The Music Modernization Act: A Monumental Transformation of Federal Copyright Protection in Digital Music

written by Emily M. Welch

 

With the monumental shift from physical to digital music consumption in recent years, an update on legislation addressing digital developments in music has become a necessity. On October 11, 2018, President Donald J. Trump signed into law the Music Modernization act, which is viewed as the most sweeping reform to copyright law in decades. The Music Modernization act, which was supported by a majority of songwriters, publishers, streaming services and politicians across the spectrum, revamps Section 115 of the U.S. Copyright Act in an attempt to bring copyright up to speed for the streaming era.

Background

Prior to the passage of the act, there were only two real options for starting a music service: clear every song manually before putting it online or set aside a fund and expect to get sued. Licensing was obtained under a “piecemeal” approach, which required music streaming services to obtain licensing for digital music on a per-work, per-song basis. However, even though licensing was a requirement, digital music providers only had to file bulk notices of intent with the Copyright Office for the rights-clearance process. The Copyright Office only required authorship to be identified “if known”. In a time where proper attribution was virtually impossible, many songwriters were not getting the royalty payments that they deserved. The process was time consuming and costly, and setting money aside in anticipation of litigation was seemingly the better approach.

When copyright protection was extended to song recordings, Congress chose not to include pre-1972 works in the coverage. Owners of pre-1972 musical recordings and users of those recordings were in constant dispute over whether copyrights existed in those works, and if so, what level of compensation was due.

Act’s Main Pieces of Legislation

The Music Modernization act brings two major changes to the preexisting copyright laws that fixes the issues above: it changes the procedure by which millions of songs are made available for streaming services and compensates artists for digitally downloaded pre-1972 master recordings. The act provides benefits for songwriters, by enhancing the royalty process, and also music streaming services, by providing confidence that, if they follow the process, they can accurately license all the musical works on their service without fear of billion dollar lawsuits against them.

In an effort to improve the licensing process, the Music Modernization act created a mechanical licensing agency that will be able to issue licenses to digital services and collect and distribute royalties to songwriters and publishers. The agency, called the Mechanical Licensing Collective (“MLC”), will be able to identify rights holders and create a public database of musical works and sound recordings so that songwriters and publishers can be matched to their songs and timely payments can be made. The MLC can also provide blanket licenses to digital music service providers, which would allow them to use any song and immunizes them from infringement lawsuits.

For the first time ever, the act provides that songwriters and artists will receive royalties on songs recorded before 1972. The protection for pre-1972 songs now has a term limit of 95 years from the date of publication, with an additional period tacked on the end based on a range that depends on how recently the song was published. The act also fully federalizes these song recordings, preempting state laws and incorporating all the normal limitations to copyright law, like fair use, that apply to any other copyrighted work.

Opposition to the Act

While the act gained unanimous support in Congress, it has not proceeded without opposition and criticism. Jim Meyer, Chief Executive Officer of SiriusXM, expressed his opposition due to concerns regarding the additional financial burden on digital music providers. The satellite radio provider would be forced to pay for pre-1972 songs, while its “terrestrial radio” rivals would not be held to the same requirements. Considering that SiriusXM and its AM/FM competitors are in the same market, Meyer argued that it is bad public policy to hold them to different licensing requirements.

Looking Forward

While the Copyright Office is currently working on a number of regulations and public outreach to solicit information to aid in the formation of the Mechanical Licensing Collective, the full effects of the law remain to be unseen. The future of digital music protection under the Music Modernization Act will be dictated by a formation of some of copyright’s most prominent experts and technological masterminds. Only time will tell the impact of copyright’s most recent revolution.


Sources

Amy Goldsmith, Musically Inclined: The Music Modernization Act of 2018, IPWatchdog (Oct 30, 2018).

Anthony S. Volpe & Savannah G. Merceus, The Tune Is Changing in the Digital Music Landscape, LegalTech News (Oct. 30, 2018).

Bill Donahue, Here Are The Final Tweaks To The Big Copyright Bill, Law360 (Sept. 28, 2018).

Bill Donahue, Trump Signs Music Modernization Act Into Law, Law360 (Oct 11, 2018).

Dani Deahl, The Music Modernization Act has been signed into law, The Verge (Oct 11, 2018).

Ed Christman, President Trump Signs Music Moderinzation Act Into Law With Kid Rock, Sam Moore As Witnesses, Billboard (Oct. 11 2018).

Jim Meyer, SiriusXM CEO Jim Meyer Explains the Trouble With The Music Modernization Act, Billboard, (Aug. 23, 2018).

Jordan Bromley, The Music Modernization Act: What Is It & Why Does It Matter?, Billboard (Feb. 23, 2018).

Nilay Patel, How the Music Modernization Act will help artists get paid more from streaming, The Verge (Oct 2, 2018).

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