Mr. President, I want to thank the Senator from Utah for his leadership. He is not only the senior Republican Senator and former chair of the Judiciary Committee, which will hear this legislation, and chairman of the Finance Committee, he…
Mr. President, I want to thank the Senator from Utah for his leadership. He is not only the senior Republican Senator and former chair of the Judiciary Committee, which will hear this legislation, and chairman of the Finance Committee, he is a songwriter himself. He is not
just a songwriter; he has a platinum record, he has a gold record, and he has another one that might become gold. So he knows what he is talking about.
I think, for all of us in the Senate, when Orrin Hatch says that in his 40 years or so here--more than any other Republican Senator--this is the capstone of his career in his work on copyright and it is personally important to him, that means something to the rest of us here. I think that means--among all of the other issues here--we are going to pay more attention to this, and we are going to work hard to pass it. I hope it also means something to those outside this Chamber-- the songwriters themselves, the digital music companies, the music publishers, the broadcasters. This is something we intend to do. We intend to make this a law because it is right thing to do, because the songwriters aren't being treated fairly, and because it is important to Senator Hatch, whom we respect.
When Senator Hatch stands up on the floor and says: I have been working since 1977 on copyright issues--and we know how many important issues he has dealt with--and he says this is a capstone of all those issues, we should pay attention to that, and we should deal with it. I think we will be able to deal with it because we start off with very strong bipartisan support.
This afternoon, Senator Hatch and I will file the Music Modernization Act. We will begin with eight Members of the Senate, including Senator Hatch, as the lead sponsor; I will be there, in addition to Senator Whitehouse, a Senator from Rhode Island, a Democrat; Senator Corker, a Senator from Tennessee; and Senator Dick Durbin, the Senator from Illinois.
Dick Durbin is in Nashville nearly as much as Orrin Hatch is in Nashville. He is not a songwriter, but he loves country music, and he loves songwriting and music, and he is the No. 2 Senator in the Senate, the Democratic whip. To begin to have that sort of cosponsorship, in addition to Senator Isakson, Senator Coons of Delaware, and our newest Senator, Mr. Jones of Alabama--those are the eight of us in the Senate who are starting this bill. We hope others on both sides of the aisle will see the wisdom of it.
Italy has its art, Egypt has its pyramids, Napa Valley has its wine, and Nashville has its songwriters. Songwriters are the lifeblood of Music City. The mayor of Nashville was in my office today and we talked about that. We have thousands of songwriters in Nashville. We have a lot in Memphis too. We have many in Bristol and Knoxville in East Tennessee, where country music really started. They are waiters, they are bus drivers, they are teachers. They have other jobs as they build their songwriting careers. Their paychecks ought to be based on the fair market value of the work they create. Songwriters are paid when their songs are played. We want to make sure that their hits that are heard around the world are felt in their pocketbook.
The arrival of the internet has transformed the music industry, but it has also meant that many songwriters simply aren't paid their royalties when their songs are played online. This is the first problem--the arrival of the internet.
The second problem is, when the songwriters are paid, they are not paid a fair market value for their work. Senator Hatch, as I have mentioned, has long been an advocate for musicians. He understands this.
We have worked together for over a year with Representative Doug Collins in the House of Representatives on the Music Modernization Act, which eight of us will introduce this afternoon. It is bipartisan. It represents the first major consensus legislation that has the support of songwriters, music publishers, digital music companies, and the record labels. Senator Hatch and I are going to continue to work together to make sure it has the support of broadcasters as well.
More importantly, the legislation will have a real impact on songwriters in Tennessee and elsewhere. First, it creates a simple licensing system for direct music services, like Pandora and Amazon to reflect a changing music industry. Second, it will make it easier for the songwriters to be paid when their music is played or someone buys a song that they wrote. Third, it will allow them to be paid for the fair market value of their work.
Now, to give you an idea of what this really means, let me tell you a story about songwriting. I do not have the experience that the Senator from Utah has. He has written more than a hundred songs over the years and cowritten some of them with a number of Nashville songwriters, as a matter of fact, and he even has a song that is a platinum record. But a few years ago, I was in East Tennessee, in my hometown of Maryville. I walked out of the pharmacy, and I saw an older couple sitting in a pickup truck, and I asked them how they were doing. The woman said of her and her husband: ``We're just falling apart together.''
Well, that weekend my son Drew was having a songwriters' retreat at our home in East Tennessee. He is in the music business. So I told one of them, Lee Brice, about what the woman said to me: ``falling apart together.'' Lee Brice said: I think I can do something with that. So he, Billy Montana, and Jon Stone, the songwriters, wrote a song called ``Falling Apart Together.'' Lee Brice put that on one of his albums, and I got one fourth of the song rights. That is the way it works in Nashville. If you contribute anything, including just the song name to a song, you get a part of the royalty. Well, Lee Brice is a pretty well-known singer, as well as a songwriter, and he put the song on his album. You would think the royalty would add up to a lot of money, but in 2016, on my Senate financial disclosure, I reported receiving $101.75 in royalties from my one-fourth of the song ``Falling Apart Together.'' If you are a songwriter living in Nashville, Memphis, Los Angeles, New York, or anywhere--or Provo or Salt Lake City--you can't make a living on $101.75.
The other problem facing songwriters is that music is increasingly played online. Companies like Spotify, Pandora, Amazon, and Apple offer listeners virtually unlimited access to digital music libraries that they can play using the internet whenever they want. According to Nielsen, there are nearly 86 million paying subscribers to these types of digital music streaming services--86 million paying subscribers. In 2016, these subscribers listened to more than 252 billion music streams, including repeated songs. So in 2016, for the first time in history, streaming music services--songs played online--generated more than half the music industry's revenues. Digital music services such as Spotify, Pandora, and Apple Music generated the majority, or 51.4 percent, of the music industry's revenues.
So we know that the internet has changed our world. It has changed politics. It has changed newspapers. It has changed retail. We have seen the effect of it. It has changed the music industry too. One half of the music industry's revenues come from online songs that are played and, as Senator Hatch has said, our laws have not kept up with that and, as a result, our songwriters--the creators who have a right under our Constitution to be paid for their work a fair market value--aren't being paid. In many cases, when they are paid, they are not being paid a fair market value. Sales of compact discs fell below $100 million in 2016, a 17-percent decline from 2015. This means that it is getting much more difficult for songwriters to make a living and Congress can't change the fact that the internet and other new technologies have changed the music industry, but we do have a responsibility to update our laws to keep up with what has happened.
So how did we get in this mess, and what laws are we talking about updating? In 1909, more than a century ago, Congress gave copyright owners of musical works the exclusive right to make, reproduce, and distribute their own musical work. At the time, the works were primarily piano rolls. So we are talking about laws that were created for player pianos. Congress sets a royalty to be paid to the owners of those piano rolls at $0.02 per copy. The Copyright Royalty Board, a three-judge panel at the Library of Congress, still sets those royalty rates today. The current rate is 9.1 cents, and it is based on a below- market standard.
Another problem, as Senator Hatch mentioned, is that ASCAP and BMI, the two largest performance rights organizations, are subject to a 76- year-
old consent decree with the Department of Justice--that means an agreement agreed upon in 1940 or so--and ever since then, it has been governing these performance rights rates. These consent decrees never contemplated the internet, and today they are harming national songwriters. The biggest problem with these outdated consent decrees is that songwriters don't get paid the fair market value for their work.
Songwriters negotiate with radio stations for the right to play their music in exchange for ``reasonable'' performance royalty. If songwriters and the radio stations can't agree on the reasonable royalty, the songwriters have to go to a Federal rate court, which means their case is heard by district judges in the Southern District of New York. Under current law, the judge is not allowed to consider what the song's performer earns when he sets a reasonable royalty. The Music Modernization Act changes that by allowing ASCAP and BMI to present new evidence about the fair market value of the songwriter's work, like what a performer might earn, to a Federal rate court judge when there is a dispute about royalty rates.
The legislation also allows more Federal district judges to hear these types of cases. The music industry has changed dramatically in the past 109 years. It is time to update our music licensing laws to ensure that songwriters can continue to make a living.
Now, what the Music Modernization Act does to solve the problem is this. It creates a new simplified licensing entity to make it easier for the digital music companies--this is Spotify, Pandora--to obtain a license to play songs and ensure songwriters are paid when their music is played. Instead of Spotify and Pandora tracking down each songwriter or a songwriter's publisher to get permission to play his song, they will be able to submit one license and start playing a song right away. Transitioning to a blanket license for reproductions was recommended by the Copyright Office of the Library of Congress. In a February 2015 report on music licensing reforms, the Copyright Office recommended this blanket licensing approach that is included in the Music Modernization Act. The Copyright Office report concluded that ``song- by-song licensing is widely perceived as a daunting requirement for new services and as an administrative drag on the licensing system as a whole.'' The move to a blanket system would allow marketplace entrants to launch their services--and begin paying royalties--more quickly.
Another important point is that the new licensing entity will not be a new government agency, and the digital music companies will pay to set it up and keep it running, not songwriters. The new entity will be governed by songwriters and music publishers, giving songwriters a say in how their work is used for the first time. The new entity helps songwriters because it will collect royalties each time a song is played, look for the songwriter, and hold on to the royalties for 3 years until they can be found. This helps songwriters because it ensures they are paid royalties for their work, whether they have a publisher or not. This helps digital music companies because it makes sure songwriters are paid and that means fewer lawsuits.
The legislation also improves transparency by creating a publicly accessible database for all music works, and it requires digital music companies to pay songwriters their royalties every month. Songwriters will receive usage reports on music that is played to make sure the money is all there. The new database is important because maybe a young aspiring songwriter co-wrote a song under an alias or moved or simply can't be located. The legislation allows songwriters to audit the licensing entity once a year, if the songwriter chooses.
Finally, the legislation requires the Copyright Royalty Board at the Library of Congress to use a fair market standard of what a ``willing buyer'' would pay a ``willing seller'' when the Board sets royalty rates. This helps songwriters receive a fair market royalty when their song is played online.
The Music Modernization Act, as Senator Hatch said, has broad support--unprecedented support. It is a consensus piece of legislation. It is supported by the National Music Publishers Association; the Digital Media Association; the American Society for Composers, Authors and Publishers, or ASCAP; Broadcast Music, Inc. or BMA; the National Songwriters Association International; and the Songwriters of North America. On January 8, these groups joined the Recording Industry Association of America, the Recording Academy, and more than a dozen music industry groups in endorsing the Music Modernization Act. It will help thousands of songwriters in Nashville, across Tennessee, and across this country.
Songwriters, music publishers, and digital music companies have reached a consensus. Now it is up to Congress to provide a result. That is why I am working in such a bipartisan way and am so glad to be working with such imminent leaders as Senator Hatch, Senator Durbin, and others to pass the Music Modernization Act and give Tennessee and our Nation's songwriters the fair pay they have earned.
I want to thank Senator Hatch's staff, as well as my own staff, once again, because they have been working on this issue for some time. Senator Hatch was the original cosponsor of legislation in the 114th Congress, titled the Songwriter Equity Act. I am proud to work with him.
I want to thank Representative Doug Collins and Representative Hakeem Jeffries, who are the sponsors of the bill in the House of Representatives. They are leading the effort to get the bill through the House Judiciary Committee so it can be considered by the full House.
Finally, I wish to thank Bart Herbison, with the National Songwriters Association; David Israelite, with the National Music Publishers Association; Beth Matthews, with ASCAP; Mike O'Neil, with BMI; and Greg Barnes and Chris Harrison, with the Digital Media Association. These individuals have all worked together and negotiated for months to try to produce consensus legislation to help songwriters and modernize the music licensing laws.
So let me end where I began. This is a bill to help songwriters. This is a bill to modernize a copyright system. This is a bill to help our laws keep up with the digital age, the internet world. This is a bill that has consensus among digital companies and songwriters and publishers for the first time. This is a bill to honor Orrin Hatch, who has served in this body since 1977, who is a songwriter himself, and who has been our leader on modernizing copyright laws from the very beginning. I intend to work as hard as I can in a bipartisan way, both in the Senate and the House, to pass this bill for the good of our country and as a capstone of the career of our senior Senator, Mr. Hatch.
I yield the floor.