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The Music Modernization Act

Thu, 02/21/2019 - 10:37 -- admin25

by Thomas Maddrey

In October 2018, the Music Modernization Act (MMA) was signed into law. This sweeping law reformed the ways musicians, songwriters and producers license music and how they are paid. For many general practice and IP attorneys, learning the nuances of music licensing agreements is akin to wading into a swamp. This new law helps to clear up some of the confusion.

The Act has three sections, each aimed at clarifying parts of the licensing process for different groups. Title I, “Modernizing Music Licensing for Digital Streaming Services,” is focused on how to contend with the change of purely mechanical reproductions onto records and other physical media and to the digital streaming services pervasive today. For the first time, Congress has shifted the law from a purely individual “mechanical license” (meaning a license for reproduction and distribution) on a song-by-song basis to a blanket license for digital music providers such as Spotify and others.

Additionally, under the new law, royalties will be paid to creators whenever a copy of their track is made, no matter if it is digital or physical, and the rates will be set based on the open market. Previously, rates were set by a panel of judges known by the Copyright Royalty Board (CRB) which set statutory rates based on public policy considerations and directives. Under the new law, the CRB has been tasked with using a “willing buyer; willing seller” market test for setting royalty amounts.

Most importantly, Congress has directed the Registrar of Copyrights to designate an entity to serve as the Mechanical Licensing Collective, which will develop and maintain a database of music and sound recordings and royalties. “This organization must be comprised of songwriters and publishers and be funded by digital music providers. Prior to the implementation of the MMA, the onus was solely on digital music providers to identify the rights holders of each individual song, a system that was not only cumbersome, but resulted in many creators falling through the cracks.”

MMA Title II, entitled “Classics Protection and Access (CLASSICS) Act”, is focused on bringing pre-1972 sound recordings into the modern age by allowing these creators and rights holders to pursue remedies for infringements. Depending on when the recordings were published, durations of exclusive rights last at least 95 years.

Notably, copyright advocates in many industries have long struggled with what to do with “orphan works,” that is, works for whom no rights holder can be found. Under the CLASSICS Act, as long as good faith efforts are undertaken, pre-1972 records can be used in certain non-commercial ways as long as notice of these uses are provided to the Copyright Office.

The final section, Title III (“Allocation for Music Products (AMP) Act”) establishes, for the first time, a system wherein producers, sound engineers, and others involved in the creation of music and sound recordings can receive compensation for uses that fall under Section 114 statutory provisions. Previously, these important contributors had to rely upon purely contractual relationships for compensation of digital streaming and other methods. The AMP Act makes changes to the Copyright Act to include this population as those entitled to royalty receipts. While the details of this compensation hinge upon when the recording was fixed and what interaction had occurred between the artist and studio professional, the overall aim to include these contributors has now been codified.

So, what should a general practice or IP attorney do when working with a client who might be affected by this new law? Here is a short checklist of questions to ask:

  • Is the client a rights holder of the underlying musical composition or lyrics, or a rights holder in the finished sound recording? (These two separate copyrights help to determine which parts of the MMA apply).
  • Is the work in question primarily distributed digitally through a music service such as Spotify or Apple Music? (If so, the Collective established by the Copyright Office will now be the one-stop shop for registration and royalties).
  • Was the work recorded prior to 1972? (If so, be sure to take a close look at the CLASSICS Act and possible remedies that did not exist prior to the MMA).

The MMA upends many parts of the music licensing system that has been in use for decades. In general, both creators and industry can find positives in this new statute and its impact on copyright law as a whole.

Thomas Maddrey is the Founding Partner of Maddrey PLLC and can be reached at tbm@maddreypllc.com.

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