SENATE BILL REPORT

E2SHB 1763

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Reported by Senate Committee On:

Commerce & Labor, March 30, 2015

Title: An act relating to regulating music licensing agencies.

Brief Description: Regulating music licensing agencies.

Sponsors: House Committee on General Government & Information Technology (originally sponsored by Representatives Van De Wege, Lytton, Riccelli and Tharinger).

Brief History: Passed House: 3/05/15, 92-6.

Committee Activity: Commerce & Labor: 3/20/15, 3/30/15 [DPA, DNP].

SENATE COMMITTEE ON COMMERCE & LABOR

Majority Report: Do pass as amended.

Signed by Senators Baumgartner, Chair; Hasegawa, Ranking Minority Member; Conway and Warnick.

Minority Report: Do not pass.

Signed by Senators Braun, Vice Chair; Keiser and King.

Staff: Susan Jones (786-7404)

Background: Music Licensing Agencies. Music licensing agencies, also known as performing rights organizations, license the music of songwriters and music publishers for a fee. These music licensing agencies may collect royalties or license fees on the performance rights whenever the music is played in a public setting. Venues that are subject to the license fees include bars, nightclubs, funeral parlors, grocery stores, sports arenas, skating rinks, fitness centers, and others. The annual license fees may vary depending on the type of business; the manner in which music is performed – live, recorded, audio only, or audio/visual; the size of the establishment or potential audience for the music; and other factors. The music licensing agencies may file a legal action to enforce the copyright claims on behalf of the persons that they represent.

Licensing. The Department of Licensing (Department) licenses certain businesses and professions, and may investigate complaints or reports of unprofessional conduct, hold administrative hearings, discipline, and fine licensees under the Uniform Regulation of Business and Professions Act.

Summary of Bill (Recommended Amendments): Licensing Requirements for Music Licensing Compensation. A music licensing agency that licenses the performing rights to music may not license or attempt to license the use of or collect or attempt to collect any compensation for any sale or license of the performance rights of music unless the music licensing agency:

Requirements and Prohibited Conduct. Before seeking payment or a contract for payment of royalties for the use of copyrighted works by that proprietor, a representative or agent for a music licensing agency (representative) must:

A representative must not:

A music licensing agency must make available electronically to business proprietors the most current available list of its represented members and affiliates and the most current available list of its licensed performed works.

Copyright Enforcement. The act may not be construed to prohibit a music licensing agency from conducting copyright investigations or informing a proprietor of the proprietor's obligation under the copyright laws of the United States.

Penalties for Violations. Separate from any fines imposed under the Uniform Regulation of Business and Professions Act, a music licensing agency is subject to a civil penalty of not more than $1,000 for each separate violation of this act. Multiple violations on a single day may be considered separate violations. The penalty may be imposed by the Department for violations.

Consumer Awareness. With the Office of the Attorney General, the Department must conduct a consumer awareness campaign to inform proprietors of their rights and responsibilities regarding the public performance of copyrighted music. The consumer awareness campaign must be paid for with fees collected and penalties imposed.

EFFECT OF CHANGES MADE BY COMMERCE & LABOR COMMITTEE (Recommended Amendments): Clarifies that only form agreements, not contracts, are required to be filed with the Secretary of State; penalties may be imposed by the Department and not a court; removes the private party claims; removes the prohibition for communicating at unusual times and inconvenient places; removes the requirement for a representative to communicate with at least once in person before investigating a claim; adds a provision that nothing in the act may be construed to prevent the agency from investigating under the federal copyright laws; and removes the provision for a CPA violation.

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

Effective Date: The bill takes effect on January 1, 2016.

Staff Summary of Public Testimony on Engrossed Second Substitute House Bill: PRO: This legislation is not keeping people from paying the amount they legitimately owe. This bill regulates the tactics the music licensing companies use and how they interface with small business owners. The bill prevents the music licensing companies from using abusive language and acting like bullies, and requires that they give notice and lists of music that they own so bars and restaurants can choose to play other music. They go into everywhere music is played, including bars, restaurants, farmers' markets, churches, and nonprofit dance schools. Restaurants don't doubt that they have to pay for copyrighted music. The bill lets restaurant owners know what their responsibilities are and clearly identifies who are the good actors and bad actors. We need to weed out the bad actors. There needs to be a licensing component and a way to notify owners of their responsibilities.

CON: Music writers are entitled to be paid royalties for the public performance of their work under federal copyright laws. The music licensing companies collect the royalties and protect the music writers' rights. Without their work, the writers could not track, contact, and collect from the establishments that pay the songs. Owners of bars and venues benefit and attract customers through playing the music. This is a cost of doing business. There is no difference between paying for music as paying for the liquor. This is the business of the songwriter and they should be paid. Passing a law that makes it harder to collect the royalties will adversely affect songwriters. Under U.S. copyright laws, music and songs are the legal property of the creator just like software and movies. Accordingly, songwriters have the exclusive right to perform their music in public. Before any others can perform the music, they must obtain permission or they are violating copyright law. There are some exceptions. The licensing companies obtain that permission through a blanket license. This is done effectively and efficiently. The fees charged are low and reasonable for the licenses. Proposed amendments will help the bill especially with respect to conduct, preemption of federal copyright law, private rights of action, and Consumer Protection Act violations.

Persons Testifying: PRO: Representative Van De Wege, prime sponsor; Trent House, WA Restaurant Assn.

CON: Branden Daniel; songwriter; Lisa Thatcher, Broadcast Music Inc.; Holli Johnson, American Society of Composers, Authors and Publishers; Bryan Case, Riddell Williams, citizens.

Persons Signed in to Testify But Not Testifying: No one.