What is the Music Modernization Act and What would it do?

The Music Modernization Act claims to be a solution to a messy royalty system.

It's made recent headlines that the US Senate has unanimously approved the Music Modernization Act of 2018 (S.2334) which could be the biggest reform for music licensing in 20 years. The bill is now on it's way to the House, then to the desk of President Trump. With all of the content detection and copyright chaos in this post-internet music industry, a major update to the music licensing process is desperately needed; and While many of the art-related bills favor big companies and are typically terrifying for creators, this one is actually a good move into the right direction.

So what is it exactly?
​This bill pretty much updates section 115 of the U.S. Copyright Act, blending 3 key pieces of legislation:

​ The Music Modernization Act,
which removes many of the kinks from the music licensing process to make it easier for rights holders to get paid when their music is streamed online. It would work by creating a new governing agency which would issue blanket mechanical licenses to digital services, collect, and distribute royalties to rights holders. This would prevent rights holders like major labels from entering into agreements with digital services. Currently, digital music services like Spotify and Apple Music are responsible for identifying the rights holders to each individual song in their catalogs - a job that would switch to the new entity created by this bill. Digital services will have to handle the costs for this new entity as well. Mechanical royalties would be paid to songwriters whenever a physical or digital copy of their song is made, and it would be based on what a buyer and seller negotiate in an open market vs the current standard rates. The rate court system would be overhauled. Currently ASCAP (American SOciety of Composers, Authors, and Publishers) and BMI (Broadcast Music Inc.) are assigned a single judge who handles all of their rate court cases. Going forward, the bill proposes that a district judge in New York's Southern District would be randomly assigned to each case. The bill would repeal Section 114(i) of the U.S Copyright Act which prevents rate courts from considering sound recording royalty rates when setting performance royalty rates. The biggest change would be this new agency which could possibly solve the biggest issue for songwriters: getting paid accurately and on time. Part of the bill states that the agency would create a public database containing song ownership information to help songwriters identify which songs haven't been properly attributed to them.

The CLASSICS Act (Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act) for recordings dating before 1972.
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​The AMP Act (Allocation for Music Producers Act), which improves royalty payouts for engineers and producers from SoundExchange when their recordings are used on satellite and online radio. This is the first time producers have ever been recognized in copyright law and isn't really controversial because it doesn't create a new right as producers and engineers will continue to collect royalties they were previously due. But it will establish a legal procedure for them to collect their funds directly from SoundExchange instead of the artist or label. Artists can already pay their producers and engineers royalties directly by accepting "Letters of Direction," but the AMP act would formalize this process.

​Although the Music Modernization Act was majorly supported my artists, songwriters, and practically every corner of the music industry, it me a bit of opposition this summer. Sirius XM and Music Choice are cashing out on lobbying firms in an attempt to fight this act as they aren't happy with the CLASSICS Act portion of this bill. XM's CEO, Jim Meyer, criticized the bill for expanding the royalty requirements for satellite radio without also expanding the requirements for terrestrial radio. (The CLASSICS act will not change anything to require traditional radio stations to pay for the broadcast of any recordings in the U.S. post- or pew-1972.)

​If all goes well this could be a major improvement to the music industry's royalty distribution system, making it less of a headache to receive credit and payment. We'll be keeping an eye on the progress of this bill and bringing you updates.
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