Locke Lord QuickStudy: Music Modernization Act

On October 11, 2018, the Music Modernization Act (“MMA”) was signed into law. A product of unanimous, bipartisan support in both houses, the MMA, as its name suggests, reflects the efforts of Congress to modernize the legal licensing of music. Specifically, the MMA addresses Congress’s concern that prior copyright legislation has failed to respond to technological innovation in the music market. The MMA is divided into three major titles, each of which aims to fill a gap in existing copyright law.

Title I, Music Licensing Modernization, modifies the existing license for reproduction and distribution of musical works in phonorecords, which was previously attainable only on a song-by-song basis, by creating a new blanket license for digital music providers to engage in certain “covered activities.” Under Section 103(d)(3)(A), the Register of Copyrights will designate an entity as the mechanical licensing collective (“MLC”) to administer the blanket license and then distribute the related royalties. A digital music provider wishing to obtain a blanket license must file a notice of license with the MLC specifying the covered activities in which it seeks to engage. If the MLC does not reject the notice within 30 calendar days, then the license becomes effective. A provider whose application for a license is rejected will have an opportunity to cure any rejection based on a defect in its notice. A provider may seek further review in a federal district court if it believes its notice of license was improperly rejected.

Aside from issuing blanket licenses and distributing royalty payments, perhaps the most important task assigned to the MLC is the establishment of a public database of musical works and sound recordings. It is anticipated that this database will be the most comprehensive in the music industry.

Title II, Classics Protection and Access, extends a measure of federal copyright protection to sound recordings fixed before February 15, 1972. For the copyright owners of these pre-1972 sound recordings, federal remedies for unauthorized use are available for 95 years after first publication of the recording. There is also an additional “transition period” of copyright protection, which varies in relation to the year in which the sound recording was first published. Title II also devises a process for lawfully engaging in noncommercial uses of pre-1972 sound recordings that are not being commercially exploited. In addition, Title II applies certain existing limitations on both exclusive rights and liability to uses of pre-1972 sound recordings, including the fair use defense, the first sale doctrine, and the safe harbor provisions for online service providers.

Title III, Allocation for Music Producers, permits music producers to receive a share of the royalties collected when their sound recordings are used on online and satellite radio services. A nonprofit collective is to be designated by the Copyright Royalty Judges as the entity responsible for collecting and distributing the royalties. This collective will distribute a portion of the royalties to music producers (as well as mixers and sound engineers) in response to a “letter of direction.” The letter of direction is sent to the collective by an “artist payee,” defined broadly as anyone other than music producers who has a right to the royalties from that particular sound recording. In this way, Title III strives to compensate the contributors to sound recordings who have historically been undervalued and underpaid.

The Trademark, Copyright & Advertising Group at Locke Lord LLP is experienced at helping companies and clients with questions regarding the MMA.