3. Dezember 2018
Elias Mühlemann, VISCHER AG

Copyright Reform in the US: Music Modernization Act

After years of unsuccessful attempts to modernize copyright law in the US, Congress recently passed the Music Modernization Act (MMA) and President Donald Trump signed the bill into law on October 11, 2018. Besides an alteration of the calculation mechanism for compulsory mechanical licenses and the closing of a loophole, which prevented the digital compensation for works created before 1972, the main purpose of the MMA is to replace the current system for the remuneration of songwriters under the Copyright Act.
The bill introduces a blanket license for the digital use of works and establishes a Mechanical Licensing Collective (MLC, Sec 2 of the MMA). The MLC will offer and administer the blanket licenses and the collection/distribution of royalties from digital music providers (MMA, Sec 2 [b][3][C]). The model chosen by the MMA follows a well-known concept of collecting societies and blanket licenses, which is practice in many other countries. The MLC will be funded by the (digital) streaming services and administered by the rightsholders (publishers and independent songwriters).
The introduction of the blanket licenses allows streaming services to offer songs to their users without filing a notice of intention («NOI») when the copyright holder of the song is unknown. The streaming service simply pays a royalty fee and the MLC will redistribute the royalties to the rightsholders. If the owner of the copyright is unknown to the MLC, it publicizes the existence of accrued royalties and tries to find the owner. Should the MLC be una-ble to identify the rightsholder within three years (holding period), it will distribute the royalties collected to all registered copyright holders based on their market share (MMA, Sec 2 [d][3]).
A main task of the MLC under the MMA is to create a «publicly accessible» database of musical works, the sound recordings in which they are embodied and shares of such works. The MLC further engages in efforts to match yet unmatched musical works with their respective sound recordings (MMA, Sec 2 [d][3][C] and [E]). The database will be accessible to the public in a «searchable, online format free of charge» and also as a database itself for the digital music providers and significant nonblanket licensees (MMA, Sec 2 [d][3][E]).
Both songwriters/publishers and streaming services mostly support the bill. Songwriters hope to collect more and higher royalties, because streaming services also pay for songs that are not allotted to an individual copyright holder. Streaming services welcome the blanket license model, because it mitigates their risk of getting sued for copyright infringements – especially because the MMA retroactively protects the streaming services per January 1, 2018. In addition, streaming services no longer have to file NOIs, which relieves them from an administrative burden.

The introduction of a central database targets a core issue of the industry to fix the attribution problem. However, critics argue that the MLC has insufficient incentives to improve the accuracy of the data collected, because the unassigned royalties will mainly go to big publishers. In addition, the MLC will not be flexible enough to promote innovative licensing solutions and could even put innovative approaches out of business.