The Music Modernization Act – Is It Really Going to Work?
“Songs reframe the world. They show us reality as it is and as it could be,” said Georgia Representative Doug Collins as he introduced the Music Modernization Act as a bipartisan bill in December 2017.[1] While songs may reframe the world, Collins wants to reframe music licensing law in a way that accurately addresses today’s music streaming culture.[2] Collins has gained substantial support for the Music Modernization Act, including public support from major music industry and technology industry players, such as ASCAP, BMI, SoundExchange, SAG-AFTRA, and the Internet Association, a trade association that represents Google, Facebook, Pandora, and Spotify.[3]
Currently, the Copyright Act governs music licensing under Section 115.[4] Since the Copyright Act has regulated musical compositions since 1909, it is not equipped to handle a world of music licensing and digital service providers, such as Spotify and Apple Music, as these technological advancements simply did not exist at the time the bill was drafted and enacted. Today, songwriters, publishers, and digital service providers are struggling with molding compliance with legislation of the existing Copyright Act to the world of streaming. Most importantly, songwriters struggle to get paid on time from digital service providers because digital service providers either: (a) cannot identify specific songwriters of unknown works and do not want to deal with litigation if they identify the wrong songwriters, or (b) are taking advantage of the Notice of Intention requirement of the Copyright Act and delaying payment to songwriters.[5] Furthermore, when songwriters do actually get paid by digital service providers, they are not paid at a competitive rate.[6] The Music Modernization Act is here to fix that.
The goal of the Music Modernization Act is two-fold: (1) to create a simplified licensing entity that makes it easier for digital music companies to obtain a license to play songs, and (2) to ensure that songwriters get paid when their music is played.[7] To do this, the bill proposes four key changes.[8] First, the bill amends Section 115 of the Copyright Act to create a Mechanical Licensing Collective, a not-for-profit organization spearheaded by the Copyright Office and digital service providers.[9]This eliminates the Notice of Intention process through which music streaming services obtain mechanical licenses, and replaces it with an option for music streaming services to obtain a blanket license for interactive streaming or digital downloads of musical works, while also providing songwriters and publishers an audit right.[10] Next, the bill proposes a Willing Buyer/Willing Seller Standard to be implemented, which allows a court to consider free-market conditions when determining rates.[11] From a litigation perspective, the Music Modernization Act would also ensure that performance rights organizations, such as ASCAP and BMI, are randomly assigned district judges in the Southern District of New York, rather than dealing with the same designated consent decree judge every time they come to court.[12] Lastly, the Music Modernization Act proposes to repeal Section 114(i) of the Copyright Act, functionally allowing songwriters to present evidence about the music ecosystem to judges who are setting rates for public performances of their musical works.[13]This will repeal the current system, where rate court judges are barred from considering sound recording royalty rates as a benchmark when setting performance royalty rates.[14]
While the Music Modernization Act is a sweeping piece of legislation that aims to address music licensing in the modern world, it doesn’t come without drawbacks. Even though the Mechanical Licensing Collective component may seem like an efficient and ideal way to compile all music and its owners online, it is important to note that if songwriters fail to find and claim their royalties from the proposed online database of millions of tracks, those royalties will go to giant music publishers based on their respective market shares.[15] Critics propose that this money should be distributed in an equitable manner among independent songwriters and publishers, rather than back into these music publishing companies.[16] Additionally, critics argue that the Music Modernization Act has failed to adequately consider the economic means of independent and unaffiliated songwriters when addressing an audit of publishers – mainly, independent entities cannot necessarily afford to do so, which, once again, leaves music publishers unchecked by the “little guy.”[17]
Thus, the question remains, if the Music Modernization Act passes, will it actually benefit songwriters in the way that the music industry hopes? Will the Act finally be legislation that is equipped to handle the legal challenges of a digital age? Just as songs reframe the world, one can only hope that the Music Modernization Act reframes music licensing in the United States today.
Footnotes
