SESAC Sneak Attack Threatens All Songwriters

We hate to interrupt what we hope is your lovely summer, but recent news about the Music Modernization Act’s prospects in the Senate is of critical importance to all songwriters. Even if you’ve never read our previous updates on the MMA, PLEASE read this one because the bill that SONA has worked so hard to help craft and shepherd through Congress is in trouble, and this is a call to arms.

At the bottom of the letter is a list of action items. If everyone reading this takes 3 minutes to execute just 1 action, we have a decent shot at derailing a predictably shitty outcome. Allow us to explain what’s going down and how we got here.

In short, the performance rights organization, SESAC, along with some other very recent players, is actively pushing an amendment in the US Senate that could effectively kill the Music Modernization Act.

As you already know, songwriters have been uniquely screwed in the new music streaming economy and the MMA is desperately-needed copyright reform legislation - the bottom line is that, if passed, songwriters will get a raise.  Obviously, there’s more to it than that, but SONA has been in the room, weighing in on the architecture of this bill from its beginnings.  It has undergone many revisions, changes and clarifications along the way.  Yet, for the first time, all the stakeholders that make up our music industry - songwriters, publishers, streaming companies, artists, producers, record companies - have made serious compromises in the service of this painstakingly negotiated consensus bill that is as fragile as it is historic.

Out of the gate, in April 2018, the Music Modernization Act passed unanimously in the House 415 to 0, followed up in June with another unanimous yes vote by the Senate Judiciary Committee. We always knew that the full Senate vote would present challenges so we prepared for many adverse scenarios. But in final moments of the MMA’s journey, just as the bill approaches its final hurdle, SESAC, Harry Fox, and parent company, The Blackstone Group, have chosen to lob an amendment into this finely tuned compromise bill that, if we do not fight back, will surely blow up the entire thing.

What does SESAC have to do with this? 

Quick primer: In 2015, SESAC bought the Harry Fox Agency, a longtime collector and distributor of mechanical licensing revenue. Last year, SESAC was purchased by a private investment firm called the Blackstone Group. So Blackstone now owns Harry Fox.

One of the primary tenets of the MMA is that it creates a Mechanical Licensing Collective - called the MLC - to issue blanket licenses to the Digital Service Providers, match the licensed works with their owners (rights-holders - like songwriters!), and collect and distribute payment from those DSP’s to the proper owners.

“But wait a second,” you may be thinking, “that’s what Harry Fox does!” Yes, exactly. EXCEPT THAT THE MLC WILL OPERATE AT NO COST TO SONGWRITERS, WITH GREATER TRANSPARENCY, WITH SONGWRITERS ON ITS GOVERNING BOARD, WITH LOWER OVERHEAD, AND, HOPEFULLY, WITH A HIGHER MATCHING SUCCESS RATE.  And let’s be honest, if Harry Fox had been doing such a good job of licensing digital mechanicals, would we need a legislative solution in the first place?

Now, nothing in the MMA precludes Harry Fox from competing to become a vendor of the MLC.  Vendors will be required under the new law to curate data, match claims, locate rights-holders, etc.  And if they can convince the Board of songwriters and publishers that they can do the best job for us, then they will get the gig.

But Blackstone doesn’t want to do that. They want to kill the MLC and have the playing field all to themselves.

Lucky for them, they found a friend in one senator from Texas who loves the free market and hates government-created entities, particularly ones with the word “collective” in them.  In their amendment proposal, they describe the MLC as “a single, European-style government regulated monopoly… antithetical to the free market.”

This makes all the prior squabbling between songwriters and publishers over board composition and the board seat selection process seem almost quaint.  In the Blackstone amendment, an MLC governing board has little to govern.  It practically mandates that the Harry Fox Agency take the place of the MLC, and without any of the oversight and accountability that we all fought so hard for.  It is a Texas-sized land grab for Blackstone – an investment group for whom a music business holding in inconsequential in the scope of their other holdings.  Squashing this bill is like killing a fly – a bit annoying, but really easy.

Our friends at SESAC can’t possibly feel good about this.  Their parent company is trying to protect an investment to the detriment of the entire music business ecosystem.  Just the timing of the amendment on its own is the definition of “bad faith.”  Last week (week of July 16th), Blackstone went from Senate office to Senate office, handily turning Republican senators away from the bill one-by-one.

The good news is that ALL of the stakeholders are strongly united in their opposition to the Blackstone Amendment.  The Digital Service Providers – like Amazon, Spotify, Apple, etc – hate the idea of paying twice for the same service of matching and administrating with zero oversight.  For songwriters, this amendment tips the balance previously struck in the MMA from helpful to harmful.  Why would we support a new blanket license (which historically suck for us) and grant indemnity with no oversight, audit rights and protection?  It would mean doubling down on the current broken system, with less transparency and even less control.  After all the time, energy, passion, and personal funds we’ve expended to get this far, we - songwriters ourselves - would have to walk away from a bill meant to help ALL songwriters.

NO F%#*G WAY.

So, we know its summer.  This is a lot of inside-baseball weeds-y stuff about political machinations and you just want to read your juicy novel on the beach.  Or write songs on ukulele. Us too. But the ONLY recourse we have is for songwriters to GET ENGAGED NOW! Here are our suggested action items:

  1. If you are a SESAC writer – please contact your favorite rep there and copy John Josephson (CEO) and anyone on the executive team (email template for SESAC is: first initial, last name @sesac.com) and ask them not to do this!  Tell them how important the passage of the MMA would be to your day-to-day survival as a songwriter, how it will mean a raise and how there is FINALLY unprecedented consensus around legislation that would fix a deeply broken system. Ask them: Does SESAC really want to go down in history as being the outliers responsible for blocking passage of this desperately needed legislation?
     
  2. If you are a pro songwriter in ANY Performance Rights Organization (SESAC, ASCAP, BMI, GMR, PRS, etc), please help us bring what SESAC is doing out into the open by tweeting @sesac with the hashtag #SESACkillstheMMA
     
  3. Are you a Texas songwriter?  Please call Senator Cruz’s office at 202-224-5922 and remind him that many of his Texas constituents are middle class songwriters whose small businesses will be hurt by his current proposal to amend the Music Modernization Act.

Thank you!  Now back to your regularly scheduled summer reading!

In Solidarity,
Kay Hanley - Co-executive Director
and the SONA Executive Committee