On September 25, 2018, the Senate unanimously approved the Music Modernization Act (MMA), now called the “Orrin Hatch Music Modernization Act” (H.R. 1551). Along with being unique for receiving unanimous approval from the House of Representatives and the Senate, the bill is notable as it provides a major update as to how artists are paid for their music; in fact, Keith Kupferschmid, CEO of the Copyright Alliance, has gone so far as to herald the bill as “the most significant improvement of music copyright law in more than a generation” and stated that he believes it will make it “easier for creators across the music industry to earn a fair living through their creativity.”
The unanimous approval of the bill has to do with how it achieves its goal of “moderniz[ing] copyright law” with regards to songwriters, publishers, record labels, digital providers, and all others involved in the creation and distribution of music in the 21st century. The bill will modify Section 115 of the U.S. Copyright Act, by combining three prior pieces of major legislation and incorporating them as titles under the MMA as reported by The Verge:
- The Music Modernization Act, which streamlines the music licensing process to make it easier for rights holders to get paid when their music is streamed online.
- The CLASSICS Act (Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act) for pre-1972 recordings.
- The AMP Act (or 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.
In a series of upcoming blog pieces, we shall discuss the importance of Title II (the “Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act”) and Title III (the “Allocation for Music Producers Act”). For now, the remainder of this piece will focus on Title I, the “Musical Works Modernization Act.”
The central focus of Title I is that it changes the way in which “qualified digital music providers”—iTunes, Spotify, etc—pay royalties to songwriters and their music publishers for reproduction and distribution of their musical work. As it currently stands, Section 115 of the Copyright Act has established a process in which one can obtain an automatic right to reproduce and distribute another’s previously recorded musical composition—this right is known as a “compulsory license.” To obtain a compulsory license, the service merely has to provide notice to the copyright owner (or the Copyright Office if the copyright owner cannot be located) of the composition and agree to pay a statutory rate set by the Copyright Royalty Board (CRB).
The MMA aims to make this process easier by creating a centralized “Mechanical Licensing Collective” (the “Collective”). Instead of notices and payments going to the Copyright Office, the Collective will manage all notices and collect and distribute royalty payment when a provider fails to locate a copyright owner. The Collective will also establish a process for dealing with unclaimed royalty payments and maintain a working database of eligible works. Of particular note, the Collective will allow digital music providers to pay for a “blanket license” that would cover the use of all works in the database.
Finally, and perhaps most significantly to songwriters, the MMA will modify the standard used by the CRB when determining rates to be paid for licenses and it is looking likely that this will result in increased royalty payments for songwriters.