IP Law Daily President Trump signs Music Modernization Act
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Thursday, October 11, 2018

President Trump signs Music Modernization Act

By Jody Coultas, J.D.

President Trump has signed bipartisan legislation revising and modernizing the music licensing regime codified in the Copyright Act in response to changes in the industry stemming from digital and streaming music services. The Music Modernization Act (MMA) was passed by both the Senate and the House unanimously, and has been supported by music labels and musicians. According to supporters of the legislation, the MMA will streamline music licensing for the digital age, provide the right incentives for artists to create new music, and ensure songwriters are paid a fair market value for their work.

The House passed a version of the MMA (H.R. 5447) in April, while the Senate unanimously passed its own version (S. 2823) on September 18. The bill was renamed the "Orrin G. Hatch Music Modernization Act." Rather than reconcile the two versions, the House adopted S. 2823, but added House Judiciary Chairman Bob Goodlatte’s name to the bill’s title. Both Senator Hatch (R-Utah) and Representative Goodlatte (R-Va) will retire at the end of the current Congress.

Title I of the legislation, titled "Music Licensing Modernization," creates a Mechanical Licensing Collective (MLC) to administer royalties covering the right to reproduce musical compositions via interactive digital streaming and downloading services. The MLC would manage a blanket licensing scheme for interactive streaming services (similar to SoundExchange’s function for performance rights licensing for non-interactive Internet radio services, such as Pandora). It also eliminates the Copyright Office’s bulk "Notice of Intent" system, which now essentially allows interactive streaming services to stream songs without paying any royalty to the owners of compositions when they are unable to find the rights owners. Importantly, the measure changes the royalty rate setting standard to a "willing buyer/willing seller" for mechanical licenses, which is likely to mean that rights owners can expect to see mechanical royalties paid on more compositions and at higher rates. This title also changes the judge assignment system for ASCAP/BMI performance royalty rate proceedings in the Southern District of New York to a random, rotating "wheel" of judges.

Title II—the "CLASSICS Act" (or "Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act")—provides owners of sound recordings made prior to February 1, 1972 (which currently are excluded from the digital performance right created in 1995) an exclusive right to digital performances.

Title III—the "AMP Act" (or "Allocation for Music Producers Act")—creates procedures to facilitate collection of digital performance royalties by sound engineers and record producers, when they have negotiated agreements with artists to receive a share of such royalties.

House Judiciary Chairman Bob Goodlatte (R-Va) and Ranking Member Jerrold Nadler (D-NY) released a statement noting the benefits to both creators and digital music providers, and described passage of the bill as an "historic opportunity to resolve some longstanding inequities in the music marketplace by helping digital services more efficiently license and distribute musical works, while ensuring artists, songwriters, and other music creators receive fair market value for their work."

A coalition composed of National Music Publishers Association (NMPA), the American Society for Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), the Nashville Songwriters Association International (NSAI), and the Songwriters of North America (SONA) issued a joint statement in favor of the legislation. The legislation also garnered the support of the Recording Industry Association of America (RIAA), the Recording Academy, and the American Federation of Musicians, and the Digital Media Association (DiMA). However, the reaction of other industry stakeholders has been more tepid. National Association of Broadcasters President and CEO Gordon Smith commended the lawmakers for crafting "a consensus solution to some of the core issues facing songwriters, music publishers, and on-demand streaming services." "Unfortunately," Smith observed, "the current bill text includes unrelated provisions that will almost certainly result in unjustifiable cost increases for local radio and TV broadcasters and many other music licensees, for whom the rest of the legislation is largely irrelevant."

MainStory: TopStory Copyright FedTracker IP

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