The Music Modernization Act: What Is It & Why Does It Matter? (Guest Column)

Scott Windus/Manatt, Phelps & Phillips, L
Jordan Bromley

This bill was borne from good intentions and a genuine desire by songwriters, publishers and DSPs to solve a problem.

The negotiated and much debated Music Modernization Act is now before our Congress and Senate, two groups embroiled in stalemates on health care, immigration and government shutdowns. Shockingly, this is a bill that looks likely to pass through the aisles of dissent and draw a wide swath of support from both Democrats and Republicans. But what does it mean and why does it matter?

What Is It?: The Music Modernization act, or "MMA" creates a formalized body, run by publishers, that administers the "mechanical licensing" of compositions streamed on services like Spotify and Apple Music (we call them DSPs). It changes the procedure by which millions of songs are made available for streaming on these services and limits the liability a service can incur if it adheres to the new process. It funds the creation of a comprehensive database with buy in from all the major publishers and digital service providers. This would be the first of its kind that has active participation from the major publishers, representing a vast majority of musical works. It also creates a new evidentiary standard by which the performance rights organizations ASCAP and BMI can argue better rates for the performance of musical works on DSPs.

So What?: First and foremost, the MMA is a proposition that is supported by both a majority of songwriters and publishers and the DSPs. Two groups who have rarely, if ever, agreed. A gargantuan effort and result just with respect to the consensus created against groups who are more comfortable suing each other than shaking hands. 

Secondly, it literally "modernizes" the process and brings music licensing into the 21st century. Instead of bulk Notice of Intentions -- the tree killing process of sending actual physical letters of intent to each publisher for each share of each song -- the licensing will be done electronically. 

Third, it puts the unclaimed royalties in the hands of the content community, rather than sitting with the DSPs.

Fourth, it finally creates a comprehensive database that everyone can agree on. While various companies and services have a version of a database, U.S. publishers have not agreed on one that is both comprehensive and accurate. As part of the MMA, the digital service providers will pay for the creation and maintenance of a database that will finally (hopefully) put all mechanical licensing information in one place that is accessible to all. No more politicization of information and the expense of progress.

Finally, it provides streaming services with confidence that, if they follow the process, they can accurately and comprehensively license all the musical works on their service without fear of billion dollar lawsuits against them. And confidence grows markets and boosts economy.  

In Sum: Nothing is perfect. There will be meaningful criticism of this bill. But at the end of the day, this is a good thing for our business. A consensus amongst the music community and agreement with the DSPs. Two notions that, before this bill, lived in the realm of fantasy. And a real nuts and bolts solution to, what a year ago, seemed to be an insurmountable obstacle. 

As someone close to various people in the proverbial "eye of the hurricane" on this bill (both supporters and dissenters) I can tell you that there is no nefarious scheme, no conspiracy theory that holds. This bill was borne from good intentions and a genuine desire by songwriters, publishers and DSPs to solve a problem. 

Let's let them.

Jordan Bromley is a partner at law firm Manatt, Phelps & Phillips, LLP.