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New US Streaming Law Aids Musicians’ Rights and Payments

A gap in US copyright law left some musicians unable to collect royalties during the music-streaming revolution, and others never realized there was money owed to them. The recently enacted Music Modernization Act (MMA) attempts to rationalize a patchwork of common law, state law, and federal law that dates back to the dawn of sound recording in the 1870s.

The MMA combines three different pieces of music-rights legislation and establishes a new way of doing business that is both more fair and more consistent, especially when it comes to Internet radio companies like Pandora and streaming services like Apple Music and Spotify.

Amazingly, the MMA has been received well by every stakeholder, partly due to last-minute changes that tweaked copyright duration. Musicians, independent and major recording labels, digital-music services, and public-domain advocates—even members of Congress who were at various times opposed to some provisions—all have mostly good things to say about the law, even if it’s not precisely what they wanted.

Spotify’s Horacio Gutierrez, the company’s general counsel, said in a statement that the company wants “a million artists” to make a good living creating and performing music. “The Music Modernization Act is a huge step towards making that a reality, modernizing the outdated licensing system to suit the digital world we live in.” (Apple didn’t reply to our request for comment about Apple Music.)

Before the MMA, the music rights held by songwriters and performers were all over the place. For performers, whether they could collect royalties depended on when a song was first recorded (and sometimes, in which state). Producers, mixers, and engineers, often deeply involved in the creative process of making a song or album, received royalties only when it was played or sold in some places.

Streaming services had to apply for rights one song at a time in a cumbersome process that overwhelmed the US Copyright Office, and they could still be hit with lawsuits demanding massive fees if they didn’t find and pay a song’s composer or other rights-holder. Yet many artists remained unpaid, too.

It was a huge mess that cost every party involved time and money, although it particularly shortchanged creators and performers.

Services like Spotify and Apple Music will likely pay more for rights under the new law—both per song and to more artists—which could translate into higher subscription prices. However, those higher costs should be offset by reduced expenses and the elimination of a whole category of potential lawsuits.

Another positive effect? More music could wind up on streaming services, even as artists are paid better for it—or paid at all!

A Patchwork of Laws and Practices

Copyright for visual media like books, film, and television isn’t simple, but at least it’s mostly straightforward. More or less, anything you write, draw, or capture as an image (still or moving) in analog or digital form gets a copyright at the moment of creation. That includes every book, movie, issue of a newspaper, architectural drawing, photograph, and artwork—and musical composition, including variations in arrangements, such as for a quartet, a jazz band, or a full orchestra.

Depending on whether you produce that work for public consumption and whether it’s created directly for a company, copyright lasts from 95 to 120 years from creation, or for 70 years after the last contributor to a work dies.

But sound recordings have always been treated differently. They’re relatively new compared to books and periodicals, with Thomas Edison making the first audio recording in 1877 that could be replayed at will. This led to weird copyright situations, in which the law in the state in which a work was recorded or sold governed ownership. If a state had no specific law, rights were covered by common law—the judicial decisions resulting from criminal or civil cases—which could be all over the place.

Eventually, Congress “federalized” audio copyright, known as the phonogram right, so that all recorded work from 15 February 1972 onward would have a clear set of ownership rights and copyright duration. But Congress also set an absurd expiration. While newly created works had rules similar to those for other kinds of publishing, the copyright on sound recordings made before 15 February 1972 wouldn’t expire until 2067! (Some state laws varied, but for most intents and purposes, that was the date.)

That federalization effort left out more too. It didn’t take into account the potential for new playback technologies that hadn’t yet been imagined. Streaming was particularly problematic because of its particular nature of not transferring music for storage.

One Law to Rule Them All

The MMA solves many of these issues by bringing everything into the same copyright regime. Simultaneously, it establishes a new independent body that will set and collect fees for certain kinds of playback, such as streaming. Here’s a summary of everything that happens.

Copyright Changes

The MMA federalizes all recordings before 15 February 1972. As a result, they’re covered by the same phonogram rights as recordings made on or after that date. As a result, streaming services have to pay performers and other rights holders in those recordings.

A late set of changes to the legislation finally put recordings under a similar set of expiration rules as published works, though it’s complicated. The phonogram rights for all recordings made before 1923 will expire on 1 January 2022. That will open up music locked away in vaults to new listeners and new scholarship.

All work made from 1923 to 1972 gets a term of 95 to 110 years, depending on when it was published. It’s complicated, but recordings from 1923 expire into the public domain on 1 January 2024, followed by annual expirations of subsequent years with a few gaps.

The law also allows non-commercial use of recordings, with a safe harbor for pre-1972 work. If you want to use a song from that era, and you can’t find it in commercial use (actively for sale on a CD or for download, for instance), you can file a notice with the Copyright Office. After 90 days with no response from any rights holder, you can then use the recording with a good assurance that it falls into so-called “fair use.” For some music historians, this will be a boon, even if they can’t sell a product that contains the music.

Clearinghouse for Composition Rights

The MMA creates a new nonprofit organization called the Mechanical Licensing Collective. This group sweeps away the need for every streaming service and digital-music company to track who has a stake in the underlying musical composition of material they deliver. (The “mechanical” right refers to making copies that use a composition. It refers to something like pressing a record—a mechanical process—even though today the process more often involves sending music as bits over the Internet.)

The Mechanical Licensing Collective will be similar to the group that already handles “compulsory licenses,” or the right that allows anyone to perform and release a recording after the first publicly released performance of a song. (This is why “cover” songs abound: the original songwriter has no right to prevent them, and the cost is set at a fixed rate.)

Right now, streaming and download services have to file a notice with the Copyright Office for each song they stream, and the paperwork is unbelievable. The Mechanical Licensing Collective will instead charge a fixed rate for everything and provide a “blanket” license. This change alone will eliminate a vast amount of duplicated and unnecessary effort.

The Mechanical Licensing Collective will also create a publicly searchable database of ownership rights in compositions, something that doesn’t currently exist. It will disburse royalties to those owed them and provide a way for composers and others to stake claims to work for which they aren’t yet listed.

The MMA doesn’t cover rights that have already been sorted out for other aspects of music. These include the fees collected for the sale of audio recordings (whether in analog or digital form), and performance rights in live venues or in movies or on TV. Those rights will still be managed by existing organizations.

Little Things

Producers, sound mixers, and engineers who contributed to a work now get royalties when it’s played on satellite radio or online radio (where a user doesn’t select which songs play), just like they do in other media.

Finally, the Copyright Ruling Board, an obscure group that mostly sets Internet radio royalties, can now consider a song’s popularity in determining how much services should pay to air it.

Pay to Play

In an age in which it seems like the creators of works seldom come out on top, whether it’s due to casual piracy by individuals or collective action by giant corporations, the Music Modernization Act is a surprisingly comprehensive win.

Many musicians will see literally a few dollars more, but some will connect with a revenue stream that could be meaningful. That’s especially true for older artists whose work remains popular and for which they haven’t been compensated at all.

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Comments About New US Streaming Law Aids Musicians’ Rights and Payments

Notable Replies

  1. From your article in The Magazine I clicked over to The National Jukebox and was bummed to see that it requires Flash for playback. I wonder what it’ll take to get that updated.

  2. I’m wondering how this act is going to affect one particular kind of streaming.

    I just finished working at a church where we live-streamed the worship service on YouTube. We purchased a “streaming license” from CCLI, one of several clearinghouse organizations that covers religious music copyright clearances. Their business model is to obtain non-exclusive licenses for a huge block of music typically used in worship, sell a reproduction or performance license to an individual congregation based on the number of people who are typically present to hear the performance, and then pay royalties back to the rights holders.

    There were issues:

    • There will always be works that are not in their catalog.
    • YouTube music streaming is an adventure in itself. The monitoring software that YouTube uses can be gamed by publishers who claim ownership and monetize an entire video because they publish a contemporary medley or arrangement of a piece that has been in the public domain for hundreds of years. The appeals process is structured to protect the publisher’s claim, not the user’s.
    • We were not sure how much of our annual licensing fee actually went back out as royalties. I suspect it was a very small fraction.

    I’m wondering if the MMA is going to have an effect on the church licensing business. Particularly, will the Mechanical Licensing Collective supersede or transform licensing for this purpose?

  3. I’ve met the person behind it, Gene DeAnna, the head of the audio section of the Library of Congress, and tried to contact him for a recent article I was writing. Unfortunately, didn’t get a reply. He may have retired! But the LOC will be able to revamp that for 2022 at least.

  4. Super complicated! I’m not sure entirely how it will be changed, because it doesn’t really affect performance licenses. It mostly streamlines large streaming companies arrangements for paying royalties. For digital downloads, all the pieces were already in place, including a process to pay for mechanical rights. But with streaming, it seems like streaming services obtained music from all sorts of sources — digital downloads were licensed individually from record labels and individual artists, while the streaming companies seem to have an awful lot of songs that they don’t know who to pay for (or didn’t pay for pre-1972 recordings in some, but not all cases!)

  5. Why do I care about this? I subscribe to Tidbits for Apple information. If I cared to know about musicians’ problems (which I don’t) there are many other places I could look.

  6. You should care because it will result in Apple having to increase pricing for Apple Music, and tracks sold on iTunes.

  7. Pervis

        October 29
    

    Why do I care about this? I subscribe to Tidbits for Apple information. If I cared to know about musicians’ problems (which I don’t) there are many other places I could look.

    I subscribe to TidBITS and participate in this list because I’m interested in Apple hardware, software, services and its myriad of strategies, revenue streams, and impact within the global market and society.

    Apple is in the music and entertainment business and they are one of the most influential and largest music and entertainment firms in the world. iPod and ITunes were critical to the company’s recovery from severe financial distress and near death, and greatly contributed to the development and tremendous success of iPhone, iPad and Beats/EarPods. Music and iTunes are a major contributor to Apple’s services business, which has become a rapidly mushrooming revenue stream and will also factor in to not so secret streaming video business.

    Apple has always tried its best to position itself as a supporter of musicians and composers in an industry that has a reputation for fleecing artists whenever possible and to the maximum extent. Because musician’s rights are so critical to Apple they recently launched a music publishing business:

    https://www.rollingstone.com/music/news/apple-music-launches-global-publishing-business-to-attract-songwriters-w520896

    And I I strongly suspect that I’m not the only person on this list that likes to listen to music.

  8. Fair enough. Apple is also exploring getting into the car business. May we now look forward to articles about the automotive industry? I strongly suspect that I’m not the only person on this list who drives a car :grinning: And since Apple is getting into the content business, may we also look forward to articles about celebrities?

    There are probably two degrees of separation between any topic and Apple. The more Tidbits loses it’s focus on the technical aspects of Apple hardware and software, the more it loses it’s unique selling proposition. For me, anyway.

    I guard my Inbox so that it doesn’t become a drag on productivity. I’m sure Mr. Fleishman’s article was well written but it’s not the content I expect to find in Tidbits (although I find a disappointing trend in Tidbits lately to add just such peripheral and verbose filler).

  9. So might inflation, the world economy, tariff wars, and politics. A fundamental axiom of marketing is “Price is unrelated to cost”. Then again, although I listen to music, I don’t use Apple Music nor buy tracks on iTunes.

  10. TidBITS has covered issues of general Internet or technology interest since the very first days, nearly 29 years ago, and as others have said, this is relevant because of Apple’s significant foray into streaming with Apple Music. Services (including Apple Music) is a large and ever-growing percentage of Apple’s revenues, so major US legislation that might affect it is relevant.

    Obviously, events dictate some of our coverage, but in general, there has been no change in the kinds of things we cover. Well, apart from our new focus on “peripheral and verbose filler,” which we believe is where the future of Internet journalism lies. :slight_smile:

    Apparently, it was John Lydgate who said: “You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time."

  11. I like the broad width and depth of Tidbits coverage. For me, many of the article are not applicable. I frequently do learn things from article which I thought I had no interest in, but if I’m busy, I use the grocery store approach. I only read the ones that appear to be of interest and leave the rest ‘on the shelf’.

  12. “Target Marketing” is “pleasing some of the people all of the time”. From your comments, your Target Market seems to be people with too much time on their hands :grinning:

    Perhaps you are right and that is the future of internet journalism. Not only the future, but the present. It has spawned a whole new workforce of, dare I call them “journalists”, who build click-bait articles around Google adWords (not that I am saying you do).

  13. Even if you don’t use Apple Music or iTunes, it will STILL affect you through the music to which you listen or buy; of course, only music pirates will probably be unaffected.

  14. Pervis

        October 30
    

    MMTalker:

    Apple is in the music and entertainment business and they are one of the most influential and largest music and entertainment firms in the world.

    Fair enough. Apple is also exploring getting into the car business. May we now look forward to articles about the automotive industry? I strongly suspect that I’m not the only person on this list who drives a car :grinning:

    Though there have been mentions of Apple’s efforts in autonomous vehicle research, TidBITS focuses on actual products and services, so they’ve remained mentions to date. There have been many discussions on this list, and as I worked on automotive accounts in advertising for decades, I am very interested and opened my big big blabby mouth about it quite a bit.

    And since Apple is getting into the content business, may we also look forward to articles about celebrities?

    I just finished streaming today’s product presentation. I am totally floored about the new Mini, MacBook Air and iPad Pro, I was also impressed by Lana Del Ray’s performance and all the artists that were mentioned and flashed on the screen by the various presenters. And years ago there was discussion about the “Think Different” celebrities.

    There has been brief mention of Ophra, Shonda Rhimes, Nicole Kidman, Reese Witherspoon, Damien Chazelle on the list, along with bits about other big names who are busily spending the $2 billion Apple budgeted for content development this year. It’s rumored that the ante will up to $4 billion next year. But I sincerely doubt TidBITS is going to get into competitive bidding with People, Hello, Access Hollywood, etc. over paparazzi photos or videos. Adam, please correct me if I an wrong.

    There are probably two degrees of separation between any topic and Apple. The more Tidbits loses it’s focus on the technical aspects of Apple hardware and software, the more it loses it’s unique selling proposition. For me, anyway.

    Not for me, and if Apple had remained just a hardware and software they might not have survived.

    I guard my Inbox so that it doesn’t become a drag on productivity. I’m sure Mr. Fleishman’s article was well written but it’s not the content I expect to find in Tidbits (although I find a disappointing trend in Tidbits lately to add just such peripheral and verbose filler).

    I’m very OCD about my inbox. I’m not at all interested in Nisus Writer or Crash Plan, though I do understand many TidBITS are. So I just ignore what I’m not concerned about and move on to articles I am. I have been a devoted reader of, and subscriber to, The New York Times since I was in the 6th grade, but I have never read every article in even a single issue. And what I consider verbose filler, including sports, is not considered such by others.

  15. I doubt it. Price is set by willingness to pay. I doubt retailers and distributors are going to alter their pricing strategies for what will probably amount to fractions of a cent on a title given the negative price elasticity of demand. They already make obscene profits. Besides, it has been claimed that the simplicity inherent in the new law will result in net savings for them… and I doubt they will be passing them along :smile: The media corporations will probably be the biggest beneficiaries followed by some crumbs for the artists.

    I deny both the implied allegation and the alligator. :crocodile:

  16. Pervis

        October 30
    

    romad:
    Even if you don’t use Apple Music or iTunes, it will STILL affect you through the music to which you listen or buy

    I doubt it. Price is set by willingness to pay. I doubt retailers and distributors are going to alter their pricing strategies for what will probably amount to fractions of a cent on a title given the negative price elasticity of demand.

    Apple didn’t spend billions to buy Beats because they wanted the headphone line, which they could have imitated for a lot less money, they wanted Dr. Dre, Jimmy Iovine and their streaming service. Sales of individual items of audio content, be they spoken word or music, had been decreasing rapidly month over month for years, and they continue to do so. Sales of streaming subscriptions overtook individual album purchases last year:

    https://techcrunch.com/2018/01/04/on-demand-streaming-now-accounts-for-the-majority-of-audio-consumption-says-nielsen/

    Vinyl sales have upturned, but not enough to make a negligible impact on overall music sales, let alone the profits for composers or artists. And that’s what the new act is all about…especially compensation for streaming content of oldies that were not fairly covered under regulations passed in the pre-streaming dark ages.

    They already make obscene profits.

    Big stars like Gaga might, but the vast majority of artists don’t. And if Apple were making mega profits off of iTunes, they would have broken the numbers out in quarterly results. Instead, they lump them in with services, like they do with Music. iTunes sold iPods, iPhones, Macs and iPads. When Spotify started making a serious dent in iTunes, Apple bought Beats and the guaranteed services of talent magnets and production magnates.

    Spotify never made a penny in profits and most probably never will. Apple, with its diversified lines of products and services, has been raking in a mint for years.

    Besides, it has been claimed that the simplicity inherent in the new law will result in net savings for them… and I doubt they will be passing them along :smile: The media corporations will probably be the biggest beneficiaries followed by some crumbs for the artists.

    Glenn’s excellent article clearly explains why this is not true. Please read it if you haven’t already done so.

  17. Dear Pervis
    If someone posts something you’re not interested in please learn how to scroll. Please start your own list and then you can tailor it to your interests.

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