The Music Modernization Act – A Long Overdue Overhaul to the Music Copyright Licensing Infrastructure

By: Michelle M. Wahl, Partner)
Swanson, Martin & Bell, LLP (330 N. Wabash, Ste. 3300, Chicago, IL 60611)

The Music Modernization Act – A Long Overdue Overhaul to the Music Copyright Licensing Infrastructure
The Music Modernization Act seeks to overhaul the music copyright licensing infrastructure, a daunting task that most would say, is long overdue. The bill is a bipartisan package incorporating several pieces of legislation, including the CLASSICS Act, the AMP Act and rate standard parity provisions from the Fair Play Fair Pay Act.

Among its proposed changes, the Act would fundamentally alter Section 115 of the U.S. Copyright Act, which regulates compulsory licenses in nondramatic musical works, or songs outside of a movie, television show or play. Specifically, the bill seeks to reform Section 115 to ensure timely compensation to songwriters by ending the Notice of Intent process and instead creating a single Mechanical Licensing Collective funded by the digital services and providing a publicly accessible database for song ownership information. The bill further seeks to establish an agency devoted to licensing and royalties that would be led by a board comprised of individuals from various sectors of the music industry. This agency would be tasked with identifying rightsholders, issuing blanket licenses to digital services and would collect and pay royalties to the appropriate rightsholders.

Additionally, the bill seeks to close the pre-1972 loophole by establishing federal copyright protection that would guarantee compensation for artists who recorded their music prior to February 15, 1972. It would also require digital radio to pay master rights sound recording performance royalties for music created prior to 1972 (e.g., addressing the CLASSICS portion of the bill).

The bill would also codify SoundExchange’s practice of honoring “Letters of Direction” from artists who wish to share royalties with producers and other creatives who participated in the creation of the works. It further provides a process whereby participants in recordings made before the digital performance right was established in 1995, can share in digital royalties for those sound recordings, and would further provide a “willing buyer, willing seller” rate standard requiring digital platforms to pay fair market value for music.

The bill also seeks to revamp the current rate court system who hears disputes over royalties paid by digital services. In other words, instead of having one judge hearing all rate court cases for ASCAP and another hearing the same for BMI, the Act would provide for a Southern District of New York judge being randomly assigned to each individual case. In so doing, the Act seeks to repeal Section 114(i) of the U.S. Copyright Act, and replace it with judges who would have the ability to gauge market value for musical compositions.

The Music Modernization Act passed the U.S. House in April 2018 by unanimous vote and was introduced in the Senate on May 10, 2018 by Sen. Orrin Hatch (R-UT) and a bipartisan group of co-sponsors. The Act has received widespread support across the various industry groups and is expected to pass early.

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Michelle is a Partner at Swanson, Martin & Bell, LLP and is licensed in Illinois and Indiana state and federal courts. With a Masters of Law in Intellectual Property, Michelle is the Vice Chair of the firm’s Entertainment and Media Practice Group and a member of the firm’s Intellectual Property Litigation and Transactional Services Practice Group. Her copyright and trademark practice focuses on intellectual property prosecution and related transactions, including performing trademark availability searches and providing advisory opinions, as well as preparing and filing trademark applications with the United States Patent and Trademark Office, and copyright registrations with the United States Copyright Office. Michelle also assists with the oversight of the firm’s extensive trademark docket and conducts required monitoring and maintenance of clients’ trademark portfolios, as well as provides clients with corporate counseling and innovative corporate solutions to address their respective needs.

Michelle further provides comprehensive representation in the drafting, negotiating and executing of various entertainment-related contracts and licenses, including but not limited to band member agreements, artist management agreements, session player agreements, performance agreements, sound engineer agreements, recording and personal services agreements, publishing agreements and licensing agreements. As a former artist manager, she has implemented many facets of national and regional tours, assembled benefit and charity concerts, communicated with various industry personnel, facilitated radio and internet publicity campaigns, arranged radio, print and internet interviews, and assisted in the development of press kits and websites promoting local talent. Michelle has also guest lectured on entertainment and intellectual property-related topics at The John Marshall Law School, DePaul University College of Law, Chicago-Kent College of Law and Azusa Pacific University (CA), as well as served as a panelist on various other entertainment-related continuing legal education courses. Michelle is an author and editor of the Litigation and Industry Updates Column of the ABA’s Entertainment & Sports Lawyers Journal and has also had numerous articles published by the Chicago Music Guide.

In addition, Michelle serves as Chair of Swanson Martin & Bell, LLP’s Community Service/Pro Bono Committee and proudly volunteers her time as President of the Associate Board and as a pro bono attorney to Lawyers for the Creative Arts, a non-profit organization that provides free legal services to eligible clients in all areas of the arts. She also currently serves as Events Chair for the Chicago Chapter of Women in Music, a non-for-profit organization dedicated to fostering equality in the music industry through the support and advancement of women. She recently served as Chair of the Young Lawyers Division for the Illinois Association of Defense Trial Counsel, where she was recognized as the Rising Star recipient and received a Meritorious Service Award and President’s Commendation.