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Indie publishers call on SESAC and HFA to compromise on Music Modernization Act

By | Published on Wednesday 1 August 2018

US Congress

As fears continue that America’s big fat Music Modernization Act could fall apart at the very final hurdle, the Association Of Independent Music Publishers has called on all parties to come together one last time to get the major copyright-law-reforming legislation through. In particular it asks that collecting society SESAC and rights administrator the Harry Fox Agency “accept a reasonable compromise”.

The MMA, of course, seeks to address various quirks of American copyright law that have become big issues in the digital age. In particular it would reform the way mechanical rights in songs are licensed Stateside, setting up for the first time a collecting society able to issue a repertoire-wide blanket licence. The way mechanical rights are licensed in the US has caused all sorts of problems in the streaming sector, and the solution proposed in the MMA will bring the American system more in line with what happens elsewhere in the world.

Lobbying for the MMA has seen unprecedented collaboration between organisations representing artists, songwriters, labels, publishers and streaming services, as well as performing rights organisations like BMI and ASCAP. All of which helped the proposals pass through the lower house of US Congress, the House Of Representatives, in a super speedy fashion. However, things aren’t going quite so speedy in Senate.

Last week two American songwriter groups hit out at private equity firm Blackstone – which owns the aforementioned SESAC and HFA – arguing that last minute lobbying by the financiers could scupper the whole MMA project. HFA is one of the companies that administrates mechanical royalties in the US under the current framework, and it is worried about the impact the new collecting society the MMA will create might have on its business.

Blackstone is therefore seeking an amendment that, it says, will ensure the market for mechanical rights licensing remains competitive in the US even if a new society is created. It has found support among some Republicans in the Senate, who dislike the idea of a European-style licensing system where single collecting societies enjoy virtual monopolies. Though the US already has Sound Exchange on the recordings side which this new society is very much based on. And, anyway, collecting societies in the US – unlike elsewhere – generally aren’t granted exclusive rights.

Blackstone insists that its proposals aren’t designed to scupper the MMA, which it says it supports. But groups like the Nashville Songwriters Association International and Songwriters Of North America say the amendment as currently written would render the board of the new society – a board NSAI and SONA have worked hard to get songwriter representatives on – pretty much powerless. They also fear the streaming services would withdraw their support for the legislation if amended in this way, basically causing it all to collapse.

In a new email to its members and supports, AIMP has expressed similar concerns. It writes: “[We support] the MMA as it is extremely important to the health and well-being of songwriters and indie publishers alike. This bill has been created out of a careful balance of negotiations between many parties which included, amongst others, all of the domestic PROs, songwriter organisations, publisher organisations, as well as the major digital services”.

The publisher group acknowledges that the way mechanicals would be licensed if the MMA goes through in its original form is “not unique compared to the way licensing is done in foreign territories”. But it then notes that “it is dramatically different from the way we have ever operated in the US”. To that end, it reckons the board of the new MMA-created collecting society would have a key role to play in overseeing the introduction of this new system.

Says AIMP: “There are unknowns that have needed to and will continue to need to be addressed along the way. But the oversight given to a board comprised of songwriters and music publishers working directly together is unprecedented in the US for mechanical rights. We, as independent music publishers and songwriters, are concerned that suggested changes to the current legislation will shift the balance away from our combined oversight and potentially create an untenable working organisation and situation”.

It then adds that “since Blackstone/SESAC proposed its amendments to the MMA, we have lost momentum in the passage of this bill and there has been in-fighting amongst our community pitting songwriter against songwriter, and songwriters and publishers against a PRO. There are also forces outside the music industry that will continue to work against us”.

To that end, AIMP says: “We urge all parties to engage, negotiate and find a solution immediately and we strongly request that Blackstone/SESAC accept a reasonable compromise. We must all continue to work together to keep the bill on track and protect all of our livelihoods. To have come this far only to have all the hard work potentially be for naught is an unacceptable outcome. History can be made”.