Smack explains the MMA.




11/5/2019 5:40 PM

The Music Modernization Act is inarguably the most important piece of music licensing legislation in over a century. With Spotify and Apple swiftly taking over the digital streaming market, the bill effectively aims to create a system to facilitate the payment of mechanical royalties, those paid to the songwriter, from streaming services to the copyright holder.

President Trump was able to experience one of the only bipartisan pleasing moments of his tenure when he signed the bill into law on October 11, 2018 after it received a unanimous 415-0 pass in congress. Among Trump’s songwriter advocates in attendance were Kid Rock, Mike Love, Sam of Sam & Dave, and Christian band MercyMe.

Since the signing, the MMA has been the source of several controversies among songwriters and musicians. The primary talking point is how it creates a third party organization that fundamentally immunizes streaming services from copyright lawsuits and eradicates any royalty disputes preceding Jan 1, 2018.

Because the MMA, though signed into law last year, doesn’t go into full effect until January 2021, the people at Smack find this story important enough to ensure that everyone involved in music knows the process as to what happens to when an artist’s songs hit Spotify.

What Exactly Is the Music Modernization Act?

The MMA is fundamentally 3 consolidated bills that aims to modernize licensing issues for audio recordings for new technology like digital streaming. They are:

I.  Music Modernization Act - This essentially finds a way to make sure royalties are getting paid to artists by streaming platforms. Cue the MLC or Mechanical Licensing Collective; a third party non profit government agency that plans to create a database to designate pieces of music available on any paid streaming service and connect them to the owners of their mechanical (composition and lyrics) license. This has been a difficulty for streaming platforms like Spotify since their beginnings in 2011.

II. CLASSICS Act - In the US, prior to the MMA, no recording before 1972 was covered under Federal copyright law and thus left to individual states to decide, making it difficult to enforce royalty payments. The CLASSICS Act establishes any recording before 1972 covered by copyright until early 2067. Recordings prior to 1923 will become public domain in 2023.

III. Allocation for Music Producers Act - Now as part of the MMA for the first time ever, producers, mixers, and recording engineers will receive royalty payments when any song they worked on is played over satellite and online radio.

It’s the Biggest Change to Music Licensing in Over a Century.

In 1909, President Taft’s government thought there to be a monopoly of publishing companies over piano rolls. In response, congress passed a law saying these companies must license their copyrights at a government set price.

That rate of two cents stayed consistent all the way until the Copyright Act of 1976 when Congress decided the newly dubbed mechanical royalty rates for music would be set every five years. Over 40 years passed without any changes to legislation, until congress passed the MMA.

The Bill has Received a Fairly Strong Response from Music License Owners...

If successful, the MMA does solve some considerable problems for songwriters. Previous unmatched royalties held by streaming companies called "blackbox money" will be designated and given back to their rightful owners through the MLC.

By updating regulations from 1909 and a consent decree from 1941, the MLC could also allow for songwriters to negotiate bigger payouts from Spotify, now that the company’s blanket rates are under federal government control.

...but it’s still not without its detractors

As soon as the bill was introduced in late 2017, Wixen Music Publishing who represents the rights to Tom Petty and Missy Elliot filed a suit for 1.6 billion dollars in damages for infractions before 2018, a date that renders all infringement ineffective by the MMA. It was ultimately settled out of court.

With the support of the streaming giants to finance the building of the MLC database, the MMA basically protects them from infringement damages by publishing companies and songwriters. Music services will be given the licenses to all compositions in the database without having to ensure copyright holders are paid earned royalties. The MLC will overtake all matters and award money through a court based on a Judge's discretion.

Regardless of geographic location, any being that controls a composition in the US or the rest of the world must register with the MLC in order to receive royalties. If not claimed after three years, these accrued royalties can now be taken and given to others that may not represent the copyright. Once these have been given away the MMA provides no mechanism to recover it

If a deal is struck between an entity that represents the licensee and a service, the MLC can play no role. However, if the service is considered significant in its monthly income, they must pay an “administrative assessment” fee to the MLC.

The MLC will receive all information as to what recordings are streamed in order to collect the money for mechanicals from services. This includes what recordings are being used, the amount of times they’re streamed, the contact information of the copyright holder, and the amount of revenue generated from royalties.  It’s seen as sketchy to some industry experts who claim members of the MLC can sell this information or try to create deals with copyright holders.

what’s next?

With the MLC officially operational in 2021, this is a story that effects people in creative industries that will continue to unfold.

The radically shifting disruptive tech world continues to bring new revelations regarding the sharing of intellectual property. Just last week the CASE Act was passed in Congress creating a copyright claims board to handle infringement cases which may include the posting of copyrighted internet memes.

With greater understanding of the value of streaming and licenses, more and more companies are buying up music rights with the Estate of Michael Jackson purchasing the entirety of Sly and the Family Stone’s high valued catalogue reported yesterday afternoon.

Eminem’s publishing company Eight Mile Style is currently suing Spotify, saying they allowed his music to be streamed without payment and claims his recordings are listed with no known owner. The suit also mentions the unconstitutionality of the MMA in that it “provides no proper compensation for the work that was taken from the publisher against the Takings Clause of the Fifth  Amendment.” The suit also correctly confirms that although mechanical rights for songs in the US are covered by the MMA, this only applies if the right paperwork has been filed with the US Copyright Office.

Two weeks ago the Trump Administration told a federal court that it won’t yet intervene to defend the licensing law and prefers to wait until a motion in the litigation has been made asking the judge to rule on the law.