Sirius XM Radio chief executive Jim Meyer is doubling down against the Music Modernization Act, accusing its proponents of brokering ‘backroom deals’ and waging a disinformation war.

So who’s right?

Proponents of the Music Modernization Act (MMA) have accused Sirius XM Radio of selfishly attempting to sabotage the bill for their own financial gain.  But Sirius claims that they’ll get screwed by this bill, while traditional radio will continue to enjoy a free ride.

Accordingly, Sirius — along with cable-based streaming radio provider Music Choice — started lobbying against the MMA.  The crux of the pushback is that traditional ‘terrestrial’ radio stations are still getting a royalty exemption on broadcast recordings, while companies like Sirius are severely handicapped by digital recording royalty requirements.

Unfortunately, it looks like this isn’t a standoff that will result in compromise.  David Israelite, head of the National Music Publishers’ Association (NMPA) and the most public advocate of the MMA, has even warned the satellite radio giant to expect serious blowback from songwriters, publishers, and the entire ‘creative class’.

Everyone’s battling on deck, even if it sinks the entire boat.

Earlier, sources to Digital Music News pointed to an extremely-tight timeframe for passing this bill into law.  An earlier standoff with Blackstone Group and its wholly-owned Harry Fox Agency created a multi-week delay, and crunched the timetable accordingly.

Now, the MMA is getting squeezed between competing bills and high-stakes midterm elections, not to mention an extremely-distracted President.

Add Sirius to the list of time-draining challenges.

Just this morning, Meyer vowed to stand firm against the MMA, the NMPA, and the imbalanced provisions of the bill.  In a stern op-ed on Billboard, Meyer pointed to ‘backroom deals’ designed to discredit Sirius XM Radio, and feed a disinformation campaign to the media.

That didn’t work against Blackstone/HFA, which stood its ground despite heavy protest against the company.  And it isn’t working against Sirius.  Specifically referring to the MMA’s sub-bill, the CLASSICS Act, Meyer pointed to an unfair imbalance with traditional radio.  “Our position on the CLASSICS Act (now part of the MMA) has been clear since its introduction,” Meyer noted.  “It’s bad public policy to make a royalty obligation distinction between terrestrial radio and satellite radio.”

The CLASSICS Act specifically calls for federal recording copyrights to expand beyond 1972, the cut-off date for current sound recording royalties.  But it doesn’t force traditional radio to pay any recording royalties, pre- or post-1972, thanks to a previously-arranged exemption.

In Meyer’s opinion, that’s a handout to a close competitor, simply because of slight differences in how the music is delivered (i.e., a tower vs. a satellite).  “Radio is radio,” Meyer continued.  “If SiriusXM and other ‘audio services’ pay pre-’72 royalties, then terrestrial radio should be required to do the same.  The same is true for post-’72 royalties.”

Meyer also quoted SoundExchange’s CEO, Michael Huppe, who has previously expounded upon terrestrial’s need to pay.

The subtext is obvious: Huppe, whose SoundExchange is widely expected to win a juicy ‘no bid’ government contract to manage the MMA’s Mechanical Licensing Collective (MLC), is also advocating for a bill that contradicts language like this:

“Nobody makes more money from recorded music than the $14 billion radio industry. Radio revenue blows away that earned by competitors like SiriusXM ($5.4 billion) and online streaming services ($6.2 billion in total). Music radio revenue has risen by nearly $40 million since 2013 and the number of music stations has increased every year for the past five years . . . if radio wants to have rules that reflect the music industry of today then that should apply across the board.”

Meyer is likely dragging Huppe into this discussion for a reason.  After all, if Huppe is so adamant about traditional radio paying its fair due, why is he also adamantly backing a bill that extends the free pass?

One explanation is the NAB, or National Association of Broadcasters, a powerful lobbying group that would ferociously fight any effort to make radio stations pay.  All of which raises the question of whether the MMA is simply too far-reaching, and therefore guaranteed to create conflicts like this.

Meyer also raised some other thorny problems, including a raft of pre-1972 deals that have already been made.

At this stage, it’s entirely unclear if those deals would be wiped out by the MMA.  “The current MMA language does not fully guarantee our prior pre-’72 settlements and license agreements and, as a public company, we cannot responsibly put nearly $250 million at risk,” Meyer noted.

That pushback sounds pretty similar to issues raised by Blackstone, which fought the MMA to avoid losing hundreds of millions of dollars — if not more.  Effectively, the MMA would largely make the Harry Fox Agency superfluous, and fractionalize the company’s value to Blackstone.

Unfortunately, this is just one attack on the CLASSICS Act.

Earlier, Oregonian Senator Ron Wyden proposed an entirely different bill, designed to counteract perceived flaws in CLASSICS.   Instead of broadening oldies copyrights beyond traditional expirations and preserving a blend of state and federal protections, Wyden’s ACCESS to Recordings Act would simply put all recordings on the same footing — pre-1972 or post-1972.

At this point, we’re not sure if Wyden’s counter-bill will impact the MMA’s chance of passage.  But the very serious question is whether players like the NMPA, Sirius, Wyden, and others can amicably reach a compromise on these disputes — in a fairly short period of time.

 

 


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