Music Modernization Act and the Future of Music Licensing
As I wrote earlier this summer, the MMA does a lot of good. In fact, the R Street Institute was an early and vocal supporter of the bill. Unfortunately, lawmakers tacked onto the MMA the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS) Act during behind-closed-door negotiations between members, staff and lobbyists.
Under current law, works created before 1972 receive royalties through a patchwork of state and common laws. Why? No one is entirely sure — not even the Copyright Office, which in its review of pre-1972 works found no clear evidence as to why Congress exempted these works.
At the conclusion of the report, the office recommends that these works be brought under the federal umbrella. Indeed, the state- and common-law patchwork that currently governs these works creates great uncertainty for artists who want to receive payment for their work. Federalizing these works would simplify things dramatically.
As my colleague Meredith Rose explains in her blog post for Public Knowledge, “[F]or all intents and purposes,” the state and common laws governing sound recordings for pre-1972 works is “indefinite.” In CLASSICS, Congress seeks to remedy this problem by mandating that all state copyrights in pre-1972 works expire Feb. 15, 2047. Why 2047? Simply put: Under CLASSICS, recordings made prior to the new law’s passage will expire at the same time as any new federally-protected works created once the law passes. And, thanks to the Sonny Bono Copyright Term Extension Act — which tacks on an additional 20 years for works published before Jan. 1, 1978 — termination of the copyright has been pushed back to 2067.
Herein lies the problem: There is no good reason why these new sound recordings should receive longer periods of protection than any other work created prior to 1972. A book written in 1924, for instance, will enter the public domain beginning in 2020, but a song written that same year won’t enter the public domain until 2067. Why, under the CLASSICS Act, is a musical work more valuable than a piece of literature?
Fortunately, Sen. Ron Wyden, D-Ore., has introduced the Accessibility for Curators, Creators, Educators, Scholars, and Society (ACCESS) to Recordings Act. The bill puts pre-1972 works in the public domain either 95 years after they were released or 120 years after they were recorded, whichever comes first. This means that some recordings will begin entering the public domain before 2067, and the recordings considered most valuable by the recording industry — the works of Motown in the 1960s — will fall into the public domain in 2055.
Lawmakers have integrated the ACCESS to Recordings language into the final CLASSICS structure. And under the compromise solution, all sound recordings are given a baseline 95-year term and an extension — designated as a “transition period” — based on the following chart:
| Dates of Recordings | Enters Public Domain |
| Before 1923 | 3 years after the passage of the bill |
| 1923 – 1946 | 95 years + 5 years |
| 1947 – 1956 | 95 years + 15 years |
| 1957 – Feb. 15, 2067 | Feb. 15, 2067 |
As the old saying goes, “The perfect is the enemy of the good.” While this solution is not perfect, it is a workable compromise. The R Street Institute supports the work of Sens. Wyden and Chris Coons, D-Del., as well as their staffs, for coming to this solution.
However, the so-called “broadcast exemption” is still in the bill.
To understand the broadcast exemption, one needs to recognize that there are two types of digital music distribution services: interactive and non-interactive. Interactive services are those like Spotify, where you can pick and choose which songs you want to listen to in any order. Non-interactive services are akin to terrestrial radio: You cannot pick and choose which song you want to play; songs must be played in the order that the digital broadcaster chooses.
Presently, non-interactive services do not have to pay royalties for sound recordings produced before 1972, but most of them do anyway. If enacted, CLASSICS will compel non-interactive services like SiriusXM to pay these royalties, but its biggest competitor, terrestrial radio, will still be exempt from payment.
This discrepancy is merely a holdover from the days before digital. Terrestrial radio provides a service to users: free radio. But it’s not free for the sake of being free; it operates under an ad-revenue model akin to free services on the internet. Facebook is free because you receive ads. Terrestrial radio is free because you receive ads. And I have yet to see a more compelling reason than “it’s free” as to why terrestrial radio still does not need to pay a performance fee.
As Congress lurches forward to the end of this session, lawmakers must make an effort to get rid of the broadcast exemption. Doing so will put all broadcasters — digital or otherwise — under the same standard. And while we cannot win every fight, as our colleagues at Public Knowledge have said, this is a great first step in the right direction for artists and consumers.
