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Music Modernization Act Expected to Be Introduced in Congress Tuesday

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Music Modernization Act Expected to Be Introduced in Congress Tuesday

Postby MrFredPFL » Tue Apr 10, 2018 12:28 am

Story :

On Tuesday, Rep. Bob Goodlatte (R-Va.) is expected to introduce the Music Modernization Act, which will transform the way mechanical royalties are collected and reform the way labels and musicians are paid for the use of sound recordings online. It's the first significant music licensing bill in a generation and the result of five years of lobbying, hearings and compromise.

As expected, the Music Modernization Act, which is scheduled for markup by the House Judiciary Committee on Wednesday combines three previously introduced bills, all of which have been introduced in the Senate, along with an additional rate-setting change. The most important of these bills -- which is, confusingly, also called the Music Modernization Act -- creates an organization to collect and distribute mechanical royalties from streaming services. The new bill also contains the CLASSICS (Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society) Act, which would require digital services to pay labels and performers for their use of recordings made before 1972, and the AMP (Allocation for Music Producers) Act, which would codify the process by which SoundExchange pays producers and engineers who receive royalties on recordings. It also directs the Copyright Royalty Board to determine the rate SiriusXM pays to use sound recordings based on "the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller," which is expected to raise its royalties.

The Music Modernization Act is especially important because, in addition to creating a new collecting organization, it offers streaming services a safe harbor from copyright infringement lawsuits for statutory damages filed after Jan. 1. (Rightsholders could still file for actual damages, but in the vast majority of cases they couldn't hope to make back their legal costs.) This wouldn't affect existing lawsuits, such as the putative class-action case Spotify settled for $43.45 million, but it would prevent further actions and thus remove an existential threat from streaming companies. The problem of how to accurately pay publishers mechanical royalties would remain, but it would be addressed by this organization rather than the services themselves.

The Music Modernization Act would also direct the Copyright Royalty Board to determine rates for both mechanical royalties and sound recordings using the so-called "willing buyer/willing seller" standard. Until now, most digital services used that rate, but others -- including, most significantly, SiriusXM Satellite Radio -- used the "801(b) standard," which usually leads to lower rates. Services would also have to pay to use recordings made before 1972, which are currently covered by state law.

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