The recently enacted Music Modernization Act (MMA) dramatically modernizes licensing in the digital age and attempts to fill gaps in the copyright landscape. The Act encompasses not only the MMA itself but, as well, the Classics Protection and Access Act (Classics Act) and the Allocation for Music Producers Act (AMP).
A. The MMA
Licensing for ephemeral digital reproduction (i.e., streaming or radio broadcasting) of musical compositions will be governed by a compulsory blanket license. While a compulsory license relating to the performance of such compositions was already in place, owners of digital platforms were required to seek individual licenses from the copyright owners of the lyrics and compositions for each song intended to be digitally reproduced. Under the new regime, these copyrights for musical works will be covered under a single compulsory license.
To make blanket licensing work, the Copyright Office is tasked with creating a Mechanical Licensing Collective (‘MLC’). The MLC will be responsible for creating a database of all music works, identifying the relevant copyright holders and distributing royalties to all relevant parties.
This fresh approach will undoubtedly benefit digital streaming platforms, currently facing burdensome litigation for failure to pay royalties. Unsurprisingly, players within the music industry have noted the high logistical hurdles involved in setting up an effective MLC.
The MMA also changes how rates are determined. Previously, rates for streaming digital royalty were determined by the Copyright Royalty Board on the basis of public interest considerations, while digital radio royalties were based upon the market value of the works.
Under the MMA, the judges of the Copyright Royalty Board must consider the market realities and arm’s length considerations in determining rates for both streaming services and digital radio. This will likely increase the amount of royalties to be paid.
B. Classics Act
Sound recordings made before February 15, 1972 were not protected by the Copyright Act and were relegated to varying degrees of protection under state law.
Long, tortuous litigation between former members of the Turtles and Sirius XM resulted in a substantial class action settlement, but ultimately no continuing state law protection for pre-1972 recordings. Under the Classics Act, pre-1972 recordings are now entitled to digital performance royalties for a term of 95 years, culminating no later than 2067.
Digital music services may satisfy their obligation by sending payment to SoundExchange, the entity designated by Congress to collect and disburse royalties for digital performance of music.
C. The AMP
The AMP widens the pool of persons eligible for performance royalties.
Previously, producers, mixers and sound engineers did not share in the performance royalties from digital broadcast or streaming of the recordings to which they contributed. The MMA now establishes a right of producers, mixers and sound engineers to share in the digital performance royalties.
Followers of the music industry, not to mention rights owners, will take great interest in the real-world implementation of these wide-ranging reforms. A particular focus will be the establishment and staffing of the MLC; that will require diverse representation from the music industry and intense cooperation among artists, recording companies and digital platforms.