The Orrin G. Hatch-Bob Goodlatte Music Modernization Act or Music Modernization Act (hereinafter referred to as “MMA”)[1] is an American legislation signed into law by president Donald Trump on 11th of October 2018. Its aim regards the modernization of the copyright system pertaining to music and audio recordings, a modernization much needed due to the appearance of new forms of technology, such as digital streaming. It is considered “the most significant piece of copyright legislation in decades[2] as it updates the law to the needs of the music marketplace.

The law is organized into three main tittles: Musical Works Modernization Act, Classics Protection and Access Act and Allocation for Music Producers Act[3].

  1. Musical Works Modernization Act (Title 1)

The most important change brought by this Chapter is the replacing of the existing song-by-song compulsory licensing structure (applied in the making and the distribution of musical records) with a blanket licensing system that allows digital music providers to make and distribute digital phonorecord deliveries, such as permanent downloads or interactive streams.

One of the most important aspects introduced here is the establishment of a “mechanical licensing collective” (hereinafter referred to as “MLC”) in charge of the administration of the blanket license , as well as of a “digital licensee coordinator” (hereinafter referred to as “DLC”) in charge of coordinating the activities of the licensees and designating a representative to serve as a non-voting member on the board of the MLC.

So, how does it work? Well, the MLC is the body that:

  • Receives the notices and reports from digital music providers;
  • Collects and distributes royalties;
  • Identifies musical works and their owners for payment.

Hence, MLC will establish, as well as maintain, a publicly accessible database containing all necessary information pertaining to musical works. If MLC cannot match the musical work to its copyright owner/s, then it has the authority to distribute the unclaimed royalties to copyright owners identified in its records, basing its decision on the relative market shares of these copyright owners reflected in reports of usage provided by digital music providers for the periods in question.

Moreover, both MLC and DLC are authorized to participate in proceedings before the Copyright Royalty Judges in order to establish the administrative assessment. The designated MCL is Mechanical Licensing Collective Inc., while the designated DLC is Digital Licensee Coordinator Inc.

The most notable difference is that there will no longer be a system for filing notices of intention to obtain a compulsory license for making and distributing phonorecords of non-dramatic musical works (hereinafter referred to as “NOIs”) with the Copyright Office on a song-by-song basis for digital phonorecord delivery of musical work. This system remains however in place for non-digital uses, such as CDs or vinyl. For the phonorecord delivery, users will be able to obtain a blanket license by submitting a notice of license to the MLC. This blanket license covers all musical works available for compulsory licensing. It allows songwriters to be compensated in a timely manner for uses of their works. It is important to mention that this applies to the communication between licensees and the Copyright Office, meaning that licensees can still serve NOIs directly on the copyright owners.

This major chance streamlines the music-licensing process, making it easier for right holders to get paid when their music is streamed online.

  1. Classics Protection and Access Act

This title brings pre-1972 sound recordings into the federal copyright system, at least partially, extending remedies for copyright infringement to owners of sound recordings fixed before 15th of February 1972 when these recordings are used without authorization.

These remedies are available for 95 years after the year of first publication of the recording, being however subject to certain additional periods.

Therefore, this protection is highly dependable on the date the sound recording was first published, as follows:

  • For recordings first published before 1923, this additional period shall end on 31st of December 2021 (e.g. Cuddle Up A Little Closer, Lovey Mine - m. Karl Hoschna, w. Otto Harbach, first published in 1908);
  • For recordings first published in the period of 1923-1946, this additional period is of 5 years after the general 95-year term (e.g. You Are My Sunshine – Bing Crosby, first published in 1941);
  • For recordings first published in the period of 1947-1956, this additional period is of 15 years after the general 95-year term (e.g. Blue Tango - Leroy Anderson, first published in 1952);
  • For recordings first published in the period of 1957-15th of February 1972, this additional period shall end on 15th of February 2067(e.g. Respect – Aretha Franklin, first published in 1967).

There are, however, limitations that apply to this title. Among these limitations, we can mention: fair use, libraries and archives, first sale, certain public performance, safe harbor provisions for online service providers.

The licensing regime stipulated in the MMA for pre-1972 sound recordings is similar to the one applicable for post-1972 sound recording. In order for rights owners to be eligible to recover statutory damages for unauthorized use of their pre-1972 sound recordings, they should file schedules listing their recordings with the Office. Afterwards, they are indexed into the public records managed by the Office. These remedies are available only in cases of unauthorized uses that occurred more than 90 days after the schedule has been indexed.

  1. Allocations for Music Producers

This title entails the possibility of mixers, music producers and sound engineers to receive royalties collected for the uses of sound recordings. Hence, the designated collective (hereinafter referred to as “SoundExchange”) shall receive instructions on how to distribute royalties to the parties mentioned above from recording artists who have agreements to distribute a portion of the royalties they receive. These instructions are known as “letters of direction”. Upon acceptance of such letter from a recording artist, SoundExchance will distribute a portion of royalties the artist receives, directly to the producers who were involved in the making process of the recording. Moreover, there is a stipulation applicable to sound recording fixed prior to 1st of November 1995 (subject to certain requirements) which states that producers shall be allocated 2% of royalties absent a letter of direction.

One of the most accurate examples of the high impact that this new legislation has in practice is given by Meredith Rose from Public Knowledge in her interview with The Verge: “Prior to the Music Modernization Act getting passed, you had really two options if you wanted to start a music service. You could do what I understand Amazon did, which is go and clear every song manually before you put it online, which is why Amazon Music for a very long time had a very spotty catalog. Or you could do what Spotify did, which is just roll up, set aside a slush fund and say, “We’re just going to get sued.” And just go forward and do it anyway, and end up with a deeper catalog. Those were your options: you either had to be extremely careful in your steps to get to market, or you could just move fast, break things, and get sued. And hopefully this will ease that ability.

It also does a thing which you couldn’t really do with these kinds of licenses before: obtain a blanket license. We joke that it’s “I’ll take one of your finest everything.” You can license the whole corpus of musical compositions, and before you [didn’t have] an entity that was allowed to license everything.

So, if Spotify was starting today, they’d be able to jump in and say, “Okay, I want all of it,” write one check, and then just kind of go about their business.”[4]

Attorney at law Daniela Manolea

 

[1] H.R.5447 - Orrin G. Hatch-Bob Goodlatte Music Modernization, adopted in the 115th Congress (2017-2018)

[2] https://www.copyright.gov/music-modernization/ , accessed on 14.09.2020

[3] H.R.5447 - Orrin G. Hatch-Bob Goodlatte Music Modernization, adopted in the 115th Congress (2017-2018)

[4] Full interview on https://www.theverge.com/2018/10/2/17927852/music-modernization-act-streaming-monetization-meredith-rose-vergecast accessed on 14.09.2020