The Music Modernization Act – What does it do?
The music law of the 21st century,
President Trump’s signing of the Music Modernization Act on Thursday, October 11, was driven by the need to update and streamline music licensing processes for the streaming era, where more and more musicians are finding it difficult to collect the royalties owed to them from streams on Spotify and other platforms. It has become the most significant copyright law change in decades.
Under the Music Modernization Act, the digital services would fund a Mechanical Licensing Collective (MLC), and, in turn, be granted blanket mechanical licenses for interactive streaming or digital downloads of musical works. The MLC would be governed by publishers and self-published songwriters. The MLC would address the challenges digital services face today when attempting to match songwriters and publishers with recordings.
The bill would also create business efficiencies for the digital services by providing a transparent and publicly accessible database housing song ownership information. Additionally, because the database would publicly identify songs that have not been matched to songwriters and/or publishers, publishers would also be able to claim the rights to songs and get paid for those songs. Songwriters and publishers would also be granted an audit right, which they don’t currently have under Section115.
Willing Buyer/Willing Seller Standard
Section 115 of the Copyright Act has regulated musical compositions since 1909—before recorded music even existed. Section 115 allows anyone to seek a compulsory license to reproduce a song in exchange for paying a statutory rate. Current law directs the Copyright Royalty Board (CRB)—the government body responsible for setting the statutory rate—to apply a legal standard to determine rates that does not reflect market value.
The Music Modernization Act replaces the current flawed legal standard with a standard that requires the court to consider free-market conditions when determining rates.
The bill accomplishes three main tasks:
- It streamlines the process by which music rights holders can be paid for their songs being played on streaming services.
- It includes a song’s producers in payment for when songs are played over satellite and online radio, the first time producers have ever been mentioned in a bill of this sort.
- It allows for payment of royalties for songs written before 1972, to both songwriters and performers.
- It would set up a non-profit governing agency that would create a database related to the owners of the mechanical license of sound recordings – the copyright that covers the composition and lyrics of a song; the actual performance and recording of the song is typically held under a different license. The database would be completed with help of the major music publishers. The new agency would establish blanket royalty rates that would be used to pay the composers and songwriters when used by streaming services using this database, eliminating the difficulty previously faced by streaming services to properly identify the mechanical license holder. These royalties would be paid to the non-profit agency as a compulsory license, not requiring the mechanical license holder’s permission; the agency would then be responsible for distributing the royalties. Streaming services would still be able to negotiate other royalty rates directly with the mechanical license owner if they so chose.
- It assures that songwriters are paid a portion of mechanical license royalties for either physical or digital reproduction of a song with their lyrics, at a rate set by contract.
- It revamps the rate court process when disagreements over royalty rates arise. Prior, a single judge in the United States District Court for the Southern District of New York was assigned to handle all cases; the bill would assign a random judge in this Court to oversee these cases.
Create more music, Create a great income.
CEO – The Musician Marketplace