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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

The Hatch-Goodlatte Music Modernization Act was signed into law on October 11, 2018. The act has been termed a music industry peace treaty of sorts, as it is designed to address years of issues and compromise between music streaming technology companies, such as Spotify, and artists and record labels. The act had unanimously passed the US House of Representatives and Senate earlier in 2018.

There are two main provisions to the act. First, it establishes an organization called the Mechanical Licensing Collective (MLC) that will create and operate a public database containing all relevant information about a songwriter’s work. In exchange for a blanket mechanical license, music streaming services will pay royalties to the MLC, which will then distribute the money to the applicable songwriter or owner. As long as the music streaming service pays the MLC, it will receive a blanket mechanical license for performing the work and the confidence that it will not be sued by song owners so long as it follows the proper procedures. Private entities may still handle other kinds of music licensing; for example, for synchronization rights, lyrics, and performance rights. The MLC is meant to address the current lack of any central database for songs, which makes it difficult for music streaming services to find a song’s author, and has resulted in years of litigation brought by artists and artist representatives against music streaming services for using works without paying for licenses.

The act also protects sound recordings fixed on or after January 1, 1923, and before February 15, 1972, and requires that music streaming services start paying for pre-1972 songs, which are currently not under copyright protection under US copyright laws. The protection for pre-1972 recordings preempts state laws and incorporates the normal limitations that apply to other copyrighted works, such as fair use and use by libraries, archives, and educational institutions. The act protects such songs for 95–110 years from the date of recording, depending on when they were made.

The act represents a significant step for artists and music streaming companies that have been fighting a battle since the days of Napster, and it brings the US music licensing scheme for digital services into the modern age.