*Editors note: This post was updated (see below) on Nov. 12, 2018:
In recent years, courts, lawyers, and judges have held huge sway over copyright law, which plays a central role in the creative life of the movie, television, publishing, and recording industries. But Congress and the executive branch have bestirred themselves with new legislation and agreements that seek to hurl intellectual property protections, especially for music, into a more modern era, with new technologies and realities.
After years of maneuvering by various interested and competing parties, sufficient political and practical compromises were struck so lawmakers recently could pass and President Trump could sign the Music Modernization Act (“MMA”), which addresses gaps and challenges in Section 115 of the United States Copyright Act.
The Act will change music licensing, including by:
- Creating an agency run by publishers, responsible for issuing licenses, as well as collecting and distributing royalties to the appropriate rights holders. Costs for organizing the new system will be paid for by digital streaming services. Proponents say the new approach will benefit artists, not only getting them paid on time but also establishing a uniform database of song ownership. This resource will help ensure that artists and streaming services can identify proper attribution of rights all in one location. Previously, streamers like Spotify, Apple Music, and Amazon were directly responsible for identifying, collecting, and distributing royalties to appropriate rights holders.
- Requiring that current market-value rates be considered. Previously, those seeking to reproduce a song were required to pay a statutory rate for a compulsory license. That rate failed to reflect current market values.
- Establishing a “wheel approach,” a rotation for figuring which federal jurists deal with rate disputes and how. When such controversies arose before, only one judge was assigned every ASCAP and BMI case. That judge was barred from considering sound recording royalty rates when setting performance royalty rates. Now, any district judge in the Southern District of New York may be randomly assigned, on a rotating basis, to these disputes, and they now can be presented evidence about other rates.
- Providing guarantees to artists involved with pre-1972 songs that they will receive copyright protection, allowing them to earn payments from streaming services, some of which have regularly played their works without paying royalties.
To get a sense of the complex decades of efforts to strike the deal that led to the MMA, it’s worth checking out a Billboard infographic or a SoundExchange online post. The Los Angeles Times report captures the optimism and praise of a good slice of the many parties who labored on the MMA, including the Recording Academy, the indie coalition A2IM, and ASCAP. Rolling Stone’s story also is chock-a-block with industry reactions, including from Spotify, the music publishers’ organization, indie music publishers, BMI, and the digital media association.
It’s also important to note that there’s big work ahead — and already under way — to make the MMA function: In nine months, digital services and copyright owners must agree not only on some challenging technical matters (making the works’ database a reality), they also must settle on how to fund the licensing agency’s first two years of operation, expected to begin Jan. 1, 2021. If they fail to get the panel up and running on time, the Copyright Royalty Board will hold a fee-setting proceeding.
Meantime, the Trump Administration — as part of a deal struck with Mexico and Canada intended to rework disputed parts of the North American Free Trade Agreement — also may be altering copyrights on the continent.
The U.S. Trade Representative has posted a long, detailed breakdown of how the so-called USMCA affects intellectual property, more so in Mexico and Canada than in America. The Osler law firm has an informative post on how the USMCA changes the length of copyright terms in Canada to match those in the United States and other salient points of the prospective intellectual property alterations that already have Canadian experts steaming.
Vox, the online news site, summarized the IP shifts in the USMCA, this way:
“This is a win for the United States. The new agreement extends the terms of copyright from 50 years beyond the life of the author to 70 years beyond the life of the author. … Also, NAFTA was negotiated more than two decades ago, so it didn’t really deal with the internet. The USMCA aims to fix that by adding new provisions to deal with the digital economy — that is things like e-commerce and data. These new digital provisions include things like no duties on products purchased electronically, such as music or e-books, and protections for internet companies so they’re not liable for content their users produce.”
The USMCA has an uncertain future, as it requires not only the signing of the leaders of the United States, Mexico, and Canada, but also approval by lawmakers for the three nations.
*Nov. 12, 2018, Update:
An MMA provision provides guarantees to artists involved with pre-Feb. 15, 1972, sound recordings, giving them exclusive right to digital performances and to earn payments from online services for streaming those works. Such payments are to be made to SoundExchange, which will distribute 50 percent of the profits to the artist and the other 50 percent to the record label.
On Oct. 11, the Copyright Office issued an interim rule regarding this provision, forming a new system for copyright owners and digital streaming services. The copyright owner may now file schedules listing their Pre-1972 Recordings with a form on the Copyright Office’s website, while the streaming service has a form to submit to the copyright owners for contact information.
This will allow the Copyright Office to begin organizing all this data into an easily convenient online database with the copyright owner’s name, title of the song, and the featured artist will be publicly available.
Filing the pre-1972 schedules not only will allow the copyright owner to earn payments but they also become eligible to recover statutory damages and attorney fees for unauthorized use of their work. The use must occur 90 days after the filing of the pre-1972 schedule to ensure the sound recording has been properly indexed into the database.
The Copyright Office is soliciting public comments regarding the filing requirements until Thursday. The interim rule and a guide on how to submit comments can be found here.