NEW YEAR – NEW LAW

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Happy New Year and welcome to the new, new music business, one that promises to keep you guessing as to how you’ll be making a living in the next 365 days.

While the rest of us were hanging frayed mistletoe and giving even more money to labels via their “new and improved 360 deals,” the California Legislature was busy figuring out better ways to regulate us. Since California tends to lead the way in new law, this affects everyone, really.

In the general scope, we have wired things that only those in Granola State could dream up: in domestic violence cases, pets can now be included in protective orders and coming soon are criminal penalties for even accidentally running over squirrels and wild animals that happen in front of your vehicle. Conversely, products made from Kangaroo skin can now be sold in the Sunshine State. So, you can’t punish your dog for pooping on the rug, but you can slaughter as many marsupials as it takes to make a purse. Y’know, that ignorance of the law is no excuse thingy would be easier to apply if lawmakers could make up their mind.

To the music space we add a couple of vital items: Classic musical groups who market themselves as “the real deal” when touring, must contain at least one original member of the group. You’d think this was given, but wrinkle-rock impersonators have been skating away on the thin ice of misrepresentation for years using names like, “Credence Clearwater Survival” and “The One and Only Platters.” There are also about a dozen “Original Beach Boys” and several variants on “Bill Haley’s Comets.” Those without an “original member” under the new law can only bill themselves as “tribute” groups. An exception was carved out, however, for STYX and Steely Dan, since no one can seem to agree on who the original members were.

The big news is the introduction of a concept that is already in place just about everywhere else in the free world and it involves how broadcasters pay royalties; specifically that they will now ALSO have to pay record companies/artists when a song is played on the air, instead of just publishers/songwriters. ASCAP ad BMI are understandably a bit concerned that this will dip into their “non-profit” revenue stream. But…

The new bill proposes the following:

1) Requires terrestrial radio and HD radio to pay labels and artists.

2) Non-commercial broadcasters (like Public Radio) pay only $1,000 per year and small broadcasters pay a flat rate of $5,000 per year.

3) Creates a statutory rate for Sound Recordings (finally!) and the rates will be set by the CRB: the Copyright Royalty Board (formally the CARP– the same ad hoc group that is about a year late in setting the regular the statutory rates.)

And most importantly…

4) New law cannot diminish what songwriters are already paid by broadcasters. (So ASCAP and BMI can stop bitching.)

There’s something here for everyone to both like and complain about. John Simson CEO of SoundExchange (SX) told me he believes that this will be a multi-year campaign, one that will not likely yield results until after 2009, but at least we’re on the right track for once.

SX is putting a lot of cash into pushing this puppy through—and this is to be expected, but the question that I wish some credible journalist would ask them is—how much of this money will be deducted as an “expense” from the artist/label royalties they are already collecting? Hmm.

Mo out