IP Alert: The Music Modernization Act
In a rare showing of bipartisanship in Congress last month, the Music Modernization Act (MMA) was signed into law on October 11, 2018 after being unanimously passed in both the House and the Senate. The MMA makes changes in an effort to bring U.S. copyright law up to date in an era of streaming and other digital distribution of music. The MMA is extensive and detailed. The U.S. Copyright Office has published the amendments to the Copyright Act as a result of the MMA (see https://www.copyright.gov/legislation/2018_mma_amendments.pdf).
The key components of the MMA are readily summarized.
Title I – Music Licensing and Modernization. The MMA now provides for a blanket license for digital music distributors that provide permanent downloads, limited downloads and interactive streaming. To facilitate the collection of royalties and payments to rights holders, the MMA envisions a new entity, designated by the Register of Copyrights, to act as the mechanical licensing collective to administer the new blanket licenses and distribute royalties to songwriters and publishers. The cornerstone of the blanket license concept will be a new database to be developed and maintained by the mechanical licensing collective to track the many rights holders for musical works and sound recordings.
Title II – Classics Protection and Access. The MMA closes the “Pre-1972 Loophole” which prevented copyright protection for sound recordings fixed before 1972. Artists who have been unable to share in revenue generated for pre-1972 recordings will now be paid compensation by digital services. As Title I does for songwriters, Title II establishes a fairer mechanism to determine the amount of compensation due to artists when it is the government setting the rates.
Title III – Allocation for Music Producers. Music producers may now receive compensation out of royalties collected for sound recordings used under a Section 114 statutory license. The entity charged with collection and distribution of these royalties (at present, Sound Exchange) will distribute payments to producers per a “letter of direction”.
The MMA is certainly a game-changer. Be sure to contact the IP Team at Offit Kurman if the MMA may impact you and your business.
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Mr. Armstrong concentrates his practice in business law, transactions, and litigation and regularly represents clients in contractual disputes, employment disputes, misappropriation of trade secrets, copyright infringement, post-merger and acquisition disputes, enforcement of restrictive covenants, and adversary claims in bankruptcy.