Music to Our Ears: The Music Modernization Act of 2018

Music Modernization Act Photo

At its most fundamental, the law of copyright is literally that – a protective limitation on the right to copy the original creative expression of authors and artists.  And, as is the case of law in general, it has always been a struggle for copyright law to keep pace with science and technological advances.  In their time, the introduction of the photocopy machine and the VCR problematically made duplication possible at the push of a button.  More recently, music digitization and the internet have made the unauthorized dissemination and sharing of copyrighted material a stress test on the royalty collection system and the artists whose livelihoods are tied to that income stream.

On October 11, 2018, the Orrin G. Hatch–Bob Goodlatte Music Modernization Act (“MMA”) was signed into law, and it promises to serve as one of the most significant pieces of copyright legislation in decades.  The MMA, designed and intended to update music copyright law for the digital era, accomplishes three key things: making sure songwriters and artists receive royalties on songs recorded before 1972; allocating royalties for music producers; and updating licensing and royalty rules for streaming services to pay rights-holders in a more streamlined fashion, via a new, independent entity. Under this new law, many music creators will have a more reliable way of collecting the money that they’re owed.

Prior to the enactment of the MMA, Congress held a series of hearings on music issues, and the Copyright Office conducted a comprehensive study of the music licensing framework as well as the ever-evolving needs of those who create and invest in music in the twenty-first century.  That study resulted in a report entitled “Copyright and the Music Marketplace” which followed an earlier policy report “Federal Copyright Protection for Pre-1972 Sound Recordings,” which examined the desirability of and means for bringing sound recordings fixed before February 15, 1972, under federal jurisdiction. Many of the suggestions offered in both of those reports are reflected in the now enacted MMA.

This new law addresses Congress’s determination that copyright law had not kept pace with changing consumer preferences and technological developments in the music marketplace. The MMA, a combination of three bills previously introduced in Congress, is organized into three key titles:

Title I – Music Licensing Modernization;

Title II – Classics Protection and Access; and

Title III – Allocation for Music Producers.

Title I – Musical Works Modernization, among other things, modifies the existing section 115 “mechanical” license for reproduction and distribution of musical works in phonorecords (which was previously obtained by licensees on a per-work, song-by-song basis) to establish a new blanket license for digital music providers to engage in specific covered activities (namely, permanent downloads, limited downloads, and interactive streaming). Licensing of physical configurations (e.g., CDs, vinyl) will still operate on a per-work, individual song license, basis. Title I establishes a market-oriented “willing buyer, willing seller” rate standard that will apply to all licensees of musical works under the section 115 mechanical license. Pursuant to section 115(d)(3), as amended, the Register of Copyrights will designate an entity as the mechanical licensing collective to administer the blanket license and distribute collected royalties to songwriters and music publishers. The newly created mechanical licensing collective will be tasked with developing and maintaining a database of musical works and sound recordings, which will be publicly available and is expected to become the most comprehensive database in the music industry.

There will be a transition period to move to the new blanket license, allowing digital music providers to limit copyright infringement liability so long as the provider engages in good-faith, commercially reasonable efforts to identify and locate musical work copyright owners. The legislation also modifies the process for selecting federal district court judges to adjudicate rate-setting disputes regarding performance rights organizations that are subject to consent decrees with the Department of Justice (i.e., ASCAP and BMI).

Title II – Classics Protection and Access, among other things, brings pre-1972 sound recordings partially into the federal copyright system by extending remedies for copyright infringement to owners of sound recordings fixed before February 15, 1972. The federal remedies for unauthorized use of pre-1972 sound recordings will be available for 95 years after first publication of the recording, ending on December 31 of that year, subject to certain additional periods. These periods provide varying additional protection for pre-1972 sound recordings, based on when the sound recording was first published.[1]

This section applies a statutory licensing regime similar to that which applies to post-1972 sound recordings, e.g., the statutory licenses for noninteractive digital streaming services — such as internet radio, satellite radio, and cable TV music services. It also establishes a process for lawfully engaging in non-commercial uses of pre-1972 sound recordings that are not being commercially exploited.

Title III – Allocation for Music Producers, among other things, will allow music producers to receive compensation from royalties collected for uses of sound recordings under the section 114 statutory license by codifying a process wherein the collective designated to collect and distribute royalties (currently, Sound Exchange) will distribute royalty payments to a producer under a “letter of direction.”   (This is the very first time producers have ever been mentioned in copyright law.)

It took two decades of intense lobbying to pass and sign the MMA into law. Now the hard part begins: implementing the first copyright law changes in 20 years.

[1] For recordings first published before 1923, the additional time period ends on December 31, 2021.

For recordings first published between 1923-1946, the additional time period is 5 years after the general 95-year term.

For recordings first published between 1947-1956, the additional time period is 15 years after the general 95-year term.

For all remaining recordings first fixed prior to February 15, 1972, the additional transition period shall end on February 15, 2067.