New Legislation Harmonizes Artists’ Rights and the Age of Streaming

By Musa Kamara (PO’22)

The rise of streamed music consumption—that is, the consumption of music that does not need to be downloaded—represents a significant milestone in the history of music. Streaming services have made listening to music easier than ever before and have facilitated a rise in music industry revenues, revenues that had suffered as CD sales declined in the 2000s. Take, for example, Spotify, the world’s most popular streaming service, which hit 200 million active users in January. For $10 a month ($5 for students), users have access to a library of over 40 million songs. By contrast, one music CD containing one album will often cost more than $10. Today, streaming currently makes up 75 percent of music industry revenues, as opposed to the 1 percent it constituted in 2005. That said, the rise of music streaming has not been mutually beneficial for both artists and consumers. Spotify currently pays artists between $0.006 and $0.0084 per stream, money that can ultimately be split between a record label, artists, producers, and songwriters. In other words, making serious money from a streaming service as an artist is a remarkable feat. However, in late 2018, the United States Congress passed a bill aiming to address this inequity, highlighting the complicated legal copyright aspect of the music industry that consumers are less likely to be privy to.

The Orrin G. Hatch – Bob Goodlatte Music Modernization Act, or MMA, passed unanimously in the House and Senate in September of 2018 and was signed into law in October of 2018. The bill features the consolidation of three separate pieces of legislation: the Music Modernization Act, the Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society (CLASSICS) Act, and the Allocation for Music Producers (AMP) Act. The MMA’s overall goal is to apply modernized copyright law to today’s state of music consumption, and each separate act represents a larger goal to resolve the aforementioned inequity afflicting artists.

The Music Modernization Act aims to make it easier for artists to make money when their music is streamed via a streaming service. Before the MMA was passed, streaming services had two copyrights to deal with when streaming a song: the copyright for the sound recording that consumers were listening to, and the copyright to the actual song, i.e. the lyrics. Artists who perform sound recordings can only gain royalties from the sale of their recordings, while songwriters and the publishers of songs can gain royalties from the sale of recordings as well as any other time a song is performed. For example, if I sang a song that I did not write, I would get royalties only when someone played my version. If I wrote a song and originally performed it, I would get royalties each time someone played my recording and each time someone performed or remixed it.

The question of the distribution of royalties is where the issue becomes interesting; songs can have both numerous performers and numerous songwriters and songwriters rights are difficult to determine. Before a streaming service can play a song, it must first establish who wrote the song and who performed a song and obtain the copyright. However, these answers are not always clear. As such, Congress had allowed for song redistributors to file copyright notices of their usage of a song, should they not be able to find who wrote a song. These notices essentially announce that if someone wrote a song, they should come forward a claim it because they could be entitled to royalties. However, copyright notices are not closely followed and could be released in huge volumes, making them difficult to find. This determination of ownership, or lack thereof, by streaming services often involved disputes over timely payment and over the incorrect attribution of song rights, resulting in lawsuits against streaming companies.

The Music Modernization Act aims to benefit both streaming services and artists by creating a government agency that would take over this responsibility from streaming services and facilitate the payment of artists. The agency, called the Mechanical Licensing Collective (MCL), will provide streaming services with the rights to songs and will then locate the person(s) to which the money should go. The digital services themselves will pay for the operating costs of this agency. This method will thus increase costs for digital services, who will have to pay for this agency; however, the absolvement from the responsibility of determining songwriter rights serves to offset this increase in cost by saving streaming services the money and trouble involved in a lawsuit.

The CLASSICS Act has more of a retroactive purpose, seeking to ensure that artists who created music before 1972 also receive the benefits established under the MMA and could achieve proper recourse should their music be used without their permission. The CLASSICS Act largely addresses the fact that streaming services and radio stations have been playing “pre-72 sound recordings” without paying royalties. These pre-72 sound recordings were not subject to the same protections as more modern music because the Sound Recording Act of 1971 (the first federal act to address copyright law for sound recordings) only addressed recordings after February 15, 1971. So, for the most part before the CLASSICS Act was passed, “pre-72 sound recordings” were no more than public domain because they were not mentioned under federal copyright law; although certain states had protections, no federal protection was established. Until the CLASSICS Act was passed, there was simply no guarantee that these recordings would receive royalties. The CLASSICS Act provides just that guarantee.

Whereas the Music Modernization Act and the CLASSICS Act essentially update current copyright law, the AMP Act presents perhaps the most seminal idea of the three components, bringing an entirely new element to the table. The AMP Act allows for the collection of royalties by music producers, mixers, and sound engineers, none of whom had previously been mentioned in copyright law. Formerly, since producers, mixers, and engineers were not artists and were thus not specifically enumerated, their payments came as a percentage of what artists were being paid in royalties. The issue with this system of payment was the fact that since artists themselves were only being paid a percentage of royalties, producers were being paid a percentage of a percentage, while still contributing greatly to the creation of the music. Furthermore, this percentage was subject to individual contracts, so while bigger producers could fetch larger percentages, smaller producers’ salaries were chiefly at the whim of the record labels.

The Music Modernization Act represents a rare moment in both political history and music history. Not only did the Act pass unanimously in both bodies of Congress, it was also supported by the vast majority of the music industry because of its universal beneficiality; it received endorsements from numerous big names in the industry, including the Recording Industry Association of America, the National Music Publishers Association, the Recording Academy, and American Society of Composers, Authors and Publishers as well as many others. Of course, the passage of such a complicated set of reforms raises the question of whether or not consumers will be affected negatively. As it turns out, the answer seems to be no; streaming services like Spotify and Pandora have endorsed the MMA and have expressed no plans to increase monthly fees. Overall, the MMA serves as a step in making music as a profession more rooted in legal protection and thus more accessible in terms of its capacity to support musicians financially, which it historically has not been able to do.

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