The Music Modernization Act (MMA) transforms the way streaming royalty rates are set, and will allow songwriters to see more transparency and compensation for their work.
It’s the biggest adjustment to U.S. Copyright Law in decades, and reflects three major changes:
- Digital royalties will be licensed & paid in a more standardized way, through the Music Licensing Collective.
- Streaming royalty payments will now be paid directly to record producers and engineers for recordings they participated in.
- Artists with songs recorded/released prior to 1972 will now see royalties from digital streaming & radio services. This closes the loophole in the Copyright Act that excluded those recordings from protection.
It replaces the 1909 copyright laws that governed mechanical royalties, as well as the consent decree regulations from 1941 for ASCAP and BMI songwriter performance royalties. Now, rates will be based on what songs are worth in the music marketplace and songwriters will be more fairly compensated.
The biggest result of the MMA is the upcoming Music Licensing Collective (MLC), governed by songwriters and music publishers to oversee and administer digital mechanical licensing and payments, resolve disputes and administer unclaimed royalties. The MLC will be funded by the streaming companies, meaning songwriters will receive 100% of each royalty dollar.
Other improvements include the following:
- ASCAP and BMI judges will now be randomly selected for rate disputes. They were previously appointed for life, which could skew certain judgments depending on the mindset of the judge.
- The Notice of Intent (NOI) program is eliminated. Administered by the overwhelmed U.S. Copyright Office, this program put the burden of licensing on the songwriters, instead of the digital streaming services that were exploiting their copyrights.
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