Home » Copyright/Intellectual Property » Music Modernization Act Proposes Single Solution to Mechanical Licensing Problem

Music Modernization Act Proposes Single Solution to Mechanical Licensing Problem

31 December 2017

From Copyright and Technology:

The music industry’s licensing problems just got another proposed governmental solution, with last week’s introduction in Congress of the Music Modernization Act (MMA). The MMA is a bipartisan bill that would provide a blanket mechanical license and set up a collecting society to manage payments to composers and publishers. It aims to solve a particular set of large and growing problems around mechanical licensing for streaming services like Spotify and Apple Music, both of which have been sued over allegedly unpaid mechanical royalties.

The problem the MMA aims to solve has to do with the current state of mechanical licenses and streaming music services. Whenever a user plays a track on a streaming service, the service has to determine which composition underlies the sound recording and pay mechanical (reproduction) royalties to songwriters and music publishers for that composition. Because record labels typically don’t supply information about underlying compositions, music services typically engage outside agencies — such as the Harry Fox Agency (HFA) and Music Reports Inc. (MRI) — to match recordings to compositions and manage royalty payments.

The recording-composition matching process is ultimately the streaming music services’ responsibility, and it’s prone to errors arising from bad or incomplete data.

. . . .

It also doesn’t help that there is no blanket license for mechanicals. For each sound recording that a music service wants to play, it must send a form called a Notice of Intention (NOI) to the composition rights holders, or if they aren’t known, to the U.S. Copyright Office. They must also account for mechanical royalties from each of billions of transactions every year. The result is a massive administrative headache and potential legal liability for the music services. (In contrast, broadcast radio stations get blanket licenses that allow them to play whatever music they want, secure in the knowledge that they won’t get sued and that performance rights collecting societies like ASCAP, BMI, and SESAC will do all the paperwork and pass payments on to rights holders.)

In its current form, the MMA provides a blanket license for mechanicals, meaning that streaming services would no longer have to identify rights holders or send NOIs. It also calls for a mechanical licensing agency to be established, to receive payments from music services according to transaction volume, match recordings to compositions, and disburse royalties to songwriters and music publishers.

Link to the rest at Copyright and Technology

Copyright/Intellectual Property

10 Comments to “Music Modernization Act Proposes Single Solution to Mechanical Licensing Problem”

  1. And people wonder why I run on about the importance of complete and accurate metadata for everything they produce (music or books).

    Metadata inside the container (e.g., ebook or mp3 file) is just as important as metadata that accompanies the file.

    • Agreed, Karen.

    • Karen– I am not sure I follow you.

      I agree that complete and accurate metadata is important and embedding it in the container is a straightforward answer, but I see two problems. The first is not much of an obstacle: a standard format that everyone understands. That has been close to solved for years and similar problems have been solved many times over.

      The second is more difficult: assurance that the metadata is accurate and complete. DRM is not hard to circumvent because any hacker with the resources and desire can decipher and remove or alter anything embedded in a file in the comfort of his parent’s basement, then broadcast it to anyone who will accept it, all on a teenager’s allowance. Lord only knows how much easier quantum computing will make that kind of hacking.

      My personal preference is for something block-chain-like that enters each production into a distributed ledger, although reports that Bitcoin takes as much energy as Slovenia raises a cloud over widespread block-chain technology, and quantum computing brings its security into question.

      I tend to agree that the US government is not the appropriate vehicle to solve a problem that transcends national boundaries. We used to be in a position to lead, but apparently we no longer have the stomach or resources to do so.

      • I’m not advocating govt involvement, one way or the other, nor making any claims re: hacker-proof metadata.

        Just saying… As creators, it’s our hands on the file last before it goes out into the world, and it behooves us to provide it with the best and most accurate metadata we can, inside the file and out, rather than to just start it out unclothed, as it were.

  2. And the US government is going to solve it?

    • they will make a large organization (which could be privately run) that will collect a lot of money from streaming services.

      Then, some amount of this money will go to the big labels who will claim everything in sight.

      Then a smaller amount will go to individual artists who bother to document or claim their work.

      and there will be a big pile of money left over that they “can’t find” who it belongs to.

      But the streaming services will be off the hook, they will have paid out the money.

      And as bad as this is, it’s probably better than the current situation.

    • The government is already involved because of statutory licensing.

      Music is unique in that your right to release your music only covers the first public release of the song. After that, anyone can record the song at the statutory rate. They don’t need your permission, and you can’t stop them from performing or recording the song.

      The government sets the rate (last I checked, it was $.095 per song per CD or download sold), and if the songwriter/publisher won’t issue the new artist a mechanical license for the song, the artist can file for one with the government, and pay them, and the government pays the songwriter/publisher.

      But mechanicals for recording a song are completely separate from performance royalties for playing a song. Radio play is a performance. An artist playing a song live in a live venue is a performance. In both cases, the writer/publisher is still supposed to get paid.

      In the case of mechanicals, the person who owns the recording needs to pay the songwriter/publisher. In the case of performance royalties, the radio station, tv station or venue pays for a license from a PRO (performance royalty organization), and the PROs distributes the money to the songwriter/publisher.

      In the case of purchasing a song on Amazon or iTunes, and downloading it, the law is clear. That’s covered under the mechanical license. The songwriter gets paid from the record company, at the statutory rate.

      But what about a stream? Is that a download, or a performance, like radio? The streaming services have come to (relatively unacceptable) terms with the artists and record companies (I laughably have made $4.50 in the past two years from streaming services as an artist), but what about songwriters? (I’ve never seen a dime of the publishing or songwriting money for those same streams). Its currently a grey area in the law, not covered by the Copyright act of 1976 (how could it be?) or the updated digital millennium copyright act of 1998.

      So, yes, the government needs to be involved in this. And simplifying the law to cover both mechanicals and performance royalties for streaming services will make it easier for everyone to get paid. And since there are three payment recipients involved in each stream (The owner of the recording master, the songwriter, and the songwriter’s publisher), it makes sense to pay one public organization and have them distribute the money. That will lower the burden on streaming services and keep prices low, which is a benefit to all of us. Otherwise, only big players would be able to play, and there wouldn’t be any competition, and artists would make even less money while the streaming services charged MORE money.

  3. Any new system can’t come fast enough to suit Spotify:


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