Bipartisan support for legislation often means two things – a growth in government and an expansion of crony capitalism. Unfortunately, the Music Modernization Act hits both those notes, and it’s moving through Congress quickly.
Music licensing issues are complex and confusing. Special corporate interests have taken advantage of this reality by spending dearly to craft skewed narratives that mislead members of both parties. As a result, The Music Modernization Act has the support of both Democrats and Republicans.
Two of the legislative aims they are unintendedly supporting is the creation of a blanket mechanical license and the establishment of a collecting society to manage payments to composers and music publishers. These two legislative aims that will nationalize rather than privatize, removing the significant progress that private businesses have already taken to rectify the problem at hand in one fell swoop.
For years, musicians, composers and the corporations who profit from mechanical licensing have been working together to address the licensing issue, such as the fact that streaming services like Apple and Spotify have been sued for allegedly not making proper payments regarding mechanical royalties. This burns a gaping hole in their bottom lines because the legal fines and liabilities are enormous.
While it is the streaming service that must ultimately determine what royalties are paid for each underlying composition, often their hands are tied because record labels typically do not provide information on the compositions. This means they need to engage third-party agents to help them connect the dots and match recordings to compositions, creating a system that is naturally ripe with error.
Thankfully, the private sector has been hard at work to close this corporate legal loophole by mitigating the chance of royalty mistakes. Competition for digital music services has been steadily growing. For example, Google recently purchased a company called RightsFlow to act as its traffic cop for mechanical licenses for music played on Google Play or YouTube.
Apple streaming services uses Music Reports, Inc. (MRI) and Harry Fox (HFA), two different companies to ensure proper royalties are paid. Seeing an opportunity to use the latest technology, other companies have sprung up touting the use of the latest technology as well, such as Loudr and Audium, which use blockchain technology as their backbone.
The so-called “middle-ground” Music Modernization Act will destroy the private sectors’ progress by creating a federal mechanical license “collective” which would collect payments and distribute them to the correct parties. This collective would be funded by a new fee on music services and housed at the U.S. Copyright Office.
The bill is a solution in search of a problem. The creation of the collective threatens to pull the rug out of the marketplace, killing competition and establishing yet another monopoly in the music industry.
Likely, the government would select just one or perhaps two services as their policeman on the beat. The most politically astute are the ones that often walk away with the deal, and by no means should anyone consider The Music Modernization Act to be an exception.
Before Washington runs off and declares a victory, it ought to ensure that the deck is not stacked against newer upstart companies that are distrusting the marketplace. Failure to address this concern will ostensibly result in another victory for crony capitalists who are better at paying off politicians than ensuring publishers and composers get their fair share. Congress should do the right thing and kill or amend The Music Modernization Act before it’s too late.
Bryan Crabtree, is author of new book, "The Trump In You: Acting Like Trump Is Actually A Good Thing." Crabtree is a radio host on AM 920 The ANSWER in Atlanta, GA and the publisher of Talk40.com
© 2021 Newsmax Finance. All rights reserved.