By: Ryan Compton and Thomas Holguin

After many years of litigation and lobbying expenses, the battle over pre-1972 music rights has finally been ended.  On October 11, 2018, President Trump signed the Music Modernization Act (“MMA”), legislation that purports to provide additional protection for song writers and publishers, as well as to provide a clearer licensing landscape for those who use such music. The bill revamps Section 115 of the U.S. Copyright Act in three major aspects:

  1. Pre-1972 Sound Recordings

The marquee change relates to songs recorded prior to 1972.  Under the 1976 Copyright Act, Congress extended federal copyright protection to sound recordings. However, the scope of federal protection did not extend to sound recordings fixed before January 15, 1972. So far, these pre-1972 sound recordings have been protected by state copyright law under a variety of different regimes, causing chaos and the aforementioned litigation. The MMA closes this hole by providing federal copyright protection for pre-1972 sound recordings (back until 1923), including requiring royalty payment for digital audio transmission of pre-1972 sound recordings and providing time frames for when those recordings will fall into the public domain.

  1. Licensing

It has always been a challenge for music services to match song writers and publishers with sound recordings. Up until now, the Copyright Office only required music services to send or publish Notices Of Intent, which serve as public notices of intent to distribute sound recordings. In this system, song writers and artists had no guarantee of being compensated in a timely manner for uses of their works.

The Act ends the Notice Of Intent process by the creation of the Mechanical Licensing Collective (“MLC”), an agency that has the ability and authority to grant blanket licenses to music services. Henceforth, digital services will fund the MLC and, in turn, obtain a blanket mechanical license for the download and streaming of musical works. The rates for these new blanket licenses will be set by the Copyright Royalty Board on a market-based standard. The MLC will then collect and distribute royalties, as well as create and maintain a public database providing information regarding musical works and their respective owners.

While music services will now have to pay to distribute these songs, in return they were able to negotiate a longer term of negotiated royalty rates from the Copyright Royalty Board.

  1. Royalties for Music Producers

 The MMA also simplifies the payment of royalties for producers and engineers. Artists will now be able to send instructions to SoundExchange, the organization in charge of collecting and distributing digital performance royalties for sound recordings. Specifically, artists will be able to communicate, through letters of direction, as to the distribution of royalties to their producers contracted in the process of making a sound recording. SoundExhange will now distribute such portion of royalties directly to producers for their participation in the creation of sound recordings.