Entertainment Attorney Jason Bost Discusses the Modernization Act
and the impact on writers and artists…
In my last article (“An Entertainment Lawyer Answers Questions About Streaming and Getting Paid”), I broke down how and how much artists are paid through music streaming. Music streaming is a huge part of the new legislation that just unanimously passed in the Senate and is now waiting on approval from the House of Representatives. (For info on how a bill becomes a law, click here for the classic School House Rock Video, or Here for general information).
What is the Music Modernization Act (or MMA for short)?
Songwriter rates are based on a law from 1909 and performance royalties (which I will discuss in my next article) are based on a law from 1941. This is the first major overhaul of the royalty system in the United States in decades. The MMA is supposed to make music streaming more transparent by creating a single “pot” called a mechanical licensing collective (“MLC”) to deposit all musical works into while requiring any streaming service provider, such as Spotify, to “buy into” the MLC in order to access music to stream. The thinking is that this will enable the supervisors of the MLC to easily track all digital music transactions in one place. This would also create the supervising body to oversee MLC which will be composed of music publishers. The MMA also addresses issues with statutory licensing rates related to Section 115 of the Copyright Act of 1976.
The MMA will also remove copyright and royalty cases from the oversight of a single judge and open up the PRO’s (Performance Rights Organizations) and licensees to enable them to go in front of any judge in the Southern District Court of New York.
Why does the MMA matter to writers and artists?
The MMA will also take unclaimed royalties and places them into the MLC which will then match the royalties to the rightful owners. Why does this matter? It is estimated that there are over $1.5 billion in unclaimed mechanical royalties currently floating around out there with no assigned writer. Being able to attach these unclaimed royalties to their rightful owners could substantially increase artist’s and writer’s revenue streams, and on the other side, effectively take this money away from the larger companies that now benefit from the “forgotten” rights.
MMA will also replace the outdated system of having to mail individual letters of intent for each share of a song to every publisher and enable electronic registration and notification. (Billboard) Additionally, for the first time ever, streaming royalties for songs recorded prior to 1972 will be included.
Most importantly for writers, the MMA would establish a new standard for mechanical royalty rate for streaming, also enabling music producers and engineers access to their digital royalties. (Variety)
In future articles, I will provide a more in-depth breakdown of each section of the MMA along with legal and practical applications.
Jason Bost is an author, former recording industry executive and Entertainment Attorney and is the managing partner for the New York Offices of Patel, Soltis & Cardenas LLC. You can contact Jason by phone at 973-200-1111 or via email [email protected]