Update: Music Modernization Act
Previously we reported on the Music Modernization Act, a bill proposed to ensure digital music services pay fair royalties to the copyright holders, and where it stands during its process to be become an enacted bill. We are happy to announce that MMA has been signed and now is law! The MMA is a dense, comprehensive 170-page bill and we plan to break down various sections of the law. This article will focus on what are the next steps in implementing this new legislation and how songwriters should best prepare themselves for the upcoming changes.
In the coming months, the most ambitious part of this new legislation involves Section 115 reform and the creation of a music licensing collective, Mechanical Licensing Collective. This music licensing collective will administer a blanket mechanical license that will protect digital service providers like Spotify, Apple Music and Tidal from copyright infringement and additionally collect song information and match these compositions to their respective master recording.
Section 115 of the MMA ends the bulk Notice of Intent process through the Copyright Office, which can prevent songwriters from being compensated or compensated in a timely manner for uses of their works. Under the Music Modernization Act, digital service providers (DSPs) will pay for the creation and maintenance of the Mechanical Licensing Collective (MLC) and corresponding database. MLC will establish blanket royalty rates that will be used to pay the composers and songwriters when used by streaming services using this database, eliminating the difficulty previously faced by streaming services to properly identify the mechanical license holder. The current method of collection has resulted in countless songwriters never receiving any mechanical royalties from streaming services. The Mechanical Licensing Collective will be comprised of ten publishers, four songwriters who own their own publishing, and three non-voting advisers, including one who will represent the digital services. The MLC will address the challenges digital services face today when attempting to match songwriters and publishers with recordings. Section 115 will also create business efficiencies for the digital services by providing a transparent and publicly accessible database housing song ownership information. Additionally, because the database would publicly identify songs that have not been matched to songwriters and/or publishers, publishers would also be able to claim the rights to songs and also get paid. These royalties would be paid to the MLC as a compulsory license, not requiring the mechanical license holder's permission; the agency is then responsible for distributing the royalties. Streaming services will still be able to negotiate other royalty rates directly with the mechanical license owner if they so chose.
As a songwriter and composer, it’s very important to organize and properly tag all existing compositions. Find all compositions you have created and track their existence on the different DSPs. There are undistributed royalties that DSPs are currently holding because they have no knowledge of the copyright holder and how to pay them. Organizing and tagging all your existing compositions will be effective, because when the MLC is organized and fully functional, songwriters will be able to properly register their works and begin to collect royalties from the MLC. Please note, it could take up to a year for the MLC to be funded and operational. Section 115 provides streaming services with confidence that, if they follow the process, they can accurately and comprehensively license all the musical works on their service without fear of billion dollar lawsuits against them.
We will continue to update you on the MMA and how it may affect you.
This update is for informational purposes only. If you have any questions, please contact the music & entertainment professionals at Troglia•Kaplan, LLC.