The Music Modernization Act: Congress Poised to Pass Legislation Updating Music Copyright Royalties for the Digital Age

On April 25, 2018, the House of Representatives unanimously passed H. R. 5447, otherwise known as the “Music Modernization Act” (MMA). The bill, which now awaits Senate action, amends the Copyright Act in multiple ways, most notably by changing the way online music services pay royalties. In its current form, the MMA comprises three parts.

First, Title I of the MMA, entitled “Blanket License for Digital Uses and Mechanical Licensing Collective,” amends the portion of the Copyright Act governing nondramatic musical works and compulsory licensing for making and distributing phonorecords. See 17 U.S.C. § 115. Perhaps most importantly, the amendments in Title I would also create blanket licenses for digital music services (Spotify, Pandora, etc.) and create a new non-profit mechanical licensing collective to administer the blanket licenses. The law would allow digital music providers that qualify for compulsory licensing under the current law to transition automatically to blanket licenses from the license availability date. Under the MMA blanket license scheme, digital music services would provide monthly reports of download and streaming data to the mechanical licensing collective, and pay corresponding royalties. The licensing collective would be responsible for collecting reports and royalty fees from digital music services and distributing the royalties to rights holders. Beyond its administration of the blanket license scheme, the collective would also perform related tasks such as identifying copyright owners and participating in Copyright Office proceedings, as well as proceedings before Copyright Royalty Judges.

Title I contains a variety of other amendments to music copyright law, including implementing uniform rate setting standards to be used by the Copyright Royalty Board for all music services and updating how certain rate court cases are assigned in the Southern District of New York.

Second, Title II of the MMA, “Compensating Legacy Artists for Their Songs, Service, and Important Contributions to Society (CLASSICS)” would create a new chapter in the copyright statute, 17 U.S.C. § 14, entitled “Unauthorized Digital Performance of Pre-1972 Sound Recordings.” This new chapter would provide a public performance right for pre-1972 recordings, closing a loophole that denied compensation for digital distribution of musical performances recorded before February 15, 1972. Beyond closing this loophole, Title II provides that 50 percent of all royalties resulting from the digital distribution of pre-1972 recordings must be paid to a non-profit collective responsible for distributing compulsory licensing receipts.

Third, Title III, “Allocation for Music Producers (AMP),” which (like Title II) is based on previously-introduced legislation, would compensate producers, mixers, and sound engineers with a share of the licensing payments for sound recordings they helped to create. Specifically, Title III would empower the Copyright Royalty Judges to designate yet another non-profit collective responsible for distributing to producers, mixers, and sound engineers two percent of licensing receipts for sound recordings fixed before November 1, 1995. Title III defines eligible producers, mixers, and sound engineers as those who were “part of the creative process that created a sound recording” that is subject to a licensing fee.

The rapid and widespread adoption of digital downloads and music streaming have dramatically reshaped the landscape of music copyright, and the MMA represents Congress’ attempt to bring federal music copyright law into the 21st century. If passed by the Senate, the MMA would be the most substantial revision of music copyright law in decades.

The full text of the Music Modernization Act as passed by the House on April 25, 2018 may be found on Congress.gov: https://www.congress.gov/bill/115th-congress/house-bill/5447/text.