By Mike Marciano

 

In recent years, music streaming services have maintained strong and promising upward trajectories in terms of popularity and usage statistics.[1] For instance, Spotify, “the world’s biggest music streaming platform by number of subscribers,”[2]reported 286 million monthly active users in its Q1 2020 report, up significantly from the 217 million the company reported in its Q1 2019 report.[3] Such an increase in users has been relatively consistent, as Spotify reported its usership at 131 million in Q1 of 2017, and 96 million in Q1 of 2016.[4]

 

As the popularity of streaming platforms such as Spotify continued on such a consistently positive trend, it became abundantly clear that the copyright law protecting music needed reform.[5] Indeed, lawmakers considered it necessary to curate a law to, “reflect modern consumer preferences and technological developments in the music marketplace.”[6]

 

On October 11, 2018, the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (hereinafter “the MMA”) was enacted.[7] Broadly speaking, the MMA, “updates U.S. copyright law to make music licensing fairer for creators and more efficient for music providers.”[8] While the MMA provides redress for various important music copyright issues, such as the incorporation of pre-1972 sound recordings into the federal copyright system,[9] and the streamlined allocation of royalties to music producers,[10] the MMA importantly creates an entirely new framework for licensing music distributed on streaming services like Spotify.[11]

 

Specifically, the MMA begins with Title I: Musical Works Modernization Act.[12] Title I, “replaces the existing song-by-song compulsory licensing structure for making and distributing musical works with a blanket licensing system for digital music providers,”[13] such as Spotify, “to make and distribute digital phonorecord deliveries . . . .”[14] To make such a marked change, the MMA establishes the creation of the Mechanical Licensing Collective (hereinafter “the MLC”).[15] A nonprofit organization, one important purpose of the MLC will be to establish this blanket licensing system pursuant to the MMA, in part by playing the role of, “administer[ing] blanket mechanical licenses to eligible streaming and download services (digital service providers or DSPs) in the United States,”[16] starting in January of next year.[17] The MLC can then store user data in The MLC Portal, which, “puts songwriters and publishers in a position to manage and control their data to ensure they get paid properly.”[18] In short, after one has registered for one of these licenses, “[t]he MLC will then collect the royalties due under those licenses from the DSPs and pay songwriters, composers, lyricists, and music publishers.”[19]

 

The MMA was born out of a recognized need to remedy the chaos and arbitrariness that defined music law.[20] Virginia Representative Bob Goodlatte, in speaking about the MMA, noted that in taking a “comprehensive review” of copyright laws, “ . . . the most complicated area, and the most contentious, but also by far the most in need of reform, was the area of music copyright law.”[21] “The [MMA],” according to Rep. Goodlatte, “treats various sectors of the music industry – our creative artists and songwriters, and others – in a much more fair way in terms of sharing the rewards for the creativity that takes place in that industry.”[22]

 

This month, the MLC confirmed the location of its new headquarters in Nashville, Tennessee, and expects to be operational in that location by the Spring of next year.[23] With the location set, and the new year around the corner, it will be interesting to see the effect of the MMA and the MLC on the music industry in the years to come.

 

[1] See Mansoor Iqbal, Spotify Usage and Revenue Statistics, Business of Apps (Oct. 2, 2020), https://www.businessofapps.com/data/spotify-statistics/#2.

[2] Id.

[3] Id.

[4] Id.

[5] See The Music Modernization Act, U.S. Copyright Off., https://www.copyright.gov/music-modernization/.

[6] Id.

[7] Orrin G. Hatch-Bob Goodlatte Music Modernization Act, Pub. L. No. 115-264, 132 Stat. 3676 (2018).

[8] U.S. Copyright Office, The Music Modernization Act in 2 Minutes, YouTube (Apr. 13, 2020), https://www.youtube.com/watch?v=sjBpQ7_Pl5Q.

[9] See Classics Protection and Access Act, U.S. Copyright Off., https://www.copyright.gov/music-modernization/pre1972-soundrecordings/.

[10] See Allocation for Music Producers, U.S. Copyright Off., https://www.copyright.gov/music-modernization/amp/.

[11] See Musical Works Modernization Act, U.S. Copyright Off., https://www.copyright.gov/music-modernization/115/.

[12] U.S. Copyright Off., supra note 5.

[13] U.S. Copyright Off., supra note 11.

[14] Id.

[15] Id.

[16] Mechanical Licensing Collective, About the MLC, The MLC, Themlc.com/our-story.

[17] Id.

[18] Jessica Nicholson, Mechanical Licensing Collective Offers Early Look into the MLC Portal, Music Row (Sept. 30, 2020), https://musicrow.com/2020/09/mechanical-licensing-collective-offers-early-look-into-the-mlc-portal/ (statement of Mechanical Licensing Collective CEO Kris Ahrend).

[19] Mechanical Licensing Collective, supra note 16.

[20] U.S. Copyright Office, The Creation of the Music Modernization Act, YouTube (Mar. 18, 2020) https://www.youtube.com/watch?v=rzGaaKRy93o (Statement of Rep. Jerrold L. Nadler) (“Well, before the MMA, music law was chaotic, and arbitrary, arbitrary in the sense that it was unfair.”).

[21] Id. (statement of Rep. Bob Goodlatte).

[22] Id. (statement of Rep. Bob Goodlatte).

[23] Jessica Nicholson, The Mechanical Licensing Collective Sets Nashville Headquarters Location, Music Row (Oct. 6, 2020), https://musicrow.com/2020/10/the-mechanical-licensing-collective-sets-nashville-headquarters-location/.

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