The Music Modernization Act: Is It Copyright Reform In Tune With the Times?

It is a rarity to see music-industry professionals, music publishers, tech companies, radio conglomerates, and music streaming service providers rally behind the passage of a congressional bill. It makes it all the more rare when such a bill has unanimous support from Democrats and Republicans alike. Yet that is exactly what happened late last week when President Trump signed the Music Modernization Act [MMA] (H.R. 1551) into law. Four years ago, I discussed the need for copyright reform, so in that respect, I am happy to see Congress pass something to better reflect the realities of the music market. At the same time, I would like to see what the potential impact is.

First, a brief discussion on what the MMA entails. The MMA is a combination of three bills. The first bill is the Music Modernization Act of 2018, which updates the licensing and royalties scheme for digital music. The second bill is the CLASSICS Act, which helps artists and songwriters receive royalties for pre-1972 recordings not already covered by federal copyright law. The AMP Act helps producers, mixers, and sound engineers receive royalties. These enjoined bills also call for the creation of a music database so the Federal government can better track potential copyright infringements. The goal of the MMA is to make sure that musicians and those who work in the music industry can make a living in an age in which streaming and other music services undermine the industry's bottom line. While this seems to be a wonderful bill with support from both political parties and those throughout the music industry's value chain, I wouldn't be doing my job if I didn't bring up some concerns with the MMA.

For one, this bill does a disservice to independent songwriters. There are instances in the music industry in which songwriters are excluded or industry workers are poorly treated. If you are a musician or producer who can afford a lawyer to fight the injustice, great. If you are one of the thousands of independent songwriters or musicians that cannot afford such legal fees, you're out of luck because no such grievance process exists. Second, the Congressional Budget Office estimates that the MMA will create a $47 million deficit between 2021 and 2028. That doesn't sound large in context of a $19 trillion economy, but given the amount of debt the U.S. is looking at, it doesn't exactly help to add onto out debt woes.

The final issue I find with the MMA is with the Musical Licensing Collective (MLC), which will create a database of music copyrights and their owners, collect and transmit royalties for digital streaming, and act as the licensing regime for digital downloads. The libertarian Cato Institute details the potential issues with the MLC in its June 2018 analysis, but essentially, a creation of the MLC would create a de facto monopoly. Performing rights organizations (PROs) already exist to perform the functions that the MLC is expected to perform. Since the MLC is not functioning as a natural monopoly, the MLC is expected to succumb to certain inefficiencies that would not exist in a competitive market. As a result, the Cato Institute ultimately argues that quality of service is likely to suffer.

The overall approval of such a bill gives me at least some hope that the MMA could be an improvement over the status quo. Plus, there is an argument to be made that the MMA will save on time and energy on paperwork and royalties processing. On the other hand, I have analyzed enough government-enforced monopolies (e.g., net neutrality, public-sector unions, the U.S. Postal Service, drug prescription patents) to merit enough skepticism. Stay tuned for whether or not the MMA creates more benefits than costs.