Music Modernization Act streamlines digital reproduction right license regime

The Recording Industry Association of America Tuesday (Sept. 18) praised Senate passage of the Music Modernization Act, a bill that creates a framework for better compensation of artists for digital plays of their music and makes it easier for music rights organizations to collect those fees from distributors of streamed music as they do from traditional plays on TV and radio.

The bill passed the House in April, and the Senate Judiciary Committee in June, but must be revoted due to changes to the Senate version (see below).

The legislation has been billed as the most significant change in music licensing laws in decades and has drawn praise from a chorus of stakeholders.

It incorporates a trio of bills. The base Modernization Act creates a single licensing entity for reproduction rights for digital uses, like those of Spotify, Pandora, Google, Apple and Amazon. It also randomly assigns judges to preside over ASCAP and BMI rate-setting cases, according to the Recording Industry Association of America (RIAA).

The package also includes The CLASSICS (Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society) Act, which compensates artists for pre-1972 recordings that had previously not been eligible for digital royalties.

Then there was the AMP (Allocation for Music Producer) Act, which allows for direct payment of royalties to music producers and engineers.

According to a source on background, there are a number of changes to the Senate version, but nothing that should hold up passage in the House since stakeholders have been closely monitoring the process.

Those include 1) changes to the notification obligation of the Department of Justice to confer with Congress about terminating consent decrees; 2) expansion of the pre-emption of state laws covering pre-72 recordings to cover reproduction and distribution in addition to public performance by digital audio transmission; 3) a new rolling schedule for pre-1972 recordings to enter the public domain (the House bill had them all moving on that date, while the new bill has 2046 for music published in 1923-46, 2066 at the latest for music published in 1947-56, and post-1956 by Feb. 15, 2067; 4) changes to payments to artists under direct licenses for pre-1972 recordings of non-interactive streaming services—like Pandora; 5) limits to remedies related to fair use and the first sale doctrine have been expanded to any claims, rather than simply unauthorized performances; 6) exclusions for noncommercial uses of pre-1972 recordings; and 7) requiring labels to pay 50% of the royalties they collect from SiriusXM under existing pre-72 settlement agreements to SoundExchange.

“As legendary band the Grateful Dead once said in an iconic pre-1972 song, ‘what a long strange trip it’s been,'" said Mitch Glazier, RIAA president. "It’s been an epic odyssey, and we’re thrilled to almost be at our destination. 

"For the modern U.S. Senate to unanimously pass a 185-page bill is a Herculean feat, only achievable because of the grit, determination and mobilization of thousands of music creators across the nation. The result is a bill that moves us toward a modern music licensing landscape better founded on fair market rates and fair pay for all. At long last, a brighter tomorrow for both past and future generations of music creators is nearly upon us. We are indebted to the leadership of Senators Hatch, Grassley, Feinstein, Alexander, Coons, Kennedy and Whitehouse for helping get us there.” 

Hercules got a workout Tuesday.

“Today’s unanimous passage of the Music Modernization Act in the Senate represents a Herculean industry-wide effort to promote and celebrate songwriters and ensure their right to a sustainable livelihood," said ASCAP CEO Elizabeth Mathews. "We applaud Senators Hatch, Alexander, Grassley, Feinstein, Whitehouse, Coons and the entire Senate for recognizing the value music has in both society and our hearts.”

"After passing unanimously in the House of Representatives earlier this year, the musicFIRST Coalition is thrilled to see the Senate follow suit with unanimous passage of the Orrin G. Hatch Music Modernization Act," said musicFIRST Coalition executive director Chris Israel. "The [legislation] will bring music licensing laws into the 21st Century and cement the framework for a just relationship between music creators and the technology companies that benefit from their work, it is also important to note the impact it will have on legacy artists."

The Content Creators Coalition (c3) and MusicAnswers applauded the move and said they expected swift House passage—the bill has changed since the House passed its version, so must be re-voted. 

“Our organizations have been pleased to join in the efforts of the music creator community in support of this bill," they said. "We also are gratified that our two organizations, in collaboration and independent of other groups, were able to make meaningful contributions to the final legislation, including comprehensive and publicly available audits of the MMA’s new Mechanical Licensing Collective and ensuring that the Collective uses best practices to find the owners of unclaimed royalties. We appreciate the receptivity of key legislators and their staffs to these fundamental notions of transparency and accountability."

“The MMA is a groundbreaking piece of legislation that will streamline royalty payments and bring some much-needed transparency to the system," said Chris Harrison, CEO of the Digital Media Association.

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