Michelle Shocked

How About The Music Modernization Act?

Text by Michelle Shocked

Aftershocks are still being felt from the sub-prime mortgage fraud that roiled working-class Americans – particularly those in the Latino and African American communities – between 2007 and 2012. The extensive damage caused by this economic disaster should serve as an early warning of what now lies on the near horizon in the guise of the ironically named Music Modernization Act being considered in Congress. Proposed in the wee hours just before the end of the 2017 Congressional session, the Act should, in truth, be called “The Spotify IPO Protection Act”.

         In 2011, on the front lines of defending homeowners during our efforts at Occupy Fights Foreclosure, I saw with my own eyes in the Los Angeles County Recorders office, sitting in front of an outdated DOS era computer, the consequences of unregulated banks creating private databases of public deeds far away from the prying eyes of the County Board of Supervisors and County Recorder.

         As most people now understand (at least anyone who’s seen The Big Short), Wall Street “securitized” sub-prime mortgages, sliced and diced them into millions of tranches and sold them with insurance policies against their inevitable default, then shorted their own bad loans. Taxpayers were left crawling through the rubble of the collapse of 2008, while the banks made a seventy-fold profit on the foreclosures than what they would have earned by simply servicing those original loans.

         Sitting in that County Recorder’s office in LA, I read a hastily-drafted, backdated recordation of a note of deed with a robo-signature attesting to the veracity of the recordation by… wait for it… Made Up Title Company. No, that was not a mistake, nor was it someone being clever. “Made Up Title Company” was a bold admission of the degree of corruption being conducted in broad daylight, primarily because non-enforcement is, by default, the same as un-regulation. No prosecutions. No consequences. When I called the clerk over and showed him the signature line, he simply said, “We see hundreds of these filed every day.”

May ’92 “Come a Long Way” single hits Billboard Top 100 from Michelle Shocked on Vimeo.

         What does this have to do with the Music Modernization Act? Plenty. The Harry Fox Agency (“HFA”) is the company Spotify relies on to do its dirty work in “licensing” its use of copyrighted music. In November, I complained to Harry Fox because they had just sent me thirty-three separate Notices of Intent (“NOI’s”) on behalf of Spotify to issue compulsory licenses for my song “Come A Long Way” for a Jamaican artist named George Nooks. A cursory search on YouTube made it quickly apparent that there had been a mix-up. George Nooks also has a song called “Come A Long Way”. So I notified Harry Fox that I want a meeting in their offices to discuss what I believe is a deliberate mix up, as it has been happening consistently since mid-2016, when the new Librarian of Congress, Carla Hayden, sold the Library’s public database to the highest bidder, who then began issuing mass NOI’s at a breathtaking rate of hundreds of thousands per month. Most of these NOI’s were backdated, and almost all were for copyrights whose owners supposedly could not be located by Spotify through music performing rights societies (“PRO’s”) like ASCAP, BMI and SESAC here in the US.

         Instead of hearing back from HFA, I received a prompt reply from Tom Pfeifer at Spotify, explaining that the title was a “bad match” and he would “take it up with Harry Fox”.

         Thirty days later, in December 2017, a new bundle of NOI’s appeared in my inbox, with the same “bad match” title “Come A Long Way”, with several of them backdated as far back as… wait for it… 2011 (backdated NOI’s are illegal, by the way).

         This is EXACTLY the type of document fraud the banks used with their private Mortgage Electronic Registration System (“MERS”) before the whole home finance house of cards collapsed in 2008. Now, let’s bring the point home.

        Someone who has never written a song or registered a copyright with the Library of Congress might not see what legislation proposing to create a private database of copyright registrations possibly has to do with getting screwed out of your home. But now, take a fresh look at that mortgage you signed. See the fine print explaining that your mortgage is actually held by MERSCORP? That’s because the bank you signed the papers with signed your mortgage over to MERSCORP shortly after you obtained the loan. That means you will never know who actually holds your deed because MERS has destroyed 400 years of public recordation of real property. And that fraud was so profitable that Wall Street is now demanding an encore performance, this time destroying the copyrights of millions of songwriters, authors and composers. And they have found just the politicians willing to deliver the legislation they need with this “Music Modernization Act” fraud so they can avoid the consequences of massive copyright infringement.

The Modernization Act gives credence to the illegitimate claim that they cannot identify rights holders.  A private database like the one proposed by the Act will be controlled by those who pay for it.  In the case of music rights a centralized un-vetted database would provide validation to the excuse of the “difficulty” of identifying rights holders.  (“If you don’t participate in the system we cannot pay you.”)  How about usage information and other analytics?  Will that be shared with the rights holders now forced to spend time and money interacting with yet another system to pay rightful owners their royalties? Have you seen the NOI lists?  https://www.copyright.gov/licensing/115/noi-submissions.html Even a casual music fan could identify a large percentage of the list.  Why pay anyone anything if you can get away with it? Simply hide behind outdated laws and keep your true goal in mind: Go public or get acquired. But above all, cash out.

The next time one of these music services sends you a survey, put in the comments section, “Pay the people who produce your only product: music.”  And tweet me @MicheIleShocked the response you get, if any.

PS: Here’s a simple approach that will let you readers decide for themselves. First is the joint statement from the interests on behalf of Spotify’s IPO, and second is the statement from the interests opposed to Spotify’s which I support.

Joint statement on Music Modernization Act of 2017 from NMPA President & CEO David Israelite, ASCAP CEO Elizabeth Matthews, BMI President & CEO Mike O’Neill, NSAI President Steve Bogard and SONA Executive Directors Michelle Lewis and Kay Hanley

We strongly support the introduction of the Music Modernization Act which represents months of collaboration and compromise between the songwriting and tech industries. This legislation enables digital music companies to find the owners of the music they use and reforms the rate setting process for performing rights, ensuring that songwriters and music publishers are paid faster and more fairly than ever before.

“For too long, digital music services have taken advantage of the ‘bulk NOI’ process and often failed to find the correct creators to pay, and now – by working together – this bill ends this practice by creating a private-sector system where money will no longer be lost to inefficiencies and lack of information. The bill also improves how mechanical royalty rates are calculated by introducing a willing-seller/willing-buyer standard.

“On the performance rights side, the bill also replaces the current rate court system with the random assignment of judges used in most federal court cases, and allows the rate courts to review all relevant market evidence into the valuation of how songwriters are compensated.

“We thank Congressmen Collins and Jeffries for their leadership in striking this balance that improves and modernizes our outdated licensing system and gives songwriters the ability to be paid what they deserve across all platforms that use music, including the growing interactive streaming services.”

Statement on Music Modernization Act of 2017 from Songwriters Guild President Rick Carnes
December 21, 2017

Dear Representative Collins:

I write as president of The Songwriters Guild of America, Inc., the nation’s longest established music creator organization run solely by and for music creators, representing thousands of professional music creators and their heirs.

Thank you for forwarding a copy of the draft Music Modernization Act of 2017 yesterday for our review prior to its introduction, which was much appreciated. We continue to believe that reform of the music licensing process is and must continue to be an exceptionally high legislative priority – second only to the need to raise music royalty rates to equitable levels that will sustain our community. We applaud your sincere efforts and the efforts of the many members of Congress who have been hard at work trying to fashion solutions to these challenges over the past several years, and hope to continue working closely with them until those worthy and important aims are met.

While it was impossible for us to fully digest and analyze the more than one-hundred-page draft legislation in the short amount of time provided, we wanted in fairness to point out to your office that while there are many good points about the draft, including the section 114 performance rights-related reforms, our initial review indicates that there are a number of very serious problems that will need to be addressed before SGA and thousands of its music creator colleagues can support the bill.

Just by way of example, enactment of the proposed bill as currently constituted would –to the best of our knowledge—represent either one of the first times or the very first time in history that any Government has acted to sanction the creation of a music copyright licensing and royalty collective over which creators themselves would not share at least equally in governance. That is a concept that we cannot support.

There are many other problems too numerous to detail in this short letter, but they include serious fairness, transparency and practical issues related to the proposed processes of setting up the licensing collective, the distributing of unidentified monies on a market share basis and the need to better protect music creator economic rights in that context, the vague nature of any optout mechanisms, the granting of relief from statutory damages liability to prior willful infringers, the scope of the musical composition database (including songwriter/composer information), the provisions concerning shortfall and other funding aspects of the collective, the absence of direct distribution of royalties by the collective to songwriters and composers, the vague nature of the audit activities to be optionally conducted by the collective, and the complications in that and other regards raised by obvious conflicts of interest issues.

We appreciate that the introduction of a bill is simply a first step, and SGA and its music creator community colleagues look forward to the opportunity to further, carefully review the bill and comment (which we intend to do in consultation with the representatives of the 500,000 American and international songwriters and composers represented by our formal national and global music creator alliances), with far more specificity in the coming weeks. As always, we intend to engage in this process on a constructive basis, with an eye towards working cooperatively with your office on improving the legislation to the point that we will be able to give it our full support.

Rick Carnes
SGA President

More detailed info about the MMA here: A Music Creators’ Guide to the Music Modernization Act