Music Modernization Act Summary

1. The music modernization act would create a new Mechanical Licensing Collective (MLC) funded by the digital services. The new collective would manage a blanket mechanical licensing system and provide a publicly accessible database for song ownership information. As a result, they would issue blanket mechanical licenses to digital services (such as Spotify and Aple Music), and collect and distribute royalties to rights holders. Currently, digital service providers are responsible for identifying the rights holders to each individual song in their catalogs. A job that would switch to the new entity in this bill.

2. Furthermore, instead of Digital Service Providers having to send bulk Notice of Intentions the licensing will be done electronically. As a result, this should help to ensure songwriters are being compensated in a timely manner.

3. Above all, it would help Digital Service Providers avoid lawsuits for not properly identifying the rights holders of songs on their services. Digital services would no longer be liable for statutory damages. As they would not be responsible for identifying rights holders.

4. The act would change the way the Copyright Royalty Board determines rates. The Mechanical royalty rate would be based on a “willing buyer, willing seller” rate standard that will require all digital platforms to pay fair market value for music.

5. Also, it would establish a practice of honoring “Letters of Direction” from artists who want to share royalties with studio producers and other creative participants who work with them.

6. Currently ASCAP and BMI are assigned a single judge who handles all of their rate court cases. The bill proposes that a district judge in New York’s Southern District would be randomly assigned to each case going forward. The bill would also repeal Section 114(i) of the U.S. Copyright Act. Which prevents rate courts from considering sound recording royalty rates when setting performance royalty rates.

7. Finally, it would close a loophole by establishing federal copyright protection that will guarantee compensation for artists who recorded music before February 15, 1972. A new process would be created that will allow eligible participants to share in digital royalties for recordings made before the digital performance right was enacted in 1995.

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