The Music Modernization Act And Changes To The Copyright Act

For decades, sound recordings have had limited protection under federal law.  In 1971, Congress passed the Sound Recordings Act, which was an amendment to the Copyright Act.  It was designed to give sound recordings protection under Copyright law already afforded to other works of authorship such as literary, dramatic, artistic, music and other intellectual works. 

However, the amendment did not give sound recordings complete protection under the law. Under the Sound Recordings Act, reproduction, adaption and distribution rights were given federal protection, but performance rights were not.   This means while there was federal protection against piracy of physical product such as vinyl albums (and later cassettes and compact discs), broadcasters could continue playing music royalty free. 

While the argument can be made that the business interests of record labels were given priority protection by the Copyright Act over the interests of recording artists, both record labels and artists received benefits from the Copyright Act and also felt the negative effects of its limited nature.  Yes, record labels benefitted from protection relating to reproduction, adaption and distribution rights of its product, but so did the artists because there was no guarantee artists would have been properly paid (or paid at all) by improper reproductions and counterfeits of their work.  At the same time, when broadcasters were able to continue broadcasting royalty-free music, neither record labels nor artists were paid performance royalties. 

Of course that is not the end of the story.   The music industry and technology have continued to evolve over the past 45 years. During that time, additional rights, including performance rights, have been granted to copyright owners.  For example, in 1995, Congress enacted The Digital Performance Copyright in Sound Recordings Act (“DPRA”), which grants copyright owners digital public performance rights in sound recordings. Later in 1998, Congress passed the Digital Millennium Copyright Act (“DMCA”), which allows digital streaming services to acquire licenses to stream music with royalties paid to copyright holders. 

It is important to note that a major exclusion to the Copyright Act applies to pre-1972 recordings, which remain subject to the rights or remedies under state statutes or copyright common law.  Some of the most popular, important, and lucrative music recordings and catalogues of all time were produced before 1972.  So, it is no surprise that these recordings have been the subject of a number of copyright and legal disputes, particularly when it comes to interpretations of streaming and broadcasting regulations under the DPRA and DMCA.  

Congress is back at it again, considering major changes to copyright law with the hopes of creating unified music legislation.  New bills include the Music Modernization Act of 2017, The CLASSICS Act, and The AMP Act (Allocation for Music Producers Act), and they have received widespread support from major music industry entities and organizations such as The Recording Industry Association of America (“RIAA”), The American Society of Composers, Authors, and Publishers (“ASCAP”), Broadcast Music Inc. (“BMI”), American Federation of Musicians (“AFM”), Association of Independent Music Publishers (“AIMP”), and SAG-AFTRA. 

The Music Modernization Act of 2017 creates a new system for compensating songwriters and music publishers when their sound recordings are played on digital services and platforms. Music publishers have experienced a number of challenges collecting royalties from digital streaming and the new licensing system under the Music Modernization Act will determine who the parties are that need to be paid and distribute royalty payments accordingly. Furthermore, digital service providers will be able to safely use a blanket license without fear of being sued for copyright infringement.  There are concerns that the system created by the bill will be controlled more by publishers rather than songwriters and that large publishing firms will receive the largest share of unclaimed royalties based on their market share, but a number of industry observers believe the bill is a step in the right direction for fair compensation and royalty administration.  

The CLASSICS Act is a significant piece of legislation because it will finally bring the aforementioned pre-1972 recordings under the Copyright Act by establishing royalty payments for pre-1972 sound recordings whenever they are broadcast on digital radio formats played by internet, cable and satellite radio services.   Of course there are bigger philosophical Copyright concerns pertaining to this bill.  Some observers argue that the public will ultimately suffer from implementation of The CLASSSICS Act because there will be higher costs associated with streaming such music, which could result in less access to the recordings and benefit digital music giants who can afford licenses, while hurting smaller, independent digital streaming radio stations.  Furthermore, many of the pre-1972 copyrights are not owned by the actual recording artists and songwriters, and as such, the bill will simply benefit corporations and other copyright owners. 

The AMP Act grants producers and engineers of sound recordings protections and rights under copyright law.

It is important to note that these pieces of legislation do not resolve any outstanding issues and concerns over terrestrial radio (AM and FM) broadcasters still playing royalty-free sound recordings.  The Fair Play Fair Play Act was introduced last year as a bill instituting radio performance royalties for artists, but it has not generated the same enthusiastic support in the music industry or in Congress as the aforementioned bills and appears to be on the backburner. 

After a series of compromises between various parties and lobbyists, the Music Modernization Act, containing The CLASSICS Act and The AMP Act legislation, was sent to the U.S. House of Representatives and passed unanimously in April 2018.  The bill is now with the U.S. Senate, where its future is less certain.  In May, a new, alternative bill was introduced by the Senate, the Accessibility for Curators, Creators, Educators, Scholars and Society (ACCESS) to Recordings Act.  ACCESS makes various changes to the Music Modernization Act as it pertains to the pre-1972 recordings, essentially creating total federal oversight over the recordings, and removing all aspects of state control and protection that still govern (including issues of when the songs enter the public domain).  It is unclear if the Senate wants to replace the Music Modernization Act or if this is simply a negotiation tactic.  Either way, expect to see big changes to the Copyright Act as it pertains to sound recordings.  Stay tuned.  

Categories: Music Business

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