Musical Works Modernization Act (changes to section 115)
Can I still file a NOI with the Copyright Office?
The existing system for filing notices of intention to obtain a compulsory license for making and distributing phonorecords of nondramatic musical works (NOIs) with the Copyright Office on a song-by-song basis will remain in place for non-digital uses (CDs, vinyl).
However, the Copyright Office will no longer accept NOIs to obtain a compulsory license for making a digital phonorecord delivery of a musical work, such as in the form of a permanent download, limited download, or interactive stream. Instead, after a transition period, during which the Register will issue relevant regulations and designate key entities to carry out administration of the license, the new license becomes available on a blanket basis (covering all musical works available for compulsory licensing). Digital phonorecord deliveries are obtained under the new blanket license by submitting a notice of license to the mechanical licensing collective (MLC).
In the interim before the blanket license is available from the MLC, the liability for digital music providers will be limited so long as they comply with certain requirements, including engaging in good-faith, commercially reasonable efforts to identify and locate each copyright owner of a musical work they use on their service. See the below FAQ on what happens during the transition period for more details.
Will the MMA change the statutory rates?
The new legislation does not change the rates for the compulsory license under section 115. However, the legislation does establish a new rate setting standard to be applied by the Copyright Royalty Judges. The new market-based willing buyer / willing seller rate setting replaces the policy-oriented 801(b)(1) rate-setting standard. The Copyright Royalty Judges will apply the new standard to rate determination proceedings that commence on or after October 11, 2018
What happens during the transition period?
Prior to the availability of a blanket license from the MLC, a digital music provider can enjoy a limitation of copyright infringement liability for use of a musical work for which the digital music provider was unable to identify or locate the musical work copyright owner, so long as the digital music provider engages in good-faith, commercially reasonable efforts to identify and locate musical work copyright owners. The digital music provider must also be prepared to pay accrued royalties to the musical work copyright owner once they are located. As part of engaging in good-faith, commercially reasonable efforts to identify musical work copyright owners, the digital music provider is required to use one or more bulk electronic matching processes, and must continue using these processes on a monthly basis for so long as the musical work rights owner is unidentified. If the musical work copyright owner is identified or located during this search process, then the digital music provider is required to report and pay that copyright owner any royalties owed. If the musical work copyright owner remains unidentified between the date of enactment and the date the blanket license is available, then the digital music provider is required to provide a cumulative usage report and accrued royalties to the mechanical licensing collective.
What is the mechanical licensing collective?
The MLC is a non-profit entity that will administer the blanket license. The MLC will receive notices and reports from digital music providers, collect and distribute royalties, and identify musical works and their owners for payment. The MLC will establish and maintain a publicly accessible database containing information relating to musical works (and shares of such works) and, to the extent known, the identity and location of the copyright owners of such works and the sound recordings in which the musical works are embodied. In cases where the MLC is not able to match musical works to copyright owners, the MLC is authorized to distribute the unclaimed royalties to copyright owners identified in the MLC records, based on the relative market shares of such copyright owners as reflected in reports of usage provided by digital music providers for the periods in question. The Copyright Office will initiate a rulemaking to designate the entity that will serve as the MLC.
What is the digital licensee coordinator?
The digital licensee coordinator (“DLC”) is a non-profit entity that will coordinate the activities of the licensees and designate a representative to serve as a non-voting member on the board of the MLC. The DLC will be authorized to participate in proceedings before the Copyright Royalty Judges’ proceedings to establish the administrative assessment paid for by digital music providers to operate the MLC. The Copyright Office will initiate a rulemaking to designate the entity that will serve as the DLC.
Who pays for the operational costs of the MLC?
The operational costs of the MLC will be paid for by digital music providers through voluntary contributions and an administrative assessment set by the Copyright Royalty Judges. The MLC and the DLC will be authorized to participate in proceedings before the Copyright Royalty Judges’ proceedings to establish the administrative assessment paid for by digital music providers to operate the MLC.
How will I claim my royalties from the MLC?
Once established, the MLC will establish and administer a process by which copyright owners can claim ownership of musical works (and shares of such works). Once an owner of an unmatched work has been identified and located in accordance with the procedures established by the MLC, the musical works database and the other records of the MLC will be updated accordingly. The MLC will also establish a dispute resolution committee that implements policies and procedures to address and resolve disputes relating to ownership interests in licensed musical works.
The Copyright Office will update its website with more educational information on claiming works.
How does the MMA affect terrestrial broadcast radio?
The MMA does not directly affect terrestrial broadcast radio. The existing section 114(i) provision that prohibits performing rights organization (PRO) rate courts from considering licensing fees paid for digital performances of sound recordings in its rate setting proceedings for the public performance of musical works is partially repealed. However, this repeal does not apply to rate settings for terrestrial broadcast radio.
Title II of the MMA, the Classics Protection and Access Act, expressly preserves the current preemptive effect, or lack thereof, that title 17 may have regarding any cause of action arising from the nonsubscription broadcast transmission of sound recordings under the common law or statutes of any State for activities that do not qualify as covered activities under chapter 14.
How does the MMA affect performing rights organizations or the ASCAP and BMI consent decrees?
The section 114(i) provision that prohibits PRO rate courts from considering licensing fees paid for digital performances of sound recordings in its ratesetting proceedings for the public performance of musical works is partially repealed. This repeal does not apply to radio broadcasters. Additionally, the legislation changes how judges in the Southern District of New York are assigned to the rate court proceedings set forth in the consent decrees for ASCAP and BMI, by assigning each new rate dispute on a rotating basis instead of all disputes being handled by the same judge.
Classics Protection and Access Act (federal remedies for pre-1972 sound recordings)
What is the term of protection for pre-1972 sound recordings?
The federal remedies for unauthorized use of pre-1972 sound recordings shall be available for 95 years after the year of first publication of the recording, subject to certain additional periods. These periods provide varying additional protection for pre-1972 sound recordings, based on when the sound recording was first published:
- For recordings first published before 1923, the additional time period ends on December 31, 2021.
- For recordings first published between 1923-1946, the additional time period is 5 years after the general 95-year term.
- For recordings first published between 1947-1956, the additional time period is 15 years after the general 95-year term.
- For all remaining recordings first fixed prior to February 15, 1972, the additional transition period shall end on February 15, 2067.
Do I need to register pre-1972 sound recordings?
No. There is no obligation to register. However, to be eligible to recover statutory damages and/or attorneys’ fees, the new section 1401(e)(5) typically requires that rights owners file schedules listing their pre-1972 sound recordings with the Copyright Office (an interim rule recently established the Office’s filing requirements). This requirement takes the place of a formal registration requirement that normally applies to claims involving statutory damages. Rights owners filing these schedules must include the name of the rights owner, title, and featured artist for each recording listed. The interim rule also establishes how individuals may request timely notification of when rights owners file such schedules with the Office. Note that in cases where a transmitting entity has filed a valid and timely notice of contact information, a rights owner may be eligible to obtain statutory damages and/or attorneys’ fees only after sending the transmitting entity a notice stating that it is not legally authorized to use the pre-1972 sound recording, and identifying the pre-1972 sound recording in a schedule conforming to the requirements set forth in the interim rule.
What is the noncommercial use exception for pre-1972 sound recordings?
The legislation establishes a process for lawfully engaging in noncommercial uses of pre-1972 sound recordings that are not being commercially exploited. To qualify for this exemption, a user must submit a notice of noncommercial use after conducting a good faith, reasonable search, and the rights owner of the sound recording must not object to the use with 90 days.
On October 16, 2018, the Copyright Office issued a notice of inquiry seeking comments regarding specific steps that a user may take to demonstrate she has made a good faith, reasonable search. The Office also requested comments regarding the filing requirements for the user to submit a notice of non-commercial use, and for a rights owner to come forward and object to such use.
How long will it take for the Office to index the schedules of pre-1972 sound recordings submitted by rights owners under the interim rule?
The Copyright Office will index a schedule of pre-1972 sound recordings promptly following receipt of the schedule in proper form, and the prescribed fee.
Allocation for Music Producers Act (payment mechanism for producers, mixers, and engineers)
What does the AMP Act mean for producers, mixers, or engineers?
Title III of the MMA, the Allocation for Music Producers Act (“AMP Act”), will allow music producers, mixers, or engineers who were part of the creative process that made a sound recording but who were not by statute receiving royalties under section 114, to receive compensation from royalties collected for uses of sound recordings under the section 114 statutory license. It does this by codifying a process wherein the collective designated to collect and distribute royalties (currently, Sound Exchange) will distribute a portion of royalty payments directly to a producer, mixer, or engineer pursuant to a “letter of direction” from an authorized artists payee. The AMP Act also directs the collective (SoundExchange) to adopt a policy that, in the absence of a letter of direction, allows for statutory royalties for certain pre-1995 sound recordings to be paid to producers, mixers, or engineers from the featured artist’s share if certain requirements are satisfied, including that the artist payee is notified and does not object.