What’s going on under the blanket?

September 2019

COPYRIGHT

The Music Modernization Act (MMA) was signed into US law on 11 October 2018, it plans to do what it says on the tin, namely the overhaul of how copyright underpins the US music industry.

One particular area in need of a revamp is the law relating to mechanical tights and digital streaming. Prior to the MMA becoming law in the US, digital music providers (iTunes, Spotify and Google Play…) would file clearance notices with the relevant publisher of the music being streamed. The publishers would then receive a mechanical royalty based on a relatively complicated formula (see link below) which is set by an authorised body. Under this provision of the Copyright Act, the copyright owner is not able to refuse the grant of a mechanical license providing certain criteria is met e.g. the work has been lawfully recorded and distributed in the US and is a non-dramatic work.

The Musical Works Modernization Act section of the MMA creates a new blanket license for the digital use of musical works and, amongst other things, authorises a newly formed Mechanical Licensing Collective (MLC) designated by the Copyright Office to administer mechanical licenses, this will entail the collection and distribution of royalties (much like MCPS in the UK).  Providing the musical work meets the criteria within the Copyright Act, starting from 2021 entities will be able to purchase blanket mechanical licenses from the MLC and thereafter have the right to provide downloads and streams of the musical work.

Although we know that blanket mechanical licence will be available in 2021 and the Copyright Office will designate the collecting entity, we even know the name – MLC, however we do not know who that entity will be. 

There are seemingly two groups planning to bid: firstly the ‘establishment’ led group that is already claiming to have “overwhelming” support from the US songwriting and music publishing sectors. That group is led by the National Music Publishers Association with support from the Nashville Songwriters Association International and the Songwriters Of North America, all three of which played a proactive role in lobbying for the MMA last year. Secondly there is the American Music Licensing Collective, backed by Tunecore and Audiam founder Jeff Price, Pledge and DotBlockchain founder Benji Rogers, songwriters Stewart Copeland and Rick Carnes, and others with a music licensing or publishing background.

There is much to be worked out by the Copyright Office and the MLC, one such task is the establishment of a public database of song ownership information, I note from a law makers perspective this sounds relatively easy but I for sure would not want to be locating and inputting the data!

Furthermore, given that substantial sums of money are likely to pass through the MLC, questions such as how it will hold and distribute royalties and what to do with unclaimed royalties will need to be answered.

Billboard has also made a good point, in that Congress is asking for something in a way which is not consistent with what industry groups lobbied for. The MMA’s endorsement criteria states that the MLC must be “endorsed by, and enjoy … substantial support from musical work copyright owners that together represent the greatest percentage of the licensor market for uses of such works in covered activities, as measured over the preceding three full calendar years.” But as Billboard rightly points out, does this mean overall revenue from mechanical royalties or the sheer number of copyright owners and sons under its control. Well not to worry, the Copyright Office has an answer in that it is asking the proposed MLCs to address the interpretation and how it satisfies such an interpretation.

Whilst the Music Modernisation Act is providing a much needed overhaul of the law relating to digital streaming, its implementation is not going to be a simple mechanical process.

Samuel O’Toole (www.lawditmusic.co.uk)

https://www.copyright.gov/licensing/m200a.pdf

https://www.billboard.com/articles/business/8491460/copyright-office-begins-create-music-modernization-act-licensing-collective

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