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James Creedon
Photo by   Andrew Welch

Photo by Andrew Welch

Are you a music artist (songwriter, musician, producer, mixer, or sound engineer) wondering how to collect the royalties on your contribution to a musical work? If so, you’ll be happy to learn about one of the most significant pieces of copyright legislation in recent history: the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the “Music Modernization Act” or simply the “MMA” for those of us who prefer to use acronyms). Signed into law on October 11, 2018, the MMA modernizes copyright-related issues that have arisen due to developments in the music marketplace—like digital streaming. The days of the physical sale of CDs, cassettes, and vinyl have given way to the overwhelmingly dominant world of online digital streaming—with millions of tracks being streamed every day—making it difficult for rights holders to gauge their appropriate royalty share. Luckily for music artists, the MMA provides a means for recovering payment.

The MMA is comprised of three key titles: 

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  • Title I: the Music Licensing Modernization Act

  • Title II: the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society Act (the “CLASSICS Act”)

  • Title III: the Allocation for Music Producers Act (the “AMP Act”)

The MMA consolidates these three Titles into a truly remarkable piece of legislation—one that simplifies the licensing process and makes it easier for rights holders to negotiate for and collect fair royalty shares when their music is streamed online. The U.S. Copyright Office plans for this new licensing system to be fully operational by January 1, 2021, with the hopes of lowering overall licensing costs and ensuring fair and timely payment to rights holders.

For many years, a “compulsory license” was needed in order to record and distribute a rendition of a pre-existing song, and these pre-existing songs were licensed on an individual basis. The MMA replaces this cumbersome song-by-song licensing system by establishing a “blanket licensing” structure for digital music providers to make and distribute media for digital download or interactive stream. This gives digital music providers a means by which they can license the entirety of a musical composition, thereby consolidating and simplifying the licensing process.

The MMA also establishes a digital licensee coordinator (“DLC”) to manage music licensee activities, and the mechanical licensing collective (“MLC”) to administer blanket licenses and maintain a publicly-available database of music ownership data. Here’s how the licensing structure will work: the digital music providers report streaming and download data to the MLC, which collects royalties from these digital music providers and distributes such royalties to any identified rights holders. When rights holders cannot be matched to a musical work that has generated royalties, the MLC will distribute the unclaimed royalties to copyright owners identified in the MLC records, basing the amounts distributed on the relative “market shares” of each copyright owner. The existing system for filing notices of intention (“NOIs”) to obtain compulsory licenses on a song-by-song basis will remain in place for non-digital uses such as CDs, cassettes, and vinyl; and although licensees will still be able to serve NOIs directly on rights holders for digital uses, licensees could instead elect to obtain a blanket license by submitting a notice of license to the MLC. 

Prior to the MMA, rights holders did not have a legislative structure for receiving royalties on songs recorded before February 15, 1972—the date Congress began recognizing copyrights in sound recordings. This prevented rights holders from bringing a federal cause of action against unauthorized uses of their sound recordings. Title II of the MMA addresses this issue by extending a rights holder’s copyright remedies for songs recorded prior to February 15, 1972, and further allowing rights holders to file for copyright protection in their songs recorded prior to February 15, 1972. The remedies afforded by Title II of the MMA are not absolute, however, and rights holders must timely take advantage of the additional protections afforded by the MMA by adhering to the following schedule:

  • For sound recordings first published prior to 1923, copyright protection lasts until December 31, 2021.

  • For sound recordings first published between 1923-1946, copyright protection lasts for 100 years following the sound recording’s date of first publication.

  • For sound recordings first published between 1947-1956, copyright protection lasts for 110 years following the sound recording’s date of first publication.

  • For all other songs first recorded prior to February 15, 1972, copyright protection lasts until February 15, 2067.

Title II of the MMA also establishes a process by which a user of a pre-1972 sound recording may lawfully use that sound recording if such use is not made “commercially” or for financial gain. The MMA requires a user in this situation to conduct a good faith, reasonable search for commercial exploitation of the sound recording by or under the authority of the rights owner. If the user does not discover any such commercial exploitation, then the user must file a “notice of noncommercial use” with the U.S. Copyright Office, and the rights holder of the sound recording then has 90 days to object to such use.

For the first time ever in U.S. copyright law, Title III of the MMA, the AMP Act, mentions producers’ rights in music. Among other things, Title III allows music producers, mixers, and sound engineers to receive royalties for uses of sound recordings on satellite and online radio. Congress designated SoundExchange as the sole collective rights management organization to collect and distribute digital performance royalties for sound recordings, which SoundExchange distributes to rights holders under what is called a “letter of direction.” The unclaimed royalties for these rights holders were previously held by digital service providers, and Title III now requires these digital service providers to pay music producers, mixers, and sound engineers the royalties they are owed.

The MMA modernizes royalty payment procedure in an attempt to pay each artist and rights holder the amount they deserve, rather than only rewarding music artists and professionals who have “made it.” This will, in turn, incentivize the creation of new works, encourage collaboration among music artists, and support the Copyright Act’s objective of promoting the progress of the arts. Congress composed this brilliant piece of legislation to make better the lives of those who make our lives better. As one quote of unknown origin famously says, “Music gives a soul to the universe, wings to the mind, flight to the imagination, and life to everything.”

For more information on this article and this topic, contact Charles Wallace.

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