President Trump might have struggled to get pop stars to rally behind either his presidential bid or the opening half of his presidency – barring Kid Rock, Ted Nugent and (for a brief but high-profile moment) Kanye West; but his passing of new copyright laws mean even his most bitter critics in the music world will have to bite their tongues and accept he did something they mostly agreed with.
After a long and bumpy journey, the Music Modernization Act (we shall stick with the American spelling as it is exclusive to the US) came into effect in October and has been hailed by many as a key step towards making laws travel at something approaching the same speed as technological and societal changes.
In brief, its biggest changes include:
- An updating of how compulsory licensing for music will work, relating to how such licences are secured, how royalty payments are made and how safe harbour laws apply to streaming services;
- Federal protection for pre-1972 sound recordings (the issue at the very heart of the Flo & Eddie lawsuit against Sirius XM that was resolved in 2016);
- New rules relating to payments due to producers of sound recordings.
While points 2) and 3) are tied to sound recording royalties, point 1) is of huge significance to the publishing and songwriting world.
Writing in Billboard, David Israelite, president and CEO of the National Music Publishers’ Association (NMPA), called it “a milestone by any measure” and argued that its smooth sailing through both the House of Representatives and the Senate makes it “the only music bill that has ever passed unanimously in United States history”. It also, he proposed, managed to unify the many component parts of the music business, many of whom often found themselves at loggerheads over the years on various issues. While it is proving to be a great unifier, Israelite argues this is just the start.
“There will always be more work to do,” he wrote. “But the MMA proves that not only is it possible to enact transformative reform in an age and area of disagreement, but we will be working hand in hand with the creators who will benefit most from it.”
His notion of it being both armistice and panacea, however, is not quite correct as there are still critical – if not quite fully dissenting – voices in the industry.
Tied to point 1) is the establishment of the Mechanical Licensing Collective that will handle a wide range of things including the administration of blanket licences, collecting and distribution of royalties and the creation and maintenance of what is termed a “musical works database”. It will also only cover downloads and streams rather than music sold on physical formats.
On paper, this sounds like it could solve a lot of problems. But those who remember the long but ultimately fruitless attempt by PRS for Music to get the Global Repertoire Database off the ground (and all at an estimated cost of £8m) will know just how difficult matching sound recording and publishing rights in the digital age can be.
“It also only applies to instances where the digital music service has not obtained a license with the copyright owner, either previously or prospectively, and the digital music wishes to obtain a ‘compulsory License’ to do so,” suggests Stephen Carlisle, copyright officer at Nova Southeastern University, in an op-ed for Hypebot about the new law.
He feels, in a worst-case scenario, this gives DSPs carte blanche to do what they want here with no regard for writers. “So, now any digital music provider is going to be able to pull a compulsory license for all of the music in the United States,” he proposes. “There is no opt-out for composers.”
Writing for IP Watchdog, Amy Goldsmith – a partner and the co-chair of the Intellectual Property Group of Tarter Krinsky & Drogincom – also had some reservations about the new legislation. Talking about the $30m settlement Spotify reached with the NMPA over unpaid publishing royalties in the US two years ago and the $43m it paid out to songwriters this year after a successful class action suit against it, she suggests DSPs could now be protected against such legal action as litigation becomes a thing of the past.
“It’s no secret that the Music Modernization Act, even in draft form, was and is a compromise bill: it eliminates certain remedies, such as statutory damages and attorneys’ fees, against streaming services such as Spotify unless a lawsuit was filed before January 1, 2018,” she argued.
There is also the issue of this all being a waiting game. President Trump may have signed it into law, but it will take until 2021 for the Mechanical Licensing Collective’s real impact to be felt.
While industry lobbying has been criticised historically for just making the already powerful and successful (be they artists or music companies) even more powerful and successful, the Music Modernization Act may actually make real and tangible positive changes for those a little further down the food chain.
Richard Burgess, CEO of the American Association of Independent Music (A2IM), argued that it wasn’t everything the independent community could have hoped for, but there was a lot for it to be pleased about here.
“In terms of being paid, especially considering independent artists tend to be songwriters as well, it will definitely have a positive impact on them,” he told CNBC. “Anything that straightens out the industry, grooms the data and makes sure it’s in a central place where anyone can access it, and makes sure payments are being paid is definitely a positive. This is a huge step in the right direction.”
This is all made timely with the publication this week of the latest WINTEL report from WIN (the global body for independent music companies) that found the indie sector grew its global market share from 39.6% in 2016 to 39.9% last year. While this mainly relates to recorded music income, it is tied to a wider growth among all in the indie world – including writers and publishers.
While a tiny percentage of streams accounts for the lion’s share of revenue on a streaming service – one well-placed source tells us that the top 100,000 tracks on Spotify make up most of its payments – anything that protects and supports those way down the long tail of 50m+ songs can only be a good thing.
Goldsmith, however, cautioned that it was not all sunshine for smaller actors and that the onus will be on songwriters and publishers to submit their musical works (and sound recordings) to the Mechanical Licensing Collective; plus, in the case of a successful audit, they will only get settlement on any underpayments but not the cost of the audit itself. The fear, of course, is that the admin and costs involved here could severely disadvantage the smaller players who might see it as too costly and risky an undertaking and so bow out.
“Additionally, the 10 music publishers on the MLC Board outvote the independent songwriters,” she says. “While there is still work to be done, the Music Modernization Act does solve some long-standing issues in the music industry.”
Even so, there is clearly a lot to be excited and optimistic about with the Music Modernization Act. Bringing laws up to speed with technological changes is always going to be like chasing a rocket in a hot air balloon. But as with all legislative changes, they are not an end in and of themselves – but rather a step in the right direction.
And going in the right direction, no matter how slowly, has to be preferable to going round in circles.
