the long standing dispute over payment to legacy artists for pre-1972 works played on digital radio platforms. It treats sound recordings made before and after 1972 the same, bringing them into the federal copyright system, with 50% of the royalties going directly to the artists through SoundExchange. Likewise, the bill applies the same limitations for fair use, archiving and preservation, the TEACH Act, and those applicable under Section 230 of the Communications Decency Act and Section 512 of the Digital Millennium Copyright Act. For too long, many of our nation’s great cultural icons have been unfairly denied compensation. That is why this measure is supported by the NAACP and more than 300 major artists, and I applaud digital services like Pandora for working so closely with us to correct this injustice. 

“The bill also establishes a uniform rate standard for digital public performance royalties. Internet radio would continue to pay fair market value, but now its competitors would too, as  Satellite radio would no longer be granted a below market rate.

“And, the bill simplifies the allocation of royalty payments to producers and engineers, similar to the AMP Act (HR 831), introduced by my colleagues, Mr. Crowley and Mr. Rooney. Not only does this create efficiencies for artists, it recognizes in federal copyright law the important contributions of producers and engineers to the creation of music.

“Not included in this bill is the creation of a terrestrial performance right, but that is solely a result of timing. Under our direction, The National Association of Broadcasters and the MusicFIRST coalition are engaged in discussions on this issue.  We do not want to wait and potentially lose the opportunity to resolve some other timely issues, but we are confident that the parties will continue to negotiate in good faith toward a solution that benefits both sides.

“We are at a unique moment in time when major stakeholders on both sides prefer a federal solution to many of these issues rather than the status quo. Because of inadequacies and loopholes in the law, there has been litigation in federal and state courts on a variety of fronts with mixed results. This has put music creators’ rights at risk, and caused uncertainty for digital streaming services. It is in everyone’s interest to come together to finally make some improvements to the Copyright Act, and that is why today’s bill is supported by a broad coalition that includes, but is certainly not limited to, the Internet Association, SAG-AFTRA and AFM, the National Music Publishers Association, the Recording Industry Association of America, the Recording Academy, Nashville Songwriters Association International, ASCAP and BMI, C3, A2IM, Songwriters Guild of America, Songwriters of North America, SoundExchange, and the Digital Media Association and its member companies such as Pandora, Spotify and Amazon.

“This is an unprecedented level of consensus that hopefully marks a new era of collaboration. Like any compromise, this bill is not perfect, but it is a major improvement over current law. We are about to accomplish something that hasn’t been done in decades, and I congratulate all of the parties for coming together. Mr. Collins deserves a tremendous amount of credit, as does Chairman Goodlatte, Chairman Issa, Mr. Jeffries, Mr. Deutch, and all of the other Members who have worked so hard to get us to this point.

“I look forward to continue working with my colleagues to improve and advance this bill through the process and enacted into law. I urge all of my colleagues to support the Music Modernization Act. I yield back the balance of my time.”

###