How The Music Modernization Act Will Reshape US Copyright Law

This article originally appeared on Scarinci Hollenbeck’s blog.

On September 18, 2018, the U.S. Senate unanimously passed the Music Modernization Act of 2018. The landmark bill, which has already passed the House of Representatives, represents the largest overhaul of music licensing in more than two decades.

The federal copyright legislation enjoyed widespread support from across the music industry, including record labels, publishers, songwriters and artists. However, objections by Sirius XM had threatened passage until lawmakers were able to reach an 11th-hour compromise that allowed the bill to pass unanimously.

Mitch Glazier, the president of the Recording Industry Association of America (RIAA), said in a statement: “As the legendary band the Grateful Dead once said in an iconic pre-1972 song, ‘what a long strange trip it’s been.’ It’s been an epic odyssey, and we’re thrilled to almost be at our destination.”

“This is the most important piece of legislation in a generation,” Sen. Lamar Alexander (R-Tenn.) said on the Senate floor after the bill was approved. “It makes sure songwriters get paid and get paid fairly.” He added: “The Internet changed the music industry just like it has changed other industries… but copyright law didn’t keep up. Copyright laws were way out of date and hadn’t been modified since the days of the [mechanical player] piano roll.”

SIGNIFICANT AMENDMENTS TO U.S. COPYRIGHT LAW

Now totaling 185-pages, the final Senate version of Music Modernization Act completely overhauls Section 115 of the U.S. Copyright Act. In its final form, it reflects the combination of three significant pieces of legislation — the Music Modernization Act, the Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act (CLASSICS Act), and Allocation for Music Producers Act (AMP Act). Below are several key provisions:

  • Music Modernization Act: The bill eliminates the existing Notice of Intention (NOI) process through which streaming music services obtain mechanical licenses. Under the Music Modernization Act, music services would be able to obtain a blanket license for interactive streaming or digital downloads of musical works through a newly-created Mechanical Licensing Collective (MLC). This amends the way the Copyright Royalty Board determines rates by incorporating a standard that requires the court to consider free-market conditions when determining rates. It also ensures that future performance rates hearings between performance rights organizations and licensees rotate among all U.S. Southern District Court of New York Judges, rather than being assigned to the same two judges. It also eliminates the Digital Millennium Copyright Act carve out for “pre-existing digital services” like Sirius XM and Music Choice that allows for certain additional considerations not given to any other digital service when rates are set.
  • CLASSICS Act: As initially proposed, the bill creates a public performance right for pre-1972 recordings. However, the amended version also accomplishes full federalization, so that all works will fall under the same system. The amended legislation also creates a tiered system under which pre-1972 recordings will enter the public domain. Most notably, recordings made before 1923 will lose all copyright protection after a three-year grace period. Recordings made from 1923 to 1956 will transition over the next few decades. As under existing law, recordings from 1957 onward will continue under copyright until 2067.
  • AMP Act: The bill establishes a formal process that allows record producers, sound engineers, and other creative professionals to receive direct royalty payments from Sound Exchange when recordings are used on satellite radio and online radio services. Interestingly, the provision marks the first time that producers and engineers are mentioned in U.S. copyright law. Up until now, compensation as to these sources for producers and engineers was by agreement only.

Because the Senate version contains so many amendments, the House must now reconsider the Music Modernization Act. Assuming the bill will again pass the House, it will then head to the President for his signature. We will continue to track its process and post updates as they become available.

Ronald S. Bienstock, attorney and musician, joined Scarinci Hollenbeck after running his successful boutique entertainment, litigation and intellectual property law firm, Bienstock & Michael, LLC for 30 years. He handles all aspects of complex intellectual property and entertainment transactions including drafting, structuring, and negotiating contracts and licenses for a variety of high-profile clients, many of whom are noted musicians, recording artists, producers and well-known corporations. 

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