Music Industry / For Artists Music Licensing & Copyright

The Music Modernization Act recently passed the House 415 votes to 0. A version of the bill has now gone to the Senate, where it is expected to meet a similar welcome. The bill seeks to bring US copyright laws regarding ownership and the licensing of music into an era in which digital tools have made it easier than ever to create, share, copy, and even steal musical works. Here’s what you need to know about the bill.

Origins of the Music Modernization Act

According to Paula Parisi at Variety, the Music Modernization Act passed by the House combines three separate legislative attempts to change the rules and processes for music licensing: the AMP Act, the CLASSICS Act, and an earlier version also called the Music Modernization Act.

The Allocation for Music Producers (AMP) Act, introduced by Rep. Tom Rooney (R-FL) and Rep. Joe Crowley (D-NY), created a method for producers and engineers to receive royalties when their works are played on streaming services. The bill represented the first time that producers and engineers have been given US copyright law protections, according to Robert Levine at Billboard.

The Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS) Act, introduced by Rep. Jerrold Nadler (D-NY) and Rep. Darrell Issa (R-CA), focused on ensuring music creators were compensated for works made before 1972. According to Jonathan Bailey at Plagiarism Today, these songs are not currently protected by federal copyright law, but are instead handled by a “mishmash” of state law and common-law court rulings.

The original Music Modernization Act, introduced by Sen. Orrin Hatch (R-UT) and Sen. Lamar Alexander (R-TN), offered updates to licensing and royalties for streaming music.
The three bills have been combined into a single new law, also called the Music Modernization Act (MMA).

What Changes Under the New Law?

While the House of Representatives provides an overview of the major changes proposed by the MMA, this overview relies heavily on readers knowing what current US copyright laws do and do not cover. Here’s a plain-text summary of what music professionals can expect from the new law.

No More Waiting on Notices of Intent (NOIs)

Currently, Section 115 of the Copyright Act requires the U.S. Copyright Office (USCO) to issue a “compulsory license” to make and distribute further copies of a recorded musical work, once its creator demonstrates that they have released that record to the public. To acquire this license, however, the owners of a musical work have to file a Notice of Intent with the USCO.

Filing a Notice of Intent got slightly easier when the USCO introduced bulk notices, but the wait times to receive the license are still quite long. The MMA changes this procedure, ending the requirement to file a Notice of Intent and to wait for the USCO to address it. Instead, the new law creates a Mechanical Licensing Collective (MLC), run by representatives of major music labels, independent labels and self-publishing artists.

Members of the collective will receive a blanket license in exchange for their participation, allowing them not only to reproduce their musical works in tangible formats (like CDs) but also in digital formats (like streaming). The MLC will also be required under the new law to maintain a public database of musical works and owners, allowing anyone to see who owns what — and to see which songs still have not been matched with their owners. The 1972 cutoff date will no longer be relevant; any creator who can demonstrate they own a song in the database will be eligible for copyright protection and payment, regardless of the work’s age.

Royalties Will Change in Response to Market Value

In 2004, Congress passed the Copyright Royalty and Distribution Reform Act, allowing anyone to seek a license to use one or more musical works in exchange for paying a certain royalty rate. Royalty rates were set by the Copyright Royalty Board.

The Copyright Royalty Board has made several changes to rates over the years, including a 50-percent increase in royalties for streaming in early 2018, according to Variety’s Parisi. But the CRB’s ability to change royalty rates is limited by the standards of the 2004 law, which doesn’t take into consideration basic market variables like demand.
The Music Modernization Act seeks to update the standard by which royalties are set so that it better reflects demand and other variables in the current market.

Copyright Royalty Board Judging Will Change

Currently, Copyright Royalty Board judges are appointed for six-year terms. The two largest music organizations, ASCAP and BMI, are assigned one judge apiece; others appearing before the board are assigned one of the remaining judges.

Under the Music Modernization Act, no organization will have an assigned judge. Instead, judges from the Southern District of New York will be assigned cases on a rotating basis — what the House summary calls a “wheel” approach.

Royalty Courts and Licensing Boards Will be Allowed to Consider More Evidence

Section 114 of the Copyright Act is “probably the most complicated provision of the Copyright Act,” according to David Post, a former intellectual property law professor at Temple and Georgetown. Here, understanding precisely what changed will be less important to most participants in the music industry than understanding the results.
Currently, one of the things Section 114 does is to restrict the types of evidence that copyright royalty judges can hear in disputes over the licenses (and violations of those licenses) covered by Section 114.

For instance, judges cannot currently use evidence of sound recording royalty rates (how much gets paid when a record sells or a song is streamed) to set performance royalty rates (how much gets paid when the song is played at an event, for instance). The Music Modernization Act repeals these rules, allowing judges to consider a song’s recording royalty rates when deciding where to set the performance royalty rates.

Benefits and Challenges of the MMA

The Music Modernization Act and its components, the AMP and CLASSICS Acts, have been met with praise from throughout the music industry. Hopes run high that the new law will change copyright law for the better, especially for creators.

“We’re incredibly encouraged that this long overdue bill to protect songwriters and the entire creative community is finally coming to fruition,” members of the country group Little Big Town told ABC News in April. “The song is where it all begins for us as artists.” The changes introduced by the CLASSICS Act particularly excited artists whose works were released in the mid-20th Century, according to William Glanz at SoundExchange.

“People get paid for their art,” Mary Wilson, a founding member of The Supremes, told SoundExchange. “We created art, but we aren’t getting paid, so it is an economic issue. Digital music stations are playing our music on a daily basis and making money off of it, but they’re not paying the artists.” Concerns about pay don’t vanish under the MMA, however. One of the largest problems with the new law is that, while the MLC will collect royalties for vast numbers of streaming songs, it will work for only three years to match those royalties with their artists, according to Paul Resnikoff.

After three years, any unclaimed royalties will be distributed among members of the MLC. And for Resnikoff and others, this arrangements amounts to a form of “legal theft” — one that is likely to hit self-published and small independent artists hardest. Ultimately, the Music Modernization Act represents only one step, albeit a necessary one. “Certainly, much work remains before the recorded-music industry can be considered equitable for all,” A2IM CEO Richard James Burgess wrote in a guest column for Billboard. “Nevertheless, the MMA is consequential because all sides of the recorded music industry along with the tech companies are working together, setting aside longstanding differences to produce a positive incremental result.”

Burgess hopes the Act represents the first step in a united music industry that benefits all its participants. “We are better together than we are apart.”

Images by: Louis Velazquez, ivanspasic/©123RF Stock Photo, ammentorp/©123RF Stock Photo

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