The Music Modernization Act and What it Means for You

150 150 Brett Manchel

By Brett Manchel

The Music Modernization Act (“MMA”) was signed into law on October 11, 2018. The law reflects bipartisan revisions to the Copyright Act, which had its last major overhauls some 20 years ago or so (copyright term extension and the DMCA).  Politically speaking, the MMA started off as a bit of a brawl, fueled by technologies and consumer trends that far outpaced the law for a long time.  By the time the legislation was sent to the President for signature, though, both the House and Senate voted unanimously for the final bill.

The new law combines previously introduced legislation to accomplish three goals:

  1. Modernize the compulsory licensing scheme for compositions by accounting for digital music providers who offer permanent downloads, limited downloads, and interactive streaming;
  2. Give copyright protection to sound recordings made pre-1972, bringing them in line with the current statutory licensing scheme for sound recordings made since 1972;
  3. Help producers, mixers, and sound engineers involved in the creation of sound recordings collect royalties from the public performance of the recording.

If you’re an artist, here’s what the new law largely means for you:

The music licensing modernization law impacts the delivery of a musical work, including in the form of a permanent or limited download or interactive stream. The new law does not change a copyright holder’s public performance right; it focuses on the right of reproduction by updating the pre-existing compulsory license scheme, which only included physical reproductions, to include digital reproductions as well.

Under the new law, a “Mechanical Licensing Collective” is created to administer the expanded scope of public performance rights/royalties, including handling royalty payments and maintaining a database of eligible licensenable works, which creates an entity that looks similar to ASCAP and BMI. Songwriters and music publishers will administer the Collective. The collective will pay royalties to artists when their works are played via digital music providers.

If you’re a more seasoned artist, the MMA grants federal copyright protection to sound recordings made prior to 1972, and it closes the longstanding loophole that allowed streaming and digital music services to not pay certain royalties on these sound recordings.

At the end of the day, the new law helps artists who were owed royalties but not receiving them, and older artists whose sound recordings arguably should have been protected by copyright.

If you’re a digital music provider:

You’re now bestowed with the honor of funding the Collective. In exchange, though, you are now granted a blanket license for all the songs in the Collective’s repertoire, and you are immunized from copyright infringement claims under a safe harbor provision that requires a good faith effort to locate copyright holders.

Though most well-established digital music providers have already worked out deals with record labels and publishers, the new law unifies previously fragmented licensing regimes. Streamlining the licensing under this broad new law should make it easier for digital music providers to organize and manage their library and royalty payments, and it will certainly help with artist relations.

And if you’re a producer, mixer, or sound engineer:

SoundExchange will now, by law, oversee and pay you your royalties via “Letters of Direction.” Practically speaking, you will not now need to rely on contractual obligations for royalties earned on digital audio transmissions. If you contributed to a sound recording made prior to November 1, 1995, and tried but failed to secure an agreement about your royalties, you may be entitled to receive 2% of the royalties collected on that sound recording. However, this right won’t be effective until January 1, 2020.

Overall, this is a rather sweeping overhaul of copyright law that addresses a number of under-the-hood issues that started boiling upon the introduction of digital music and streaming. The new licensing protocol may take some getting used to as the Collective is set up, but will make the process easier. Still, some digital music providers will be paying more for the distribution of older sound recordings – but the new law provides answers to previously unanswered questions, which eliminates risk, and it should bolster the relationship between artists and digital providers, allowing a more fair playing field as the consumption of digital music continues to evolve.


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