IP Law Daily, COPYRIGHT NEWS: House panel hearing on five-year anniversary of Music Modernization Act examines successes, shortcomings, (Jun 28, 2023)

By Anne H. Gibson, J.D., LL.M.

Testimony from Mechanical Licensing Collective, publishers, songwriters, and others primarily focused on benefits of the law, but also noted issues with data management.

On its fifth anniversary, the Music Modernization Act (“MMA”) can be seen as a resounding bipartisan success, even as there is room for improvement, according to witnesses who testified at a June 27 hearing held by the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet. Specifically, several witnesses testified as to how the Classics Act portion of the MMA allowed for the distribution of streaming revenue that was previously unavailable to the relevant artists. On the other hand, some witnesses were concerned with the lack of accuracy in the data maintained by the Mechanical Licensing Collective (MLC), forcing publishers to engage in an ongoing game of “Whack-a-Mole” to prevent disbursements of royalties to the incorrect recipients.

The primary purpose of the 2018 Orrin G. Hatch-Bob Goodlatte Music Modernization Act was to update the music licensing system to better serve songwriters and publishers, as well as to facilitate the legal use of musical works by digital streaming service providers. Toward this end, it: (1) created the MCL to manage a blanket mechanical licensing scheme for interactive streaming services; (2) provided for the creation of a public database of song owners; (3) eliminated the Copyright Office's bulk "Notice of Intent" system for digital streaming licenses; (4) changed the royalty rate setting standard to "willing buyer/willing seller" for mechanical licenses; (5) gave owners of pre-1972 sound recordings an exclusive right to digital performances; and (6) facilitated the collection of digital performance royalties by sound engineers and record producers.

Success of the MMA. The witnesses and subcommittee members agreed that the MMA was a huge improvement over the prior situation. “The MMA replaced an antiquated, inefficient licensing system that was not able to respond to advancements in technology, where creators were not fairly compensated for their works and publishers, labels, and streamers were constrained by unclear licensing guidelines,” Subcommittee ranking member Henry C. Johnson (D-Ga.) said in his opening remarks. However, they also agreed there was room for improvement. As Subcommittee Chairman Issa (R-Calif.) said, “We’re here today to listen to some… key stakeholders about whether the system we set up is working properly and what more needs to be done,” and “to see if the MLC is solving the problems it was intended to solve.”

Praise for the MLC. The MLC, a nonprofit collective, has an important but narrow purpose under the MMA, namely, to manage the blanket license created by the Act and to maintain a free, publicly accessible database of musical works ownership information. Kris Ahrend, the CEO of the MLC (testimony), noted some of its successes, including that it had distributed “more than $1.1 billion in royalties to rightsholders, without deduction of any fees or costs,” and that it was “on track to process royalty pools of approximately $1 billion in 2023 alone.” He also noted that the MLC had assisted more than 60 digital music providers to “set[] up the blanket license and the related monthly usage reporting and royalty payment obligations.”

Garrett Levin, the president and CEO of Digital Media Association (testimony), whose members include Amazon, Pandora, YouTube, Apple Media, and other digital streaming services, also testified regarding the successes of the MLC, of which he is a Board member. He noted that, “beginning on January 1, 2021, hundreds of millions of dollars of unmatched royalties were transferred, dozens of services began submitting monthly reports with more data than had ever been reported, and the MLC began matching sound recordings to musical works and paying mechanical royalties to publishers.” Fellow MLC Board member Michael Molinar, president of Big Machine Music (testimony), also noted that, “as a publisher, I am here to tell you today that The MLC you helped us to create is working and working well.”

Concerns about MLC’s data management. Other witnesses had concerns about how well the MLC was carrying out its duties, however. Abby North, an independent music publisher and publishing administrator (testimony), expressed her concerns and frustrations with the incompleteness of the MLC’s database, likening her ongoing efforts to search out false or missing matches for covers of her and her clients’ compositions to an unending game of “Whack-a-Mole.” Although the MLC database is publicly available, it is huge and unmanageable with ordinary tools. North testified that she spent thousands of dollars to acquire the technology to be able to search the database and compare the results with other sources. She argued that the MLC must license other databases in order to ensure its data is more complete.

Daniel Tashian, an artist, songwriter, and producer (testimony), also testified about his concerns with the MLC, centering on the fact that it “is still holding on to hundreds of millions of dollars in historically unmatched royalties.” He felt that the MLC was not doing enough to actively reach out to songwriters to identify them and provide them with the royalties they are owed. “[T]hese unidentified songwriters are most likely to be those who are independent and unaffiliated with a publisher, and the most in need of receiving those royalties.”

Improvements needed to process for producers and engineers. Tashian also testified about the importance of a part of the MMA known as the AMP Act. “For the first time,” he noted, “the AMP Act recognized the important role of producers, engineers and mixers in copyright law, and codified the ‘letters of direction’ or ‘LOD’ process by which producers can collect their share of digital royalties directly through SoundExchange,” the sole organization designated by the Congress to collect and distribute digital performance royalties for sound recordings. He noted, however, that more needed to be done to facilitate this process. He felt that SoundExchange should “continue to improve and streamline the LOD application process” and that “industry stakeholders should increase awareness” of it, as he felt that those producers and engineers with the fewest resources were the ones who were missing out on this important opportunity.

Concerns about AI. One witness testified about the increasing frequency of AI-generated musical works and his concerns about this phenomenon. He noted that, using AI, songs can be created, not just copying or sampling a part of an existing song, but creating a new song with a singer’s voice, without his or her permission. “To have someone – or something – take my voice, my sound, my persona without permission and manipulate it or mimic my work is a personal violation and a threat to the good[will] I’ve built up over the years,” stated accomplished performer and songwriter David Porter (testimony), who was named one of the 100 Greatest Songwriters of All Time by Rolling Stone magazine in 2015. “You have a model in the MMA process to make things right, bringing the music family together with your own policy and legal expertise to shape strong rules for healthy uses of AI. Just like writing a great song, it’s hard work that will pay off for generations to come.”

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