The Music Modernization Act is Introduced Into U.S. House, Would Create Blanket Licenses for Streaming Music Services

On Tuesday, April 10th, a bipartisan group of Representatives serving on the House Judiciary Committee introduced the Music Modernization Act (H.R. 5447) into the U.S. House of Representatives. Along with broad political support, the Music Modernization Act reportedly has wide support among both song creators and distribution platforms within the industry. The bill, which would enact the largest changes to U.S. music copyright law in 20 years if passed, also incorporates elements of other music copyright laws which have been introduced but failed to pass in recent years. A press release issued by the House Judiciary Committee notes that the Music Modernization Act would update aspects of the current music licensing system which has been in place since 1909.

About 120 pages worth of the 153-page bill is devoted to a single section of Title I of the bill, titled Blanket License for Digital Uses and Mechanical Licensing Collective. This section largely consists of amendments which the bill would make to 17 U.S.C. § 115, the statute governing the scope of exclusive rights in nondramatic musical works as well as compulsory licensing for making and distributing phonorecords. It includes new provisions on digital phonorecord delivery and record company individual download licenses as well as royalties payable and other terms for compulsory and voluntary licenses.

This section of the Music Modernization Act would also enact blanket licenses for digital music providers which qualify for compulsory licenses, giving those service providers the right to distribute digital deliveries of musical works through one or more covered activities. These covered activities include the making and distribution of server, intermediate, archival and incidental reproductions of musical works, activities in which streaming music services are engaged.

Title I also sets up a non-profit mechanical licensing collective to be formed within nine months of the law being enacted. This collective will be in charge of offering and administering blanket licenses, including the collection of usage reports from digital music providers; collecting and distributing royalties from digital music providers for covered activities; engaging in efforts to identify musical works embodied in particular sound recordings and locating the copyright owners of those works; administering a process by which copyright owners can claim ownership of musical works; and initiating and participating in proceedings before the Copyright Office and the Copyright Royalty Judges. The mechanical licensing collective is also prohibited from engaging in government lobbying activities. The board of directors for the collective would consist of ten voting members representing music publishers, four voting members who are professional songwriters as well as one non-voting member to represent each of the non-profit trade association of music publishers, the digital licensee coordinator and the non-profit trade association working on behalf of American songwriters.

Under a blanket license, a digital music provider would report and pay royalties to the mechanical licensing collective on a monthly basis. Data to be reported to the collective would include the number of digital phonorecord deliveries of a copyrighted sound recording, including the number of limited downloads and interactive streams. Failure to provide monthly usage reports or royalties would put a digital music provider in default of the blanket license. Digital music providers would be able to transition automatically to blanket licenses from compulsory licenses on the license availability date.

Title II of the Music Modernization Act is titled Compensating Legacy Artists for Their Songs, Service, and Important Contributions to Society (CLASSICS) and it repeats language and provisions included in the CLASSICS Act introduced into the House last July. This section of the act would create a new chapter in U.S. copyright law, 17 U.S.C. § 14, to be titled Unauthorized Digital Performance of Pre-1972 Sound Recordings. The proposed section would make any public performance of a sound recording fixed after January 1st, 1923, and February 15th, 1972, including those performed by digital audio services, an act of copyright infringement if the performance happens without the consent of the rights owner. Such performances would not be permissible under copyright law until after February 15th, 2067. Anyone producing digital audio transmissions of a sound recording fixed between 1923 and 1972 must pay 50 percent of the performance royalties negotiated under a license agreement with the rights owner to the collective responsible for distributing licensing receipts.

Title III of the act is titled Allocation for Music Producers (AMP), a section of the bill which closely mirrors the AMP Act introduced into the House last February. It would create an avenue through which producers, mixers or sound engineers who were part of the creative process in creating a sound recording could receive a portion of the licensing payments for the sound recording. For sound recordings fixed before November 1st, 1995, 2 percent of the licensing receipts would be collected by a non-profit collective and then distributed to producers, mixers or sound engineers for that recording.

On the day that the Music Modernization Act was introduced, the non-profit advocacy organization Content Creators Coalition (C3) issued the following statement in support of the bill’s passage:

“Today is a momentous day for musicians, songwriters, and everyone who loves music. For the first time in 20 years, there is real momentum in Congress to pass legislation that will help ensure that artists and songwriters are treated fairly while also ensuring that fans have access to the music they love…

“The Goodlatte/Nadler Music Modernization Act is the most important legislation for musicians and songwriters in 20 years. It is nothing short of a major victory for artists – for performers, songwriters, and music creators of all stripes.

“The legislation ensures fair pay for older artists, better pay for all performers when music is played on SiriusXM, and moves forward with critical reforms to help songwriters. It will make the music ecosystem stronger and fairer.

“While we have proposed ways that the legislation can be improved, and it doesn’t include some necessary pro-artist reforms – those that would empower artists to fight back against platform monopoly abuses by updating the DMCA or level the playing field with an AM/FM performance right – neither our enthusiasm in support of this legislation nor our fight for those reforms will diminish.

“For the elderly artists who desperately need the CLASSICS Act, the clock is ticking. For the working musician, whose SiriusXM royalties check doesn’t cover groceries let alone her rent, the clock is ticking. And for the struggling songwriter, who is thinking about leaving music behind because he can’t make a living, the clock is ticking.

“That is why, we look forward to the swift passage of this legislation by the House Judiciary Committee and the full House. And we look forward to working with Chairman Grassley and Ranking Member Feinstein on expediting the consideration of these issues in the Senate.”

On the morning of April 11th, the House Judiciary Committee held a hearing to markup multiple bills, including the Music Modernization Act. Most of the two-hour long hearing focused on the markup of H.R. 5447 and the bill went to a vote without any amendments while various provisions of the act were also lauded by many members of the House Judiciary.