While summer is typically a slow time in Washington, DC, we find
it to be a great opportunity to make the rounds in an effort to educate
staff members on core issues we are focusing on. We are encouraged
to see the level of interest and concern shared by staff on Capitol
Hill and related agencies - these are people who truly love music
and are eager to help create solutions that benefit artists.
A. Music Online Competition Act (MOCA) Introduced Last month,
Representatives Rick Boucher and Chris Cannon introduced the Music
Online Competition Act (MOCA), a bill strongly backed by the webcasting
industry in an effort to boost those firms’ ability to compete.
While it is difficult to see this bill becoming law in its current
form, given opposition from the RIAA, there are a number of important
ways that simply the introduction of a bill can shape the debate around
a specific set of issues. In particular, the FMC is interested in
two provisions that are critical to a thriving independent music industry:
i) Provision of Statutory License Payments to Artists This
language is from Boucher’s staff: “The sound recording statutory performance
license provision specifies that royalty payments should be shared
equally by performing artists and recording companies. Current law
funnels these payments to artists through the recording companies.
Our bill requires these payments instead to be made directly to the
artists or to a collective organization representing the artists.”
This indicates the bill’s support of payment of the digital royalty
directly to the artist, rather than having royalty monies flowing
through the artist’s record company. The major labels have been staking
a claim to this webcasting royalty, arguing that these royalties could
or should be applied to artist debt. The FMC takes the position that
webcasting royalties are analogous to broadcast royalties — royalties
based on radio airplay in the terrestrial world. Ever since the creation
of the performance rights organizations in the early 20th century,
broadcast royalties have been paid directly to the artists, and we
believe that this method should continue for music broadcast on the
internet. We applaud Reps. Boucher and Cannon for standing up to the
RIAA and including the direct payment of the 45 percent royalty to
artists as a component of their legislation.
ii). Assurance of Nondiscriminatory Licensing to Affiliated and
Non-Affiliated Entities: This language is from Boucher’s staff:”Recording
companies recently have entered into the online music distribution
business by establishing joint ventures with other record companies
(e.g., MusicNet and Pressplay) and by acquiring well-known, formerly
independent Internet services (such as CDNow, EMusic and MP3.com).
It is anticipated that the distribution services owned by record companies
will cross license each other, so that each site will be authorized
to distribute over the Internet approximately 80 percent of all recorded
music. If the major record companies do not also license independent
unaffiliated distribution services, this could create a competitive
imbalance that could threaten the establishment and survival of independent
online music services. Such an imbalance mirrors the concern in 1995
with respect to cable and satellite subscription services, which Congress
addressed by requiring vertically-integrated companies that both owned
content and distribution services to offer nondiscriminatory license
terms and conditions to all similarly-situated noninteractive performance
services. The bill extends this existing nondiscrimination provision
interactive performance services and digital distribution services.”
In essence, this provision attempts to ensure that new competitors
are able to receive non-discriminatory license terms and conditions.
The major labels won’t be able to simply block competition from companies
who are not affiliated with the majors by skewing the licensing agreements.
In other words, if Sony cuts a deal with Universal, Sony would then
have to offer the same terms to another company. While this concept
needs a lot of thought and examination, it might lead to entrants
having a shot at competing against MusicNet and Pressplay.
As this very long process moves forward there will be many opportunities
to debate both the specific goals of this legislation and examine
whether the legislation as drafted will lead to the intended consequences.
To that end, we welcome discussion, critiques or recommendations regarding
the concepts addressed in this bill.
B. Low Power Radio Gains Strength In addition, Low Power Radio
is becoming a reality. The FCC received over 3,400 applications for
these licenses, and it looks like we may see as many as 1,000 new
non-commercial stations get on the air over the next year and a half.
While the broadcasters were successful in barring the initiative from
urban areas, the success of the rural stations will form the foundation
for opening up the service to the cities, ideally in the next several
years. The Future of Music Coalition is committed to doing anything
we can to ensure these new stations have the visibility and support
they need to prosper. The length of the process is surely frustrating,
but that’s the old cliche about Washington - there are no permanent
victories or defeats. Take what you can get and keep pushing…