In this post, we highlight the benefits of the MMA for all parties involved in creating a musical work or sound recording.
Although the MMA centralizes information and royalties with the Music Licensing Collective (“MLC”), while establishing a more efficient blanket licensing scheme for digital music providers (“DMPs”), many copyright owners may be wondering, “What’s in it for us?” Fortunately, all three Title sections of the MMA provide opportunities for copyright holders, as well as previously ineligible artists and music production teams, to claim their fair shares of royalty payments.
However, before receiving those checks, the MMA requires that copyright owners do their part to ensure an effectively run system. Songwriters may have an easier path to claiming royalties, so long as they provide certain information to the MLC and monitor their database in a minimum effort to uphold quality control.
For most copyright holders
Title I of the MMA, the Music Licensing Modernization Act (“MLMA”), is the section primarily responsible for making the licensing process easier for streaming services and other DMPs, but creating a more efficient system may assure copyright holders that they will receive a more equitable cut of royalties. Of course, copyright holders must uphold their part of the bargain as well.
The MLMA requires that copyright owners provide commercially reasonable efforts to deliver appropriate identifying information to DMPs, such as alternative titles—for example, “Single Ladies” by Beyoncé is also known as “Put A Ring On It.” Since the U.S. Copyright Office released a notice of proposed rulemaking regarding this requirement, it is unclear what will be legally considered “commercially reasonable” or how much identifying information will be required. The MLC does not want to overburden do-it-yourself artists, but it also must uphold the most accurate database. Regardless, it is important for copyright owners to include as much information as possible about each individual song for which they intend to claim royalties.
It is also imperative that copyright owners monitor the MLC database for missing or inaccurate information. An incorrect name of a featured artist could lead to a headache of communication or, worse, a threat of litigation for royalties. Furthermore, the MLMA permits three years to pass before distributing royalties for “orphan works,” works for which no owner has been identified or located, to the public based on market share. Although the MLC is responsible for maintaining the database, copyright owners must ensure that their works are reasonably easy to locate and all parties sharing royalties are listed.
For copyright holders of pre-1972 works
The second Title section of the MMA, the Compensating Legacy Artists for Their Songs, Service, and Important Contributions to Society (“CLASSICS”) Act, creates a new stream of revenue for copyright holders of works that were created before February 1972.
Prior to the enactment of the MMA, copyright owners had to look to state law to protect their works and collect possible royalties. This typically meant that record labels, after negotiating individual contracts with recording artists, would recoup most of the royalties and leave the songwriters in the dust.
In other cases, owners of copyrights for pre-1972 works (also known as “legacy artists”) were forced to navigate multiple state laws to even attempt to claim royalties. As mentioned in a previous post, the classic rock band The Turtles led a few class actions against streaming services and satellite radio, some of which ended in settlements. However, their suit against Pandora is still pending because the Central District Court of California is deciding whether MMA preemption of state laws can prevail as an affirmative defense. Flo & Eddie, Inc. v. Pandora Media, LLC, 789 Fed. Appx. 569, 572, 2019 BL 397624, 3 (9th Cir. 2019). Therefore, artists entangled in existing lawsuits may want to pay attention to this outcome.
Fortunately for legacy artists without pending proceedings, the CLASSICS Act expressly preempts state laws and allows for recovery, so long as the owners claim their royalties within the three-year statute of limitations. The Act shifts 50% of royalties to SoundExchange, the only government-designated collective rights management organization for musical works and sound recordings, which in turn sends those payments to the rightful copyright holders. Unless a voluntary agreement is executed after the enactment of the MMA, featured artists will receive 45% of royalties, whereas non-featured musicians and vocalists will receive 2.5% each.
Equally important is that the Act extends the copyright term for pre-1972 recordings for an extra 95 years, including additional time periods for recordings first published in a particular time span. For recordings first published before 1923, that added period ends on December 31, 2021, so it is crucial that owners of these copyrights, including their estates, communicate with the MLC before then. Recordings first published between 1923 and 1946 receive an additional five years, and recordings between 1947 and 1956 receive an additional 15 years.
Accordingly, copyright owners of pre-1972 musical works, including many estates, should check the MLC database to determine their eligibility for royalties, which could be substantial depending on how they are being used, within the three-year statutory period. On the other hand, if an entity is using a pre-1972 sound recording for purely noncommercial purposes, legacy artists may only have grounds for a remedy if the entity fails to file a notice of that use.
Music producers and sound engineers
Title III of the MMA, the Allocation for Music Producers (“AMP”) Act, permits copyright owners to send “letters of direction” to SoundExchange to authorize royalty payments to music producers and sound engineers who contributed to any musical works or sound recordings. While letters of direction have been standard industry practice for some time, the MMA codifies this requirement to give the folks behind the plexiglass in the studio greater assurance that their interests will be protected.
This could mean that producers and engineers begin to negotiate contracts ensuring that copyright owners send letters of direction to secure royalties on their behalf. It could also lead to more producers and sound engineers requesting songwriting credit overall.
Songwriters are no longer required to send humongous piles of notices to copyright agencies for mechanical royalties, eliminating potentially lengthy waiting periods. Spotify no longer must seek out and negotiate licenses with individual owners, eliminating the possibility that the estates of deceased songwriters go unlocated and therefore unpaid. The MLC is run by a board of publishers and songwriters who should ensure that rightful copyright owners receive their deserved royalties. It all appears more efficient, and so long as copyright owners do their due diligence, they can prosper.
As always, L&L is available to help those who wish to get their “piece of the pie,” or those who need assistance in determining their rights and possible courses of action under the MMA.
Arnie Lutzker has decades of experience helping owners and users of copyrighted works to benefit from the rights conferred by the Copyright Act of 1976, as amended over the years, and to help individuals, companies and institutions fairly and legally license, acquire or otherwise exploit works. He has also practiced before the Copyright Royalty Board and its predecessors for more than 40 years. The legal team at L&L is ready to help you navigate these new copyright requirements.