October 31, 2018
The Music Modernization Act was signed into law on October 11, 2018, and represents one of the most significant pieces of music-related legislation in a generation. IP/Media partner Todd Larson, a lifelong musician and expert on the many complexities of the MMA, provides insight on this milestone legislation.
What is the Music Modernization Act? What does it do?
The MMA is a nearly 200-page piece of legislation that consolidates three separate bills introduced over the past year into one. It revamps several portions of the Copyright Act on which digital music streamers rely, including the compulsory license for making and distributing copies of music, and provisions addressing the copyright of status of pre-1972 recordings. As a result, it is very significant for our IP/Media practice and the clients we represent.
Why is it so important? What makes it a milestone?
Well, the mere fact that significant copyright legislation was enacted at all makes it news, especially in a contentious election year. But the biggest innovation of the MMA clearly is the introduction of a blanket license for mechanical rights in interactive streams and downloads – the type of music delivery offered by Spotify, Apple and other popular music services. For the better part of a hundred years, record companies had to secure song-by-song mechanical licenses from songwriters or their music publishers to distribute music. That old and outdated system just did not work for on-demand streamers offering tens of millions of songs, and led to massive lawsuits against those services for unlicensed songs. The MMA was motivated in large part by the industry-wide desire to fix that problem. Now, a digital music provider will be able to obtain a blanket license by filing a simple notice, and will be shielded from infringement liability for songs that might have fallen through the licensing cracks under the old system.
The licensing process seems inherently adversarial, and there must have been a lot of competing interests involved in the drafting and negotiation of this bill. How did everyone agree so that the MMA could take shape as we now know it?
There were many legitimate criticisms aimed at earlier versions of the Act. But that fact that the music publishing community, the digital streaming community and the recording industry were all on board from the start gave the legislation early momentum on the Hill and allowed the stakeholders to present the Act as having unanimous support. And the legislation was amended along the way to bring other parties into the fold – ASCAP and BMI, the National Association of Broadcasters (NAB), and Blackstone, among others – who might otherwise have been able to kill the bill before passage. So I don’t think everyone is thrilled about all aspects of the MMA, or as unanimous in their support as has been portrayed, but there were enough goodies in the bill, or added during the process, to get everyone on board at the end of the day.
I stream music online, will this affect me in any way?
No, this shouldn’t affect the general population streaming music – unless it leads to higher royalty rates down the road that end up getting passed through to consumers. In the short term, the MMA’s impact will be felt more widely by the key players in the music industry. Streamers like Spotify and Amazon, who have been sued for hundreds of millions of dollars in statutory damages as a result of streaming uncleared compositions, will be shielded from infringement liability. At the same time, however, digital streamers will face a new licensing obligation for sound recordings made before 1972, which haven’t been subject to federal copyright protections in the past. And the rate-setting and evidentiary standards governing the tribunals that set royalty rates have been altered in several ways that may favor the music publishers over the digital services; the new provisions will likely be used to argue in support of higher royalty payments. We look forward to engaging in those battles in the rate courts and before the Copyright Royalty Board, two venues where our IP/Media team has successfully represented numerous licensees over the years.
What is Weil’s history in this area?
Weil pioneered this area of the law, and over several decades we’ve built an exceptional practice that represents both traditional broadcasters – local radio and television stations, broadcast television networks, and cable networks – as well digital services such as Pandora, Sirius XM, Hulu, Twitter and Facebook, among others. Under the guidance of Bruce Rich and Ben Marks, the IP/Media group has had a major influence on how music licensing law has been defined, particularly with respect to litigation before the ASCAP and BMI rate courts and the Copyright Royalty Board. Weil is the go-to firm for digital services taking such cases to trial, and the new law will reshape those proceedings in many ways.
To learn more about the Music Modernization Act, please read our recent Intellectual Property/Media Alert, “Music Licensing Overhaul Signed Into Law.”