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WHAT IS THE MUSIC MODERNIZATION ACT AND HOW DOES IT AFFECT YOU

On October 11, 2018, the Music Modernization Act (H.R. 1551) or MMA was signed into law.

WHAT IS THE MUSIC MODERNIZATION ACT AND HOW DOES IT AFFECT YOU

This brought some very welcome changes to the music industry, where the technology has been far ahead of the law for many years.

The biggest problem the act needed to solve was how to get songwriters paid for interactive streams on platforms such as Spotify, Soundcloud, Tidal and Apple Music (also known as DSP’s, or Digital Service Providers)? While licensing through entities such as Harry Fox pays for sales of your song on CD’s and even digital downloads, there was no real system for paying songwriters for interactive streams, which is pretty much the most popular way that the public is consuming music these days. Because of this huge void, DSP’s such as Spotify and Apple Music became the target of class-action lawsuits by writers and artists that may have had a decent amount of streams but saw no money from it.

Among other things, the MMA creates a new entity—the Mechanical Licensing Collective (MLC) —to “modernize” and administer the compulsory mechanical licensing process for interactive streaming services like Spotify and Apple Music. As a songwriter, you will want to fully understand the new processes in the MMA to protect your rights to unclaimed and future royalties.

Key Changes the MMA Created

The following are the key changes created by the MMA:

  • The Music Licensing Collective. The MMA changes the Section 115 compulsory licensing process for digital music providers (primarily interactive streaming services) from song-by-song licensing to blanket licensing. Before the MMA, song-by-song licensing required digital music providers to identify and locate, serve a notice on, and make payments to the copyright owners for every song on the provider’s service. This is why Spotify and Apple Music were sued, they just could not comply with the huge task of obtaining a license for every song they played. The MLC will establish and maintain a musical works database, match works used by digital music providers, collect royalties from digital music providers, and distribute royalties to copyright owners.
  • Collect it or Lose it Deadline. There are reportedly billions of dollars in unpaid mechanical royalties. Most of these unpaid royalties are sitting there because digital music providers have been unable to identify or locate many of the copyright owners for songs they use. If you believe you are owed royalties, you should contact all applicable digital music providers—you do not have to wait until the new MLC starts operating. Once the MLC starts operating, you should also confirm that your musical works are registered with the MLC and that all your information in the new database is accurate. You need to claim these royalties before January 1, 2022, otherwise, you will lose all rights to this money.
  • AMP Act – “Creative Participants”: Most producers, at least in the urban music genre, have added a letter of direction into their producer agreements which would entitle them to be paid as a “performer” by SoundExchange, just like the artist does. SoundExchange was the entity set up years ago to pay artists when their songs were played on satellite radio, Pandora, and other digital sites which have non-interactive streams. The producers being paid by SoundExchange were paid a percentage of the Artist’s payment, and this was all done by agreement between the artist and the producer. Now, if you are a sound engineer, you are also considered to be a “Creative Participant” and you may also be entitled to get paid some percentage of the Featured Artist payment. These are important developments for sound engineers and mixers! Not only are you getting paid, but this law recognizes an engineer or mixer’s contribution to the creative process of the sound recording. As an engineer, you and the artist will need to discuss what that percentage will be. If you do nothing and do not fill out paperwork for the artist to sign, do not expect to get paid anything. This can also be done retroactively, for tracks that you engineered in the past that are getting played and streamed now. For more info on this important new law, go to www.soundexchange.com. The forms are on their site to direct your percentage to you.

If you need help understanding the Music Modernization Act or want to make sure you have all taken care of the necessary steps to make sure your being compensated for your music contact my office today! We are here to help you with your entertainment law needs.

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