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New US Streaming Law Aids Musicians’ Rights and Payments

A gap in US copyright law left some musicians unable to collect royalties during the music-streaming revolution, and others never realized there was money owed to them. The recently enacted Music Modernization Act (MMA) attempts to rationalize a patchwork of common law, state law, and federal law that dates back to the dawn of sound recording in the 1870s.

The MMA combines three different pieces of music-rights legislation and establishes a new way of doing business that is both more fair and more consistent, especially when it comes to Internet radio companies like Pandora and streaming services like Apple Music and Spotify.

Amazingly, the MMA has been received well by every stakeholder, partly due to last-minute changes that tweaked copyright duration. Musicians, independent and major recording labels, digital-music services, and public-domain advocates—even members of Congress who were at various times opposed to some provisions—all have mostly good things to say about the law, even if it’s not precisely what they wanted.

Spotify’s Horacio Gutierrez, the company’s general counsel, said in a statement that the company wants “a million artists” to make a good living creating and performing music. “The Music Modernization Act is a huge step towards making that a reality, modernizing the outdated licensing system to suit the digital world we live in.” (Apple didn’t reply to our request for comment about Apple Music.)

Before the MMA, the music rights held by songwriters and performers were all over the place. For performers, whether they could collect royalties depended on when a song was first recorded (and sometimes, in which state). Producers, mixers, and engineers, often deeply involved in the creative process of making a song or album, received royalties only when it was played or sold in some places.

Streaming services had to apply for rights one song at a time in a cumbersome process that overwhelmed the US Copyright Office, and they could still be hit with lawsuits demanding massive fees if they didn’t find and pay a song’s composer or other rights-holder. Yet many artists remained unpaid, too.

It was a huge mess that cost every party involved time and money, although it particularly shortchanged creators and performers.

Services like Spotify and Apple Music will likely pay more for rights under the new law—both per song and to more artists—which could translate into higher subscription prices. However, those higher costs should be offset by reduced expenses and the elimination of a whole category of potential lawsuits.

Another positive effect? More music could wind up on streaming services, even as artists are paid better for it—or paid at all!

A Patchwork of Laws and Practices

Copyright for visual media like books, film, and television isn’t simple, but at least it’s mostly straightforward. More or less, anything you write, draw, or capture as an image (still or moving) in analog or digital form gets a copyright at the moment of creation. That includes every book, movie, issue of a newspaper, architectural drawing, photograph, and artwork—and musical composition, including variations in arrangements, such as for a quartet, a jazz band, or a full orchestra.

Depending on whether you produce that work for public consumption and whether it’s created directly for a company, copyright lasts from 95 to 120 years from creation, or for 70 years after the last contributor to a work dies.

But sound recordings have always been treated differently. They’re relatively new compared to books and periodicals, with Thomas Edison making the first audio recording in 1877 that could be replayed at will. This led to weird copyright situations, in which the law in the state in which a work was recorded or sold governed ownership. If a state had no specific law, rights were covered by common law—the judicial decisions resulting from criminal or civil cases—which could be all over the place.

Eventually, Congress “federalized” audio copyright, known as the phonogram right, so that all recorded work from 15 February 1972 onward would have a clear set of ownership rights and copyright duration. But Congress also set an absurd expiration. While newly created works had rules similar to those for other kinds of publishing, the copyright on sound recordings made before 15 February 1972 wouldn’t expire until 2067! (Some state laws varied, but for most intents and purposes, that was the date.)

That federalization effort left out more too. It didn’t take into account the potential for new playback technologies that hadn’t yet been imagined. Streaming was particularly problematic because of its particular nature of not transferring music for storage.

One Law to Rule Them All

The MMA solves many of these issues by bringing everything into the same copyright regime. Simultaneously, it establishes a new independent body that will set and collect fees for certain kinds of playback, such as streaming. Here’s a summary of everything that happens.

Copyright Changes

The MMA federalizes all recordings before 15 February 1972. As a result, they’re covered by the same phonogram rights as recordings made on or after that date. As a result, streaming services have to pay performers and other rights holders in those recordings.

A late set of changes to the legislation finally put recordings under a similar set of expiration rules as published works, though it’s complicated. The phonogram rights for all recordings made before 1923 will expire on 1 January 2022. That will open up music locked away in vaults to new listeners and new scholarship.

All work made from 1923 to 1972 gets a term of 95 to 110 years, depending on when it was published. It’s complicated, but recordings from 1923 expire into the public domain on 1 January 2024, followed by annual expirations of subsequent years with a few gaps.

The law also allows non-commercial use of recordings, with a safe harbor for pre-1972 work. If you want to use a song from that era, and you can’t find it in commercial use (actively for sale on a CD or for download, for instance), you can file a notice with the Copyright Office. After 90 days with no response from any rights holder, you can then use the recording with a good assurance that it falls into so-called “fair use.” For some music historians, this will be a boon, even if they can’t sell a product that contains the music.

Clearinghouse for Composition Rights

The MMA creates a new nonprofit organization called the Mechanical Licensing Collective. This group sweeps away the need for every streaming service and digital-music company to track who has a stake in the underlying musical composition of material they deliver. (The “mechanical” right refers to making copies that use a composition. It refers to something like pressing a record—a mechanical process—even though today the process more often involves sending music as bits over the Internet.)

The Mechanical Licensing Collective will be similar to the group that already handles “compulsory licenses,” or the right that allows anyone to perform and release a recording after the first publicly released performance of a song. (This is why “cover” songs abound: the original songwriter has no right to prevent them, and the cost is set at a fixed rate.)

Right now, streaming and download services have to file a notice with the Copyright Office for each song they stream, and the paperwork is unbelievable. The Mechanical Licensing Collective will instead charge a fixed rate for everything and provide a “blanket” license. This change alone will eliminate a vast amount of duplicated and unnecessary effort.

The Mechanical Licensing Collective will also create a publicly searchable database of ownership rights in compositions, something that doesn’t currently exist. It will disburse royalties to those owed them and provide a way for composers and others to stake claims to work for which they aren’t yet listed.

The MMA doesn’t cover rights that have already been sorted out for other aspects of music. These include the fees collected for the sale of audio recordings (whether in analog or digital form), and performance rights in live venues or in movies or on TV. Those rights will still be managed by existing organizations.

Little Things

Producers, sound mixers, and engineers who contributed to a work now get royalties when it’s played on satellite radio or online radio (where a user doesn’t select which songs play), just like they do in other media.

Finally, the Copyright Ruling Board, an obscure group that mostly sets Internet radio royalties, can now consider a song’s popularity in determining how much services should pay to air it.

Pay to Play

In an age in which it seems like the creators of works seldom come out on top, whether it’s due to casual piracy by individuals or collective action by giant corporations, the Music Modernization Act is a surprisingly comprehensive win.

Many musicians will see literally a few dollars more, but some will connect with a revenue stream that could be meaningful. That’s especially true for older artists whose work remains popular and for which they haven’t been compensated at all.

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