An Opportunity To Include Startups In Music Modernization Act

The music modernization act received a lot pushback form the industry, this time for it's doubling down on the power of the industry's already dominant tech players. Here we explore the opportunity of offering a startup a more prominent position in the ruling bodies which would emerge should the act go through.

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Guest post by Chris Castle of Music Tech Solutions

If you’re one of the small group that has actually read the Music Modernization Act, I think you’d have to come away with the idea that this is legislation by the big boys for the big boys.  Nowhere is this unfortunate flaw more apparent than in the way that digital media companies are treated.  No wonder Digital Media Association (Amazon, Apple, Google, Spotify) and the Internet Association (Amazon, Facebook, Google, Spotify) love it so much.

The Music Modernization Act creates two main bodies around the new government-mandated blanket license:  The “collective” which is to represent those with songs to be licensed and the “digital licensee coordinator”.  Both these bodies are supposedly designated by the Register of Copyrights (the head of the U.S. Copyright Office), but the Register is constrained by statute to appoint certain types of entities or people.

One of those criteria is very majoritarian–and I would suggest that in both cases the math alone limits the choice to one entity.  Here’s the relevant language for the collective:

“is endorsed by and enjoys substantial support from copyright owners of musical works that together represent the greatest share of the licensor market for uses of such works in covered activities, as measured over the preceding 3 full calendar years;”

And here’s the relevant language for the “digital licensee coordinator”:

“is endorsed by and enjoys substantial support from digital music providers and significant nonblanket licensees that together represent the greatest share of the licensee market for uses of musical works in covered activities, as measured over the preceding 3 full calendar years”

So one thing seems true for both the collective and the coordinator:  they can only be entities designated by at least a plurality if not a majority of their respective markets on either side of the same coin.  I’m not quite sure how that definition presents a choice to the Register–more like it dictates the choice to the Register.  (How can there be two pluralities much less two or more?)

Others have and are writing about the conflict ridden aspects of the collective, so I will focus here on the digital licensee coordinator which is equally, if not more, conflict ridden than the collective.

This is one of the many, many examples of why the Music Modernization Act is really not about modernizing anything, particularly for the digital media companies.  By definition, startups–who are potential licensees most in need of flexible licensing–are excluded from any possibility of becoming the coordinator.  Startups need to be front and center in this process and new legislation is an excellent opportunity to level the playing field for these companies that are no doubt afraid to challenge the incumbents like Google (known for being specially vindictive to any startup that challenges them–see Foundem and the European Union’s antitrust litigation against Google).

The Music Modernization Act is a great opportunity to do something positive for the market rather than continue to reenforce the dominance of the very, very dominant incumbents on the technology side of the house.  Here’s some free advice to Congress:

Go wild.  Require appointing a startup or two or three to the coordinator role.  And if you really want to go truly off the reservation, require one of those startups to be from some place like Austin, Athens, Northern Virginia or Salt Lake.

I know, I know.  Scary things happen when you open the floodgates to new ideas.  But wouldn’t that be real modernization rather than further entrenching encumbents?

As a wise old Member of the Texas Congressional delegation once told me, they get to climb the ladder to the American Dream like everyone else.  What they don’t get to do is pull the ladder up behind them once they get to the top.