What is the Music Modernization Act?

On the surface, the Music Modernization Act (or MMA) is a bill that changes the way mechanical royalties are paid out to copyright owners, and how statutory boards and courts regulate collective licensing in the United States. It’s much more complicated at its core, however — a law that affects the lives of rights holders and streaming platforms for the foreseeable future via blanket mechanical licenses and a new collecting society called The Mechanical Licensing Collective (The MLC).

We don’t expect Songtrust clients to take our word when we say we support the MMA. By educating our community on who it affects, what it aims to change, and what the MMA means for the music industry itself, we hope you can make your own decision on whether to support the legislation. 

To really understand the MMA’s roots, you must follow the path it took from a hopeful piece of potential legislation to its final approval on October 11, 2018.  

Let’s Break It Down

At its most basic, fundamental level, the MMA modernizes what many consider an archaic piece of legislation for a new generation — one where all songwriters, artists, and publishers are given more of what they deserve rather than only those who “make it big”. One of its primary goals was having The MLC provide a blanket license for streaming services, covering mechanical rights in any songs not otherwise covered by a digital company’s direct deals with music publishers.

It also aims to rethink the way rates are set when a song’s rights are licensed by a collecting society in the U.S., with the goal of songwriters and publishers earning more for their hard work. Not only for mechanical rights, but also for performing rights. 

Where We Are Now to Where We Want to Be

No societies currently offer a blanket license for mechanical rights, which often leaves a song to be exploited whenever it is copied. This means that anyone using music has the responsibility of identifying the rights holder(s) of the song they copy to ensure rights holders receive the proper paperwork — which rarely happens. 

Streaming platforms, which typically exploit both the performing rights and mechanical rights elements of song copyrights, aren’t overseeing this process as efficiently as they should either — especially since there is no central database that outlines music rights ownership of songs.

The MMA’s overhaul of the mechanical royalties system in the U.S. offers more than just an efficient mechanical royalties system. It also changes the way statutory boards and courts regulate collective licensing in the U.S., and how they set the rates users of music pay.

Who Does It Affect and Who Supports the MMA

Perhaps the most important part of the Music Modernization Act is who it affects and, ultimately, how it’ll affect them. Although the changes will be paid for by digital services, The MLC is run by music publishers and songwriters. Music owners and users will embrace the changes by witnessing how judges are selected to determine royalty rates and how they can be changed. The new collective’s board will expand into a 14-seat board of directors and create more clarity on how royalties would be distributed amongst rights holders.

Both rights holders and corporations have offered their support of the MMA, including The Digital Media Association, which represents companies such as Facebook and Spotify; David Israelite of the National Music Publishers Association (NMPA); Justin Kalifowitz of Downtown Music Publishing and Songtrust; performance collection societies such as BMI and ASCAP; the Songwriters Of North America and Nashville Songwriters Association International; Republicans Orrin Hatch and Lamar Alexander, and Democrat Sheldon Whitehouse; the Songwriters Guild Of America, RIAA, A2IM, Recording Academy CEO Neil Portnow, and the National Association of Broadcasters.

Looking to the Future

The MMA’s ultimate goal is reforming how music is handled under U.S. copyright law, bringing “music licensing its first meaningful update in almost 20 years.” Such drastic change didn’t happen overnight, however. It took half of 2018 to finally ratify the MMA and make its major win for music owners, rights owners, and songwriters official.  

Here’s a detailed breakdown of how everything came together. 

On April 25, 2018, the MMA passed unanimously through the House of Representatives, where it was introduced by co-sponsors Robert Goodlatte (R-VA) and Jerrold Nadler (D-NY). It promised improvements in four key areas, including:

• Improving a dysfunctional mechanical licensing system “that seems to generate more paperwork and attorneys’ fees than royalties”

• Ensuring royalty protection for pre-1972 performances

• Providing a statutory right to recognition for adjunct creators, including producers, sound engineers, and mixers

• Establishing a unified rate standard for music royalties

On May 10, a major music reform package including the MMA (S.2334), the Classics Act (S.2393), and the AMP Act (S.2625), was introduced in the U.S. Senate by Orrin Hatch (R-UT) and a bipartisan group of supporters. The bill was expected to have a hearing and be met with little resistance before it moved to the president's desk. 

On September 18, the U.S. Senate approved the MMA with unanimous consent. This version of the bill headed back to the House for approval of any changes made by the Senate. Meanwhile, some outside parties pushed back against portions of the bill. For instance, Sirius XM objected to the Classics Act, which would make them legally responsible for paying songwriters and artists royalties on pre-1972 recordings.

Once the MMA passed the Senate, the bill was renamed the Orrin G. Hatch Music Modernization Act. The bill revamped Section 115 of the U.S. Copyright Act, and combined three major pieces of legislation:

• The Music Modernization Act, which streamlines the music licensing process to make it easier for rights holders to get paid when their music is streamed online

• The Classics Act (Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act) for pre-1972 recordings

• The AMP Act (or Allocation for Music Producers Act), which improves royalty payouts for producers and engineers from SoundExchange when their recordings are used on satellite and online radio

In the last week of September, the Orrin G. Hatch Music Modernization Act passed the House of Representatives, approving all the changes set forth by the Senate and sending it straight to the Executive Secretary at the White House. On October 11 at 12:08 EST, the Orrin G. Hatch Music Modernization Act was signed into law, becoming one of the industry’s biggest reform bills in decades.