Music Modernization Act launched in the US

COPYRIGHT: Two US Congressmen have launched a proposed new statute that has the support of both music owners and music users in an effort to overhaul of the mechanical royalties system in the US. Doug Collins and Hakeem Jeffries say that the Music Modernization Act would "bring music licensing its first meaningful update in almost 20 years".

With no collecting society offering a blanket licence covering the so called 'mechanical rights' in songs, music users must identify the owners of every song they copy, and make sure those owners receive the licensing paperwork and fixed royalty rate set out in American copyright law. Its not easy - the streaming platforms, which concurrently exploit both the performing right and mechanical right elements of the song copyright. Last May, Spotify came to a proposed $43 million settlement to resolve a class action from songwriters led by David Lowery and Melissa Ferrick. The plaintiffs in that case had alleged that Spotify hasn't adequately paid mechanical licenses for song compositions. In July, Spotify was hit with two lawsuits, including one from Bob Gaudio, a songwriter and founding member of the group Frankie Valli and the Four Seasons. Now Spotify has been hit with a $1.6 Billion copyright lawsuit from Wixen Music, publisher of songs by Tom Petty and Neil Young amongst others, which amongst other claims argues that the Lowery/Ferrick settlement was far too low. Apple Music has faced similar claims. 

The proposed legislation will be an overhaul of the compulsory licence system that governs mechanicals in the US, with Collins and Jeffries saying: "Under the Music Modernization Act, the digital services would fund a Mechanical Licensing Collective, and, in turn, be granted blanket mechanical licenses for interactive streaming or digital downloads of musical works". Although paid for by the digital services, the new collecting society would be run by music publishers and (self-published) songwriters. The law would also: change the way the statutory boards and courts that regulate US collective licensing are organised; the way judges are selected to consider the royalty rates would be changed; and the criteria employed when setting rates would be altered to reflect market realities.

With Wixen's claim against Spotify alleging that Spotify outsourced its work to a third party, licensing and royalty services provider the Harry Fox Agency, which was "ill-equipped to obtain all the necessary mechanical licenses", surely this proposed legislation is much needed? Some say yes, some say maybe!

The Digital Media Association (which includes Apple, Spotify, YouTube, Pandora, Amazon, Napster and Microsoft as members) is backing the proposals, as are the US music publishing and songwriter community. David Israelite for the National Music Publishers Association said "The Music Modernization Act brings the laws that govern songwriters into the modern age. This legislation will lead to improved rates for songwriters and will streamline digital music companies' ability to license music. While there is still more to do to free songwriters from oppressive government regulation, this is a major step forward". The NMPA also put its name to a joint statement alongside collecting societies BMI and ASCAP, plus Songwriters Of North America and Nashville Songwriters Association International. Together they declared that the Music Modernization Act represents "months of collaboration and compromise between the songwriting and tech industries". However the National Association of Broadcasters (NAB) said it has serious concerns about unrelated provisions in the bill that may unjustifiably increase costs for many music licensees, including local radio and TV broadcasters, who otherwise receive no benefit from the legislation” the organisation said in its statement adding “NAB looks forward to working with the bill sponsors and impacted parties to resolve our outstanding concerns” and  the Songwriters Guild of America said that while the proposed legislation has many good points, it also has a “number of serious problems” that will need to be addressed before SGA and thousands of its members can support the bill. 

Other proposed music sector focussed legislation in the US includes moves to ensure AM/FM radio stations to pay royalties to artists and labels as well as songwriters and publishers (the Fair Play Fair Pay Act), and moves to sort out the pre-1972 'quirk' in US copyright law (the CLASSICS Act), and the Transparency In Music Licensing & Ownership Act proposed by Congressman Jim Sensenbrenner earlier this year. That proposal also seeks to overcome some of the issues around digital licensing and the problems caused by the lack of a workable publicly accessible database detailing accessible music rights ownership information.

An interesting take on how this may have influenced Wixen Music's recent filing of it's $1.6 billion lawsuit against Spotify (and how this might impact on Spotify's planned IPO) here
https://www.npr.org/sections/therecord/2018/01/03/575368674/sweeping-new-music-law-expedites-a-1-6-billion-lawsuit-against-spotify and here  https://musicindustryblog.wordpress.com/tag/spotify-law-suit/

https://www.billboard.com/articles/business/8078543/music-modernization-act-house-of-representatives-licensing-reform

https://www.billboard.com/biz/articles/news/legal-and-management/8085840/spotify-hit-with-16-billion-copyright-lawsuit-over

http://musiclawupdates.blogspot.co.uk/2017/12/apple-music-in-hot-water-over-unpaid.html

http://www.theweek.co.uk/90715/spotify-hit-with-billion-dollar-copyright-lawsuit

No 'making available' without 'reproduction' rules German court in CELAS case

From Dr Martin von Albrecht (K&L Gates) comes news of an important decision last month in which he was personally involved. He writes:

In a declaratory judgment action filed by the company MyVideo (represented by K&L Gates Berlin) against CELAS, a joint venture of the German collecting society GEMA and the UK collecting society MCPS-PRS, the District Court of Munich (Landgericht München) decided on 25 June 2009 that CELAS has no right to prohibit reproductions of the Anglo-American repertoire of EMI Music Publishing Ltd online in Germany.

MyVideo provides an ad-financed website in German (myvideo.de) that, just like Youtube, enables the streaming of user-provided video content over the internet. CELAS, which was set up by GEMA and MCPS-PRS to manage on a pan-European basis the so-called mechanical reproduction rights for online uses of the Anglo-American repertoire of EMI Music Publishing Ltd, had claimed that MyVideo needed a CELAS licence with respect to EMI songs uploaded on its server as part of videos.

The District Court of Munich held that, in general, making available copyright works online required imperatively both making available rights and mechanical reproduction rights, since the act of making available online was technically not feasible without a reproduction. In such a case of union of rights, however, German copyright law did not allow a splitting of making available rights and mechanical reproduction rights for online uses. The court held that, as a consequence, EMI could not have validly transferred only mechanical reproduction rights for online uses to CELAS while the making available rights were still managed by GEMA.

The decision confirms that, in Germany, GEMA still functions as a one-stop-shop for the world-wide repertoire which offers all making available and reproduction rights necessary for online uses. Users do not have to negotiate separate deals with business models such as CELAS or PEDL (Warner) for mechanical reproduction rights. Instead, they can obtain comprehensive licenses from GEMA in a fast and efficient manner - also for the benefit of all copyright holders.

The impact of the decision may be bigger than it seems at first glance because it would stop all the publisher models of withdrawing the mechanical online rights from the collecting societies. The grounds of the German court's decision are in line with the Commission's decision of 6 July 1972 (72/268/EWG, ABl. 1972 L 166/22 GEMA II). The Commission found that "all economically dividable forms of exploitation of copyright under consideration of the differences of the national laws could be transferred separately".

Further analysis of this decision by Dr Albrecht can be found here.