The National Music Publishers Association (NMPA) has called on leaders of Congress to help deal with harsh laws that impact songwriters.
In recent years, the Music Modernization Act (MMA) has brought significant benefits to songwriters, music publishers, and digital service providers. However, it has also highlighted the need for corrections to the century-old compulsory license system. This issue has become especially pressing with the recent actions of companies like Spotify, which exploit outdated regulations to the detriment of American songwriters.
Nearly six years ago, members of the House and Senate Judiciary Committees came together to pass the MMA, a landmark piece of copyright legislation tailored for the digital music streaming era. The MMA aimed to improve the compulsory license system imposed on songwriters and publishers by creating the Mechanical Licensing Collective (MLC). The MLC administers a blanket license under Section 115 of the Copyright Act, taken by digital music services.
The MLC has achieved several key improvements:
Increased Transparency: The creation of a public database for musical works.
Enhanced Licensing Efficiency: A central administrator for licenses.
Better Royalty Distribution: Streamlined processes for paying songwriters and publishers
On Going Challenges
Despite these advances, the statutory system continues to be abused by digital services, with Spotify being a prime example. The royalty rates for musical works under the Section 115 blanket license are set by the Copyright Royalty Board (CRB) every five years. In these proceedings, music publishers and songwriters must compete against some of the world's largest tech companies—Spotify, Apple, Amazon, and Google—to establish fair rates.
The law currently prevents private negotiations in a free market, leading to ongoing abuse of the statutory system. Recently, Spotify has found a way to game the system by reclassifying its premium subscription service, along with nearly 50 million subscribers, into a "bundle." By including previously free audiobooks in this bundle, Spotify significantly reduces the revenue attributed to music, thereby lowering the royalties owed to songwriters. According to Murray Stassen (2024), "The MLC filed a lawsuit against Spotify, claiming that, by applying the rate formula applicable to Bundles to its Premium subscriptions, Spotify is underpaying royalties due to songwriters and publishers, and that Spotify’s position does not comply with the law" (Music Business Worldwide, 2024).
Proposed Solutions
To address these issues, Congress can take action that would preserve the benefits of the MMA and MLC while providing a fairer playing field for songwriters and publishers. Here are some proposed solutions:
Rightsholder Choice: Allow rightsholders the option to license through the MLC using statutorily set rates or to withdraw and operate in a free market if they meet certain conditions.
Conditions for Withdrawal:
Provide 6 months’ notice to the Register of Copyrights and the MLC.
Ensure musical work copyrights are registered in the MLC’s public database.
Flag withdrawn rightsholders and their catalogues for voluntary license negotiations.
Maintain current contact information in the MLC database for licensing purposes.
Benefits
Implementing these changes would:
Restore fairness by requiring streaming platforms to negotiate with music creators as partners.
Provide songwriters and publishers leverage to negotiate better terms.
Build on the successful infrastructure of the MMA and MLC.
These steps are crucial for ensuring that songwriters and music creators continue to benefit from their creative efforts without being disadvantaged by outdated federal policies. By modernizing the compulsory license system, Congress can help maintain a vibrant and fair music industry.
Comments