The MMA and EU Copyright reform are charging ahead. What will be their impact?
Making music markets more efficient, and ensuring creators are paid fairly and accurately, have been hot topics in recent years. Most people familiar with the recorded music industry will acknowledge that new business models and technology can help solve some of these problems, but the underlying copyright law that provides the right to exploit creative works, is antiquated and change is hard — especially when it comes to legislative policy. However, in both the European Union (EU) and the U.S., current proposed changes to copyright laws are likely to have a substantial impact on the music markets in both territories.
The MMA in the U.S.
The United States currently operates on copyright law that was written in the early 1970’s, prior to the Internet, or fax machines, or even FEDEX. EU law is a little more current, given the later development of legislation and “directives” which tell member EU countries which laws to implement in-country. The EU “safe harbor” system was, however, adopted almost two decades ago, with many similarities to the U.S. Digital Millennium Copyright Act (DMCA), enacted during the Clinton administration in 1998, before smartphones, subscription streaming music, YouTube, and the technology to clearly identify content uploads to user-generated content sites.
In the U.S, the first major change to music law in 23 years, the Music Modernization Act (MMA), looks set to become law any day. The MMA passed the House of Representatives on a 415–0 unanimous vote earlier in the summer, reflecting the strong support for the bill from across the industry. However, the bill ran into trouble in the Senate, where proposed amendments from interested parties such as Sirius and Blackstone/SESAC changed the nature of the proposed law.
To the contentment of many observers, the differences were overcome, the bill was passed by the Senate. The House of Representatives passed the Senate version of the bill last week, negating the need for any negotiation to reconcile the two versions of the bill. The MMA is currently awaiting President Trump’s signature, at which point it will become law.
Most notably, the law ends the messy notice of intent (NOI) process for musical composition licensing, whereby a digital service had to send an NOI to anyone whose music was available on the platform, and creates a nonprofit “Music Licensing Collective” which will be responsible for collecting and disbursing compulsory mechanical royalties for music publishing to the correct owners from digital streaming services. The organization is mandated to create a publicly accessible database with a claiming system for publishers and songwriters, and will be governed by publishers and songwriters. Rightsholders can still direct license services through a different entity (the result of one of the Senate amendments which sought to preserve competition in licensing administration). Copyright owners (whether US-based or foreign) MUST register with the MLC in order to receive their US mechanical royalty payments.
The law changes some of the rate-setting considerations for the Copyright Royalty Board (CRB), requiring them to consider a willing buyer/willing seller standard, which empowers musical composition copyright holders who have traditionally been less able to set free market rates in the past. It also impacts the processes governing the consent decrees for ASCAP and BMI by changing the judicial mechanisms of oversight.
Finally, the law also grants federal copyright protection to pre-1972 sound recordings, enabling legacy artists (and their labels) to finally benefit from digital streaming.
EU copyright reform
Meanwhile, in Brussels, EU lawmakers are updating aspects of their copyright law, in the form of a new directive. Directives are issued by the EU to member states, who then typically have two years to include the directive’s language in their own laws. The Directive on Copyright in the Digital Single Market, originally introduced in 2016, has now cleared several hurdles, the last of which was an approval by the European Parliament on September 12. The Directive now moves to the final step in the legislative process, which involves discussions among the European Commission, the Parliament and the Council of the European Union, on the final version of the text.
Among the Directive’s proposals is Article 13, which requires user generated content sites (such as YouTube) to have a license from rightsholders for content available on their services, instead of merely requiring copyright owners to issue takedown notices. Many rightsholders have claimed that these sites use legal safe harbors to negotiate better rates for licenses they do have in place (part of the so-called “value gap” issue). Separately, and unrelated to music, Article 11 of the Directive creates a new right for press publishers, allowing them to be paid each time a written publication is shared via a content aggregator (the so-called “link tax”).
Finally, the Directive also provides for fair remuneration to authors and performers for every exploitation of their work, including online use, and the right to receive information on such exploitation at least once a year.
What do these changes mean for Dot Blockchain Media?
At Dot Blockchain Media, we support attempts on both sides of the Atlantic to modernize copyright law and ensure rightsholders and creators are paid accurately. The creation of the MLC and its database will go a long way towards solving some of the mismatching metadata for music across the supply chain. We envision that our distributed, networked system, allowing rights information to flow as freely as the underlying media, can be a critical part of resolving rights and data quagmires that ultimately hamper rightsholders’ abilities to be paid on time and correctly.
Our system uses blockchain technology as a synchronizing agent for audio files and data. The protocol can give songs dashboards, allowing for inter-party communication and fast resolutions to changes in song ownership going forward, resulting in more accurate data in a more timely fashion. Our goal is to synchronize metadata across owners, increasing efficiency and reducing costs for all parties, while leaving control of their data in their own hands.
For more information on Dot Blockchain Media, you can visit our website and view a number of informative videos: www.dotblockchainmedia.com
Allen Bargfrede is a co-founder of Dot Blockchain Media, and has been working in the music industry for over 20 years as a media strategist, lawyer, professor, artist manager, and author. He was the founder of the Rethink Music thinktank at Berklee College of Music and also leads music investment firm PDX Media Partners.