House Passes Bill Overhauling Music Royalties for Digital Age

(Bloomberg) -- The U.S. House of Representatives unanimously approved legislation Wednesday to overhaul music copyrights, a step toward reforming the way musicians and songwriters are paid by online streaming services.

The Music Modernization Act, introduced with bipartisan support in the House, passed by a vote 415-0 and will now proceed to the U.S. Senate.

Technology companies and music-rights holders have pushed Congress to update copyright law for the streaming era. The existing framework predates the proliferation of the internet, and artists now make more money from on-demand services Spotify and Apple Music than from selling CDs.

Under the proposed law, Spotify Technology SA, Apple Inc., Alphabet Inc., Pandora Media Inc. and Amazon.com Inc. would create a database of songs and support a trio of judges who would determine songwriter royalties. The Music Modernization Act would also benefit artists who recorded music before 1972 by delaying the expiration of their copyrights, and determine how sound engineers get paid.

The Senate is scheduled to begin consideration in May, including whether to consider all three issues -- writer royalties, older music and sound engineers’ pay -- in a single bill or separately.

While technology companies might have to pay more in royalties, the new law could limit damages in future litigation. Artists have routinely sued streaming services over unpaid royalties. The Congressional Budget Office said it’s unsure how the law will affect the value of royalties currently tied up in lawsuits.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net.

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum, Virginia Van Natta

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