On September 18, 2018, the Orrin G. Hatch “Music Modernization Act” (“MMA”) was passed unanimously by the Senate, after already being approved by the House earlier this year. This bill is considered a “music peace treaty” between artists, performance rights organizations, music publishers and tech companies including Spotify, Amazon, and SiriusXM. Spotify is a digital music, podcast, and video streaming service that gives listeners access to millions of songs and other content from artists all over the world for free. SiriusXM is a satellite and online radio station in which listeners pay for access to the music.

The Act was necessitated by “new” uses of music after tech companies entered the music realm and started playing music without “just compensation” to the songwriters who wrote the songs, and the artists and producers who recorded them. This has led to numerous lawsuits filed against Spotify and Sirius, and other major music tech companies. Numerous artists including Paul McCartney, have lobbied in favor of the MMA. Sirius and other music tech companies lobbied against it.

Currently, the rates songwriters receive for streaming compositions are determined by a law established in 1909, while “performance royalties” are determined by rules established in 1941 by the US Department of Justice known as “consent decrees.” Up until recently, artists and producers who recorded their works pre-1972 did not have a right to be compensated for use of their recordings by digital-streaming services such as Spotify and Sirius. Under the MMA, streaming services (including Spotify and SiriusXM) will work together with publishers to make the licensing process more streamlined, pay royalties on recordings recorded before 1972, and pay music producers royalties as well.

“It is the most important piece of legislation in a generation to help make sure songwriters in our country are paid and are paid a fair market value for their work,” Tennessee Senator Lamar Alexander exclaimed after the bill was passed.

The bill will put in place a new quasi-governmental organization called the Mechanical Licensing Collective-which will be paid by digital music providers- an organization that will create and operate a public database containing information about the songwriters, artists, and producers, which information companies will then use to pay them. This bill also specifies the [minimal] rates songwriters, artists, and producers will be paid. In addition, the new bill addresses other problematic issues that evolved such as the “Copyright Royalty Board”-a panel consisting of three judges that set royalty rates. These judges are now allowed to set song values based on the open market, which will result in more money for songwriters, artists, producers, and performance rights organizations such as ASCAP and BMI.

The bill now awaits the President’s signature, and he is not expected to veto it.

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