The Music Modernization Act (“MMA”)
has finally passed both the Senate and the House after the herculean efforts of
some individuals and organizations who worked tirelessly to negotiate
compromises to accommodate all sides. The MMA will finally move the recorded
music industry forward in a way that should facilitate more artists and
songwriters being able to make a fair living from making music. The MMA
proposes to reform the music licensing landscape in several substantive ways
- and vigilance is
required to ensure that composers, songwriters and other copyright creators
receive all the benefits available to them under the MMA.
The MMA is comprehensive and
sweeping in its scope. The MMA revamps Section 115 and repeals Section 114(i)
of the U.S. Copyright Act. It creates a public database to facilitate and
expedite payments to songwriters and it overhauls the rate Court system and
upgrades the standard for setting rates to a "free market" standard.
The MMA also incorporates several other major pieces of legislation including
the CLASSICS Act (Compensating Legacy Artists for their Songs, Service, &
Important Contributions to Society Act) which grants copyright protection to
pre-1972 sound recordings so songwriters and artists can receive royalties on
pre-1972 recordings and the AMP Act (Allocation for Music Producers Act), which
improves royalty payouts for producers and engineers from SoundExchange when
their recordings are used on satellite and online radio. Notably, this is the
first time producers have ever been mentioned in copyright law.
Here are some details of the
highlights of the MMA’s benefits explained:
Section 115 Reform and the Public Database
The MMA ends the bulk Notice of
Intent (NOI) process through the Copyright Office, which can prevent
songwriters from being compensated or compensated in a timely manner for uses
of their works. Under the MMA,
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 MMA also creates
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 is not currently available under Section 115
of the US Copyright Act.
Willing Buyer/Willing Seller Standard
The MMA upgrades the current
standard to a free market 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 MMA replaces the current
flawed legal standard with a standard that
requires the Court to consider free-market conditions when determining rates.
Rate Court System Overhaul & Section 114 Repeal
The MMA overhauls the rate Court system. Currently, ASCAP and BMI are each assigned to a single, respective rate court judge. Every case must be adjudicated before each performance rights organization's (PRO’s) respective designated consent decree judge. Under the MMA, a district judge in the Southern District of New York would be randomly assigned from the wheel of district judges for rate setting disputes. The “wheel” approach would enable BMI and ASCAP, as well as licensees, to go before any judge in the Southern District of New York on a rotating basis - rather than being assigned to a single judge - for the purpose of rate setting disputes. This approach ensures that the judge will find the facts afresh for each rate case based on the record in that particular case, without impressions derived from prior cases. The MMA would also repeal Section 114(i) of the U.S. Copyright Act which prevents rate courts from considering sound recording royalty rates as a relevant benchmark when setting performance royalty rates. As a result, the playing field has been uneven, at the expense of songwriters. The MMA moves the industry to a fairer system under which PROs and songwriters would have the opportunity to present evidence about the other facets of the music ecosystem to judges for their consideration. This repeal creates the opportunity for songwriters to obtain fairer rates for the public performances of their musical works.
Wallace Collins is a lawyer with 30+ years’
experience specializing in entertainment law and copyright, trademark and internet
law matters. He was a teenage recording artist for Epic Records before attending Fordham Law
School. T: (212)661-3656 / www.wallacecollins.com