Music Modernization Act in a Nutshell

Introduction 

Especially in a time of national divide, it is rare to see a law passed where there are no true “losers.” Nevertheless, through compromise and cooperation, all of the many stakeholders in the music industry celebrated the Music Modernization Act (MMA) when it was signed into law on October 11, 2018. “Music Modernization Act” has commonly been used as a blanket term to refer to the Orrin G. Hatch – Bob Goodlatte Music Modernization Act, an entire music reform package comprised of three rejuvenating acts: (1) Music Modernization Act (MMA); (2) Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society (CLASSICS) Act and; (3) Allocations for Music Producers (AMP) Act. Ultimately, this music reform package as a whole is meant to update the copyright laws to ensure that music creators of all kinds are justly and timely compensated

       

Title I – The Music Licensing Modernization Act (MMA)

This act reforms Section 115 of Title 17 which proved to be extremely outdated, especially with the integration of music streaming services. This reform is essentially meant to make it easier for right holders to get paid when their music is consumed through streaming services such as Spotify or Apple Music.

The MMA would end the Notice of Intent (NOI) process that required streaming services to mail composers paper notice that the service intended to use their works. The NOI process remains in place for what it was intended – namely, physical recordings (CD’s, vinyl’s, etc.). However, the NOI process over-complicated the compensation of songwriters through streaming services. The private third-party entity tasked with the NOI and mechanical licensing process was not equipped to keep up with the powerhouse streaming services and delayed the process extensively.

In order to redress this gap where digital services have issues finding songwriters and publishers, the MMA came up with the idea to create the Mechanical Licensing Collective (MLC) to be funded by the digital music providers. The MLC would administer blanket licenses, rather than the previous song-by-song licensing, and maintain a publicly available music ownership database. This all would help to fast-track the licensing process, ipso facto speeding-up the compensation process. Direct licensing would also still be allowed as another avenue for compensation, in this model, publishers take care of their own interest and writers’ interest who are under contract to them, rather than the MLC.

Furthermore, given the music provider complies with certain requirements, (including good faith attempts to locate the copyright owners) past infringement liability will be limited to the royalties due. This means that even through legal action, right holders will be able to collect only the royalties due and nothing more. This provision is meant to prevent frivolous lawsuits filed due to impatience of the right holder rather than actual wrong-doing of the music provider.

Before this act was passed, the Copyright Royalty Board (CRB) would apply a legal standard to determine blanket statutory rates for all songs across the board. The MMA replaces this flawed legal standard and now requires that the court consider free-market conditions when determining specific songs rates, also called the “willing buyer/willing seller standard.” This would allow for more “valuable” songs to be treated that way, rather than lumped into the same category as songs that might not do as well.

Additionally, instead of assigning a single judge for each performance rights organization (PRO) such as ASCAP and BMI, this act would rotate judges per rate-setting dispute, also called the “wheel” approach. This will ensure that the judge will find the facts afresh for each rate case based on the specific record at hand in that case, instead of using impressions derived from prior cases.

Lastly, the MMA would repeal 114(i), which would allow the opportunity for songwriters and PROs to present a wider variety of evidence about other facets of the music ecosystem which might affect the value of their consideration owed. This ultimately would allow songwriters to obtain fairer rates for public performances of their music.

Title II: The CLASSICS Protection and Access Act (CLASSICS)

This act addresses pre-1972 sound recordings which were not formerly protected by federal copyright, a cutoff date in legislation created a somewhat arbitrary distinction between pre and post 1972 recordings. This act would bring pre-1972 recordings partially into the federal copyright system by guaranteeing compensation to right holders in cases of copyright infringement (subject to certain conditions) which previously flew under the radar. Essentially, the CLASSICS act seeks to ensure legacy artists receive the same protections and compensation that post 1972 artist are guaranteed.

Title III: The Allocation for Music Producers Act (AMP)

For the first time, this act addresses the rights of music producers. This act allows producers to receive royalties collected for uses of sound recordings by officially codifying the process of designating a collective (Sound Exchange) to distribute royalties to a producer under a “letter of direction” from the artist. Sound Exchange claims they have always honored this process, but codifying the process would allow producers a legal remedy if this letter of direction is violated. However, this does not ensure that all producers are compensated, they may only be compensated through an agreement with the artist (and letter of direction to Sound Exchange) that the artists is willing to share royalties with producers/other creative participants.

Conclusion

All of these acts are a step in the right direction for the music industry, but their biggest battle may still be ahead. The new system has been generally laid out, but the minor details and functionality still must be figured out. This could take a long time for the system to get acclimated and actually “fix” the industry. The MLC database is easier said than done, the whole system is just very intricate so a lot of time and thought will need to be put into the logistics of it, including making sure its flexible enough to keep up with advancing technology. Because there is so much leeway with how the system will actually function, many music organizations are vying for the control of the not-yet-created MLC. In order to hear all of the ideas before proceeding, the U.S. Copyright Office opened up submissions for written proposals on how to proceed and accepted these proposals until March. The U.S. Copyright Office is scheduled to make its decision on an applicant group to form the MLC by July 8th, 2019, so the process is far from over.

Works Cited

Bromley, Jordan. “The Music Modernization Act: What Is It & Why Does It Matter?” Billboard, Feb. 23, 2018,https://www.billboard.com/articles/business/8216857/music-modernization-act-what-is-it-why-does-it-matter-jordan-bromley. Accessed 17 June 2019.

Clair, Chantelle St. “What Is the Music Modernization Act?” Songtrust, October 8, 2018, https://blog.songtrust.com/what-is-the-music-modernization-act. Accessed 20 June 2019.

“Issues & Policy.” GRAMMY.Com, 5 Feb. 2015, https://www.grammy.com/advocacy/issues-policy.

“House Introduces Comprehensive Music Licensing Reform Legislation.” SoundExchange, April 10, 2018,https://www.soundexchange.com/news/house-introduces-comprehensive-music-licensing-reform-legislation/. Accessed 20 June 2019.

“Issues & Policy.” GRAMMY.Com, Feb. 5, 2015, https://www.grammy.com/advocacy/issues-policy. Accessed 20 June 2019.

Orrin G. Hatch—Bob Goodlatte Music Modernization Act | U.S. Copyright Office. https://www.copyright.gov/music-modernization/. Accessed 17 June 2019.

“Overview of the Music Modernization Act.” Overview of the Music Modernization Act.Pdf. https://lieu.house.gov/sites/lieu.house.gov/files/Overview%20of%20the%20Music%20Modernization%20Act.pdf. Accessed 17 June 2019.

“Shouldn’t Legacy Artists Get Paid For Their Work?” GRAMMY.Com, 11 May 2018, https://www.grammy.com/advocacy/news/classics-act-why-legacy-artists-deserve-get-paid-their-work. Accessed 20 June 2019.

Wang, Amy X. “Trump Signs Landmark Music Bill Into Law.” Rolling Stone, 11 Oct. 2018, https://www.rollingstone.com/music/music-news/trump-signs-music-modernization-act-736185/.Accessed 20 June 2019.

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