Raise the Minimum Wage for Songwriters?

Senator Orrin Hatch plays piano and writes songs. His 300+ works include a Christmas Eve album and a Hanukkah song. With colleagues Lamar Alexander and Bob Corker he introduced the Songwriter Equity Act of 2014 to go along with the House version introduced in February by Doug Collins. It’s already a battleground for opposing interests that monetize music.

Copyright law is federal law, and it has procedures to set the royalty rates which work like a kind of federal minimum wage for songwriters. One royalty rate targeted by SEA applies to digital music services like Spotify and Pandora. The other applies to “mechanical licenses” which copyright law grants to anyone who wants to record a song. They are called “compulsory” licenses because the copyright owner can’t say no.

The center of the battle is a provision requiring the special judges who set the royalty rates to peg them to the rates that would be negotiated in the marketplace by a willing buyer and seller. Everyone thinks fair market value pricing means royalty rates will go up—a lot. The first mechanical royalty rate in 1909 was two cents. Today it is about nine cents. Compare the price of anything else in 1909 to today.

Many music observers think streaming will be the dominant delivery system. One analysis of Pandora’s finances found it was paying less than 5 percent of revenues to publishers and songwriters while record labels got about 50 percent. The SEA would move royalty rates toward equality, and songwriters want a minimum wage boost. Guess who doesn’t .

Total revenue from songs today may be a true zero-sum game, and the zero is shrinking. Music is more available than ever. People pay less for it than ever. So a greater slice of the shrinking pie for songwriters means others will get less.

Broadcasters expect to get a smaller slice because they will have to start paying royalties or pay higher rates when they can least afford it. Locally-focused radio has lost key revenue sources and must compete with the web. More music royalty expense could force them into talk formats with almost no music. They naturally oppose the bill.

Federal copyright law has been pushed and pulled by technology changes for more than a hundred years. Its provisions favor different players at different stages when new ways to monetize songs came along. Copyright law resembles a cross-section of layers at an archeological dig. Whether the Songwriter Equity Act passes or fails, that layering process is less likely to stop than Sen. Hatch will stop writing songs.

About Craig Pinkus

Craig Pinkus is a partner in the Intellectual Property Group. He also is a member of the Litigation and the Sports, Entertainment and Media Groups. He assists clients with a broad range of disputes and transactions involving all areas of intellectual property, entertainment, and other complex business arrangements. He has conducted trials and arbitrations throughout the United States and has argued appeals before the Seventh, Sixth and Federal Circuit Courts of Appeal, the Indiana appellate courts, and United States Supreme Court.
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