(PART 2) The Music Licensing Collective & Statutory Rates for Song Reproduction

Part 1 of our Blog Series discussed the inclusion of AMPA to the Music Modernization Act (MMA), which establishes a legal procedure for studio professionals to collect their royalties directly from SoundExchange.

Part 2 of our Blog Series focuses on another issue faced by music professionals: Obtaining licenses forsampling purposes or song reproduction.

Prior to the signing of the MMA, the Copyright Act (specifically, §115) has regulated music compositions and allows anyone to seek a compulsory license to reproduce a song in exchange for paying a statutory rate.

A compulsory license allows a musician to record and sell a version of a previously recorded song by paying royalties to the legal copyright holder of the work. The legal copyright holder earns mechanical royalties at the statutory rate set by the Copyright Board for these licenses. The MMA replaces the current flawed legal standard with a standard that requires the court to consider free-market conditions when determining these rates. This is known as the more market-oriented “willing buyer/willing seller” standard of valuation.

§115 also addresses mechanical licenses, where a copyright owner allows a music user to reproduce a song in an audio-only format; these types of licenses are granted to digital music services, libraries and record labels. As of late, licenses granted to music users were done on a song-by-song basis. This has proven rather burdensome, particularly for digital music services who have to acquire licenses song-by- song.

This per work, song-by-song licensing system for the reproduction and distribution of phonorecords of musical works in the digital context will now be converted to a blanket statutory license administered by a nonprofit aptly named, the Mechanical Licensing Collective.

This Collective will:

(1) assemble and distribute royalties, (2) work to identify songs and their owners for payment, and (3) maintain a comprehensive, publicly accessible database for music ownership information.

A Digital Service Provider ("DSP"), like Spotify, will no longer be able to file Notices of Intention (“NOIs”) with the Copyright Office in order to obtain a compulsory license. Instead, the new license becomes available on a blanket basis – which covers all musical works available for compulsory licensing.

Digital Service Providers file a notice with the Collective, which will manage these notices and collect and distribute royalty payments, as well as implement a process for handling unclaimed royalty payments. The existing system for filing Notices of Intention to obtain a compulsory license for making and distributing phonorecords of nondramatic musical works with the Copyright Office on a song-by-song basis will remain in place for non-digital uses (CDs, vinyl).

If you have questions regarding your current contracts, and understanding the Mechanical Licensing Collective and your rights, please contact us for a free consultation.

#Music #MusicLaw #MusicLawyer #AMPA #MMA #musicmodernizationact #Licensing #DSP