Four Key Elements of the Music Modernization Act

Four Key Elements of the Music Modernization Act

Rep. Doug Collins Recently Introduced the Music Modernization Act (H.R. 4706)

Late last month, Rep. Doug Collins (R-Ga.) introduced the Music Modernization Act (H.R. 4706) in the U.S. House of Representatives. The bill represents the largest proposed overhaul of U.S. copyright law governing music licensing in more than two decades.

“I introduced the Music Modernization Act to move music licensing law closer to where it should be. Today, the music industry is shackled to laws devised before streaming, and even basic recordings existed—laws that penalize music creators and music lovers alike. Only by ushering music licensing into the twenty-first century can we promote artistry and its appreciation long into the future, and that’s exactly what we’re doing with the Music Modernization Act,” said Rep. Collins in a press statement.

Representative Hakeen Jeffries (D- N.Y.) is the bill’s lead co-sponsor. Additional cosponsors include Chairman of the Democratic Caucus, Rep. Joseph Crowley (D-N.Y.), Reps. Diane Black (R-Tenn.), Marsha Blackburn (R-Tenn.), Steve Cohen (D-Tenn.), Ted Lieu (D-Calif.) and Pete Sessions (R-Texas). 

Proposed Reforms to Music Licensing

Many U.S. copyright laws governing music licensing pre-date the explosion of digital music. The goal of the Music Modernization Act makes it easier for digital music platforms to license songs and to increase the royalty rates paid to songwriters and publishers. Below is a brief summary of the four key provisions of the proposed legislation:

(1) Mechanical Licensing Collective: The bill amends Section 115 of the U.S. Copyright Act to eliminate the existing Notice of Intention (NOI) process through which streaming music services obtain mechanical licenses. Under the Music Modernization Act, music services would be able to obtain a blanket license for interactive streaming or digital downloads of musical works through a newly-created Mechanical Licensing Collective (MLC). The MLC collective would be an independent not-for-profit organization selected by the U.S. Copyright Office and would be funded by administrative fees paid by music streaming companies.

(2) Willing Buyer/Willing Seller: The bill would also amend Section 115 of the U.S. Copyright Act to change the way the Copyright Royalty Board determines rates by incorporating a standard that requires the court to consider free-market conditions when determining rates.

(3) “Wheel” Approach: The bill would also implement a new “wheel” approach for resolving rate setting disputes. Currently, every case must be adjudicated before each performance rights organization’s (PRO’s) respective designated consent decree judge. Under the new approach, each rate dispute lawsuit would be randomly assigned to any judge sitting in the Southern District of New York. According to Rep. Collins, “This wheel approach ensures that the judge will find the facts afresh for each rate case based on the record in that particular case, without impressions derived from prior cases.”

(4) Rate Court System Reform: The Music Modernization Act also repeals Section 114(i), which prohibits federal rate courts overseeing the consent decrees that govern the two major PROs from considering certain evidence when setting performance royalty rates for songwriters and composers. Under the proposed bill, the rate court judges would no longer be barred from considering sound recording royalty rates as a relevant benchmark when setting performance royalty rates for songwriters and composers.

Support for Music Modernization Act

The Music Modernization Act is the product of lengthy negotiations between various stakeholders in the music industry. In a joint statement, National Music Publishers’ Association (NMPA) President & CEO David Israelite, American Society of Composers, Authors, and Publishers (ASCAP) CEO Elizabeth Matthews, Broadcast Music, Inc. (BMI) President & CEO Mike O’Neill, Nashville Songwriters Association International (NSAI) President Steve Bogard and Songwriters of North America (SONA) Executive Directors Michelle Lewis and Kay Hanley wrote:

We strongly support the introduction of the Music Modernization Act, which represents months of collaboration and compromise between the songwriting and tech industries. This legislation enables digital music companies to find the owners of the music they use and reforms the rate-setting process for performing rights, ensuring that songwriters and music publishers are paid faster and more fairly than ever before. 

Not everyone has thrown their full support behind the bill, however. The National Association of Broadcasters (NAB) characterized the legislation as a positive first step in modernizing music licen ng, but raised concerns about specific aspects of the bill. “NAB has serious concerns about unrelated provisions in the bill that may unjustifiably increase costs for many music licensees, including local radio and TV broadcasters, who otherwise receive no benefit from the legislation,” the organization said in its statement. “NAB looks forward to working with the bill sponsors and impacted parties to resolve our outstanding concerns.”

The Songwriters Guild of America (SGA) was also critical of the bill. The “enactment of the proposed bill as currently constituted would — to the best of our knowledge — represent either one of the first times or the very first time in history that any Government has acted to sanction the creation of a music copyright licensing and royalty collective over which creators themselves would not share at least equally in governance,” SGA president Rick Carnes stated in a public letter to Rep. Collins. “That is a concept that we cannot support.”

What’s Next?

It is still unclear whether Congress will pass the Music Modernization Act and whether President Trump would sign it.. However, the likelihood that it becomes law is bolstered by the fact that it is a bi-partisan bill and has received the support of numerous players in the music industry. We will continue to track its process and post updates as they become available.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Brent “Giles” Davis, at 201-806-3364.