On October 11, 2018, the President signed the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (H.R. 1551). After years of calls for reform to music licensing by virtually all interests in the music industry, the MMA ushers in significant changes to the Copyright Act.
Among other things, the MMA creates a new entity—the Mechanical Licensing Collective—to “modernize” and administer the compulsory mechanical licensing process for interactive streaming services like Spotify and Apple Music. It is crucial that musicians, in particular independent songwriters, understand the changes, the critical deadlines, and the new processes in the MMA to protect their rights to unclaimed and future royalties.
The following are the key changes created by the MMA:
The Music Licensing Collective. The MMA changes the Section 115 compulsory licensing process for digital music providers (primarily interactive streaming services) from song-by-song licensing to blanket licensing. Prior to the MMA, song-by-song licensing required digital music providers to identify and locate, serve a notice on, and make payments to the copyright owners for every song on the provider’s service. This is a huge task, and many lawsuits were filed against digital music providers alleging noncompliance with the song-by-song licensing requirements. The MMA changes this approach to a blanket license that is administered by the Mechanical Licensing Collective. The blanket license is essentially a one-stop-shop for digital music providers. The MLC will establish and maintain a comprehensive public musical works database, match works used by digital music providers, collect royalties from digital music providers, and distribute royalties to copyright owners. The new blanket license becomes effective on January 1, 2021. Prior to then, a modified version of song-by-song licensing will continue.
On July 1, 2019, the Register of Copyrights designated an organization called “Mechanical Licensing Collective, Inc.” as the MLC. The Mechanical Licensing Collective, Inc. is a nonprofit entity with a board composed of four professional songwriters and ten music publisher representatives as well as two nonvoting board members. The four professional songwriter board members were selected by a songwriter advisory panel consisting of two professional songwriters from each of the Nashville Songwriters Association International, Songwriters of North America, Songwriters Guild of America, ASCAP, and BMI. The ten music publisher board members are representatives of BMG, Sony/ATV, Kobalt, Peermusic, ABKCO, Pulse Music Group, Warner/Chappell, Universal Music Publishing Group, Big Machine Music, and Concord Music. The two nonvoting members are a representative of the National Music Publishers’ Association and a representative of the the Nashville Songwriters Association International.
Collect it or Lose it Deadline. There are reportedly billions of dollars in unpaid mechanical royalties. In general, these unpaid royalties are due to the fact that digital music providers have been unable to identify or locate many of the copyright owners for songs they use. It is very important that musicians and songwriters determine if they are owed any of these unpaid mechanical royalties (note: these royalties are different than sound recording royalties and public performance royalties that musicians may see from interactive streaming services on distributor or performing rights organization statements). If you believe you are owed royalties, you should contact all applicable digital music providers—you do not have to wait until the new MLC starts operating. Once the MLC starts operating, you should also confirm that your musical works are registered and that all your information in the new database is accurate.
VERY IMPORTANT: If you are owed royalties and do not claim them before 2022, under the MMA you will lose your right to receive these royalties. In a nutshell, the burden is now on musicians and songwriters (not the digital music providers) to ensure that royalties are properly paid.
Pre-1972 Recordings. Historically there has been no federal copyright protection for sound recordings created prior to February 15, 1972. Rights in such pre-1972 recordings were governed by a patchwork of state laws which were the basis for dozens of lawsuits in recent years over the use of pre-1972 recordings. The MMA changes that landscape. Under the MMA, pre-1972 recordings are now protected under federal copyright law generally to the same extent as post-1972 recordings. The term of this new protection expires February 15, 2067 (or earlier depending on when a particular recording was made).
As with post-1972 recordings, pre-1972 recordings only have a narrow public performance right limited to digital audio transmissions. The MMA also extends the Section 114 non-interactive streaming compulsory license to pre-1972 recordings, and expressly preempts state law claims over the use of pre-1972 recordings.
Other Items. There are several other items in the MMA that are beyond the scope of this post. For example, the MMA makes certain changes to royalty rate-setting standards and processes, and requires SoundExchange to establish policies for the payment of Section 114 non-interactive streaming royalties to producers, mixers, and sound engineers.
Earlier this year we conducted a comprehensive presentation on the MMA. For more information about the MMA, check out our slides from that presentation.
The Music Law 101 series is provided by Coe W. Ramsey and Amanda M. Whorton of the law firm Brooks, Pierce, McLendon, Humphrey & Leonard LLP. Brooks Pierce provides sophisticated and strategic counsel to a wide variety of clients in the entertainment industry, including artists, musicians, songwriters, record producers, DJs, artist managers, radio stations, television stations, new media companies, record and publishing companies, film and television producers, advertisers, actors and reality TV talent, radio talent, and literary authors and publishers. The Music Law 101 series provides a survey introduction to the laws in the United States relevant to the music industry, is not intended as and shall in no way be construed as legal advice or a legal opinion on any specific set of facts or circumstances, and shall not be construed as creating an attorney-client relationship.