When Art, Technology, and Law Align by Maxey-Fisher, PLLC

So far, 2018 has been a big year for the music industry. In May, the BTS Boys became the only Korean pop group ever to get a Billboard Music Award twice. Child singing sensation Justin Bieber got married. Plus, Congress passed perhaps the greatest music legislation of the century.

The Music Modernization Act, officially named the Orrin G. Hatch­-Bob Goodlatte Music Modernization Act, is a bill designed to finally bring laws governing the music industry up to date with the reality of internet streaming and distribution services. After unanimously passing through both the House and Senate, President Trump signed the bill into law on October 11, 2018.

The law’s passage demonstrates a major shift in the entertainment industry. Twenty years ago, the introduction of internet streaming technology had thrown the music industry into chaos. The “normal” ways to pay musicians through distributors paying royalties and percentages of physical record sales became impossible to regulate as file formats storing music got more web-friendly (i.e., MP3s). Companies like Napster capitalized on these innovations by creating what came to be known as “peer-to-peer music sharing websites”, which were essentially digitalized spaces for consumers to exchange songs for free.

As expected, a series of lawsuits followed. Outraged that their music was being distributed without their knowledge, artists, producers, and their management companies demanded due compensation from Napster’s profits. Such hardships foreshadowed some of the backlash that Napster’s successors, like Pandora and Spotify, would come to face in the years to come. Because tensions in the music industry did not seem to be resolvable by the existing regime, the Music Modernization Act meant sweet deliverance for all.

First, Title I of the Act calls for the creation of a nonprofit agency that would govern a compiled database of all mechanical licenses owned by song owners, denoting the people who have property interest in a recording’s composition and lyrics. Songwriters are ensured a portion of the payment involved with digital or physical song reproductions, at a rate set by contract. Cases regarding royalty rates would also be randomly assigned to judges in the United States District Court for the Southern District of New York, instead of being automatically sent to the same single judge. The Act thereby attempts to reduce time wasted in trying to locate and pay a song’s owners, ensure songwriters due pay, and increase court efficiency when dealing with royalty rate disputes.

Hopefully, the Music Modernization Act will help artists and record companies get paid right the first time. With less lawsuits filed against them, digital service providers can also rest easier. Plus, with fairer exchange, creators are incentivized to produce better media so that the public can enjoy greater access to better music.

For the full text of the Bill, see 115 H.R. 1551.


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