How the Music Modernization Act Will Change the Music Industry

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H.R. 5547, the Music Modernization Act (MMA) is a bill that recently was passed to bring copyright regulation into the digital music streaming industry.

The music industry is experiencing a shift as more people use the digital marketplace to listen to music. As creators and producers continue to push for change, copyright regulation is slow to follow. Due to this lag, the laws in place don’t support the current digital marketplace or music streaming. That means everyone involved from the artist to the label to the services aren’t being rewarded for their work. As more people in the industry push against the outdated laws, newer ones are slowly coming to the forefront. H.R. 5547, also known as the Music Modernization Act (MMA) is a bill that recently was passed to bring copyright regulation into the digital music streaming industry.

The MMA will affect major areas in music licensing for artists and labels. It will hold companies accountable that do not pay copyright owners and songwriters. Companies like Spotify, Google Play and Apple Music file huge amounts Notice of Intentions (NOIs) with the Copyright Office allowing them to gain licenses for music that have missing information. According to SoundExchange, there are over 60 million NOIs on file at the Copyright Office. The handling of large numbers of NOIs takes millions of dollars away from musicians, songwriters and producers.

Processing for NOIs will change so that creators receive acknowledgment and royalties from their contributions while reducing the copyright liability for brands that use music. The bill will establish a subcommittee called Mechanical Licensing Collective (MLC) to properly pay songwriters for mechanical royalties. The MLC provides missing information needed for songs and would give digital services access to use licensed songs. Since the MLC will have access to most, if not all the necessary information for songs and their copyright owners, payments from mechanical royalties will be more accurate and timely then before.

While producers, mixers and engineers put a lot of energy into the created song, they receive little credit or payments from it. Under the MLC, artists and owners of copyrighted recordings can file “letters of direction” to SoundExchange to be able to receive direct payments. This will give copyright owners greater negotiating power with music streaming services and the marketplace.

The MMA will also allow songwriters to get fair-market royalty rates on the Copyright Royalty Board (CRB). By doing so, the CRB will be able to set royalty rates that reflect market value instead of decades-old values. The new bill will increase the performance royalty amount that is set by the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI). The MMA bill would rotate judges between ASCAP and BMI to move to the “willing buyer/willing seller” model to reflect the marketplace value. This would stabilize digital streaming services that work with and pay the copyright owners and artists in the marketplace.

If passed into law, the MMA would also affect sound recordings before 1972. Legacy artists and copyright owners of recordings before 1972 will have copyright protection over the digital transmission of that music. Digital music services like Pandora and Sirius XM will have to pay royalties to those copyright owners.

The MMA broadly supports much of the needed changes for the music industry. Establishing a platform for songwriters, creating better-negotiated royalty deals with artists and making the music industry more efficient will lead to a more stabilized music marketplace. By giving greater power to songwriters, the MMA will help boost the burgeoning digital music streaming marketplace.

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