Expanded Music Modernization Act Introduced With Radical Changes To How Musicians Are Paid

An expanded Music Modernization Act was introduced in the U.S. Congress yesterday by House Judiciary Chairman Bob Goodlatte (R-VA), ranking member Jerry Nadler (D-NY) and 28 bipartisan cosponsors. While not without critics, the bill has received widespread industry support as an overdue overhaul of the nation’s antiquated music licensing laws.

The Music Modernization Act (H.R. 5447) is billed as consensus legislation that packages together several music licensing reform bills with wide-ranging bipartisan support including the CLASSICS Act, the AMP Act, elements of the previously introduced Music Modernization Act and the rate standard parity provisions from the Fair Play Fair Pay Act.

Highlights of the new Music Modernization Act include:

Closing the pre-1972 loophole by establishing federal copyright protection that will guarantee compensation for artists who recorded music before February 15, 1972;
Establishing a “willing buyer, willing seller” rate standard requiring all digital platforms to pay fair market value for music;

Pat For Producers – The new law would codifying SoundExchange’s longtime practice of honoring “Letters of Direction” from artists who want to share royalties with studio producers and other creative participants who work with them.

Creating a new process that will allow eligible participants in recordings made before the digital performance right was enacted in 1995 to share in digital royalties for those recordings

The bill also includes the language of the original Music Modernization Act, including the creation of a single licensing entity to administer mechanical rights for musical works.

What's Next

After the House Judiciary Committee’s expected approval today, the bill heads to the House floor in the weeks ahead for a vote. The Senate is likely to conduct a hearing on the legislative package in May and a markup in the Judiciary Committee soon thereafter.

Key portions of the legislation via the RIAA:

The Music Modernization Act (H.R. 4706, S. 2334) is the most significant update to music copyright law for songwriters in a generation. The bill improves both how, and how much, songwriters are paid. The bill reforms Section 115 of the U.S. Copyright Act to create a single licensing entity that administers the mechanical reproduction rights for digital uses of musical compositions – like those used in interactive streaming models offered by Apple, Spotify, Amazon, Pandora, Google and others. It also repeals Section 114(i) and, consistent with most federal litigation, utilizes random assignment of judges to decide ASCAP and BMI rate-setting cases – two provisions that will enable fairer outcomes for songwriters and composers.

The CLASSICS Act (H.R. 3301, S. 2393) addresses one of copyright law’s most glaring loopholes: the lack of payment for the streaming of recordings made before 1972. Legacy artists who recorded music before 1972 are not entitled to be paid royalties under federal copyright law when their music is played on digital radio (think Pandora and SiriusXM). Many legacy artists are no longer able to tour in order to earn a living, so this unfortunate gap in the law has an enormous effect on their livelihoods. The CLASSICS Act would treat legacy artists the same way their contemporaries are treated. Notable: Pandora supports this bill, along with the Digital Media Association (DiMA), and the NAACP recently endorsed the legislation, among others. On Valentine’s Day, Rock n Roll Hall of Famer Darlene Love and Mary Wilson of The Supremes made a compelling case before Members of Congress and staff at a CLASSICS Act event on Capitol Hill (see footage here).

The AMP Act (H.R. 881, S. 2625) improves and simplifies the payment of royalties owed to music producers, mixers and engineers by allowing royalty collection/distribution organization SoundExchange to directly pay these music creators. This formalized, streamlined process provides a consistent and permanent arrangement for studio professionals to receive their much- deserved payments for their contributions to the creation of music.

Market-Based Rate Standard For Statutory Licenses. The new bill would require a market-based rate standard for sound recordings for statutory licenses. This provision would allow the Copyright Royalty Board which sets rates for statutory services to consider the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller.