President's Corner


Continuing the Songwriter Compensation Conversation


Recently, a journalist and producer in Nashville started an important conversation regarding the future of songwriting with a July 9 Guest Post in Billboard (You can read it here: http://www.billboard.com/biz/articles/news/legal-and-management/6150410/six-suggestions-for-not-screwing-up-copyright-reform).

I responded with my own Guest Post the following week (http://www.billboard.com/biz/articles/news/publishing/6157555/our-best-bet-for-screwing-up-copyright-reform-more-government).

Mr. Havighurst continued the discussion with a blog response (http://chavighurst.tumblr.com/post/93020050398/were-all-producers-now-a-reply-to-the-nmpa).

I'd like to take a moment and respond here. I respect the views of Mr. Havighurst and his supporters very much and appreciate the opportunity to engage in a constructive dialogue. Therefore, let’s start with where we seem to agree. Music licensing certainly is too difficult and frustrating for both licensors and licensees.  A tremendous amount of value is being lost due to the inefficient and complex ways in which music is licensed. It can, and should, be better.

Unfortunately, the proposed solutions offered by Mr. Havighurst are at odds with our nation’s foundational beliefs in property rights and free markets. Let’s start with Mr. Havighurst’s complaint about his experience in securing the rights to use a particular song in a documentary he produced.  Because it was for a small audience, he argues that it would be more efficient if there were a schedule of compulsory rates for the use of “sync” rights in films such as his. He is right. It would be more efficient. However, it would also take away the property right of the creator who wrote that song.

What if that documentary was about a subject a songwriter didn’t want to promote? Under Mr. Havighurst’s proposal, the songwriter would have no choice. While it undoubtedly would be more efficient not to ask permission, it would fundamentally devalue intellectual property rights in favor of ease of use.  

Mr. Havighurst argues that there is a “problematic fact” that “each song is its own little monopoly, with one owner.” In other industries, this is neither problematic nor does the federal government establish compulsory licenses with government rate-setting.  The same could be said for paintings. Perhaps a popular painter should be forced to sell at a price set by a federal judge.  The real problematic fact is that if one believes a song is a small monopoly, where does it end? Your painting, your photo, your screenplay?

How about his argument that songwriters are losing money from the inefficiencies of a free market?  Sure, this may be true.  However, the government has no right to seize personal property because the owner is not maximizing its profits on such property.  Micro, or small-volume uses are clearly an area where money is being lost. The market should address that problem by creating an answer, as it has done for the uses of lyrics and user-generated content on YouTube where solutions have been found with free market prices.  

Contrarily, songwriters have been devastated when the government has set their prices. Due to compulsory licenses dating back to before World War I and consent decrees created during World War II for public performances, more than 50% of the value of a song has been lost due to government intervention and price setting.  No amount of efficiency justifies this result.

Mr. Havighust writes that he would like to see, “as little government as necessary to support a new regime of fair compensation for all uses in all cases.”  That, of course, would be no government.  

Look at other forms of content. At the Apple, Amazon or Google Play Digital Stores you can find movies, television shows, books, magazines, video games, and music.  The only part of that content that is regulated by government price setting is the contribution of the songwriter.

He also writes that there is “precedent for independent arbitration/negotiation bodies that balance the needs of all interested parties”…and that he doesn’t “have the perfect design” but “that’s what the public policy process is for”.  Unfortunately, as far as the public policy process goes, any new compulsory licensing system passed by Congress would become a lobbying war pitting songwriters against every powerful interest that would prefer to pay less for music: Google, Apple, Amazon, the broadcast industry, the cellular phone industry and record labels, to name a few.  After working in Washington, DC, for the last 20 years as part of the public policy process, I can assure you, songwriters would lose.

Finally, Mr. Havighurst’s concept of a “vending machine for licenses” may sound appealing to those who want to purchase quickly, but songs are not a cheap, mass-produced commodity to which everyone has a right. Just the comparison shows how devalued songs will become should such a scheme be put in place.

However, there is light at the end of the tunnel, and perhaps even areas where we can agree.

First, in an effort towards efficiency, we could simplify the licensing process significantly by removing the artificial divisions among different types of licenses.  Instead of labeling each a “mechanical”, a “performance”, a “sync” or a “lyric,” it could simply be a license for the use of a musical composition.  

The reasons the division exist today are due to the different ways the government chooses to regulate our industry through compulsory licenses and consent decrees.  Remove the government overreach, and all of a sudden it becomes easy to have an all-in, efficient license.

Second, we should recognize that collective licensing benefits the licensees even more than the licensors, and therefore there should be a strong antitrust deference to collective licensing.  In the United States, we have three different Performance Rights Organizations—four including Irving Azoff’s new venture. A licensee must go to all four if it wants to have access to all repertoires. The same concept can work for all uses – think of it as a Music Rights Organization (MRO).  The largest of music publishers may wish to license directly, or through a collective.  Smaller publishers could choose a collective to join.  A licensee would be able to negotiate – in a free market – a rate for the uses of the compositions in that particular collective’s repertoire.  Some may say no.  There is no right to use the copyrights of others without permission.  There would be no government involvement.  The market would set prices.

For some perspective, keep in mind Pandora controls more than 70% of the internet radio market.  Apple controls more than 80% of the digital download market.  Why would a number of MROs need any government regulation for what would be a much smaller market share?  

All of these questions are critical at this juncture in the music industry, which again, is why I appreciate the continued interest in this dialogue. Songwriters create a good so meaningful and valuable, yet they have been constrained by the federal government for over 100 years. It’s time for change, and my hope is that this conversation can help bring about reforms on which we can agree.


David Israelite
President & CEO