Volumes have been written in recent weeks about the signing of the Music Modernization Act (MMA). Many churches and ministry leaders have come to us asking questions – “What does the MMA mean for us, will anything change?” Others are concerned about higher rates and increased costs.
As with most legislative acts, there are a lot of details to process and understand. We won’t focus on the minutiae in this article, but rather summarize what will most likely happen over the course of the next few years and what it will mean for churches, ministries, record labels, and songwriters.
A chorus of people has bemoaned for decades that the US Copyright Law has lagged far behind technology and the digital age of streaming music. The MMA is a culmination of a collaborative effort of a diverse group of music industry players and represents a major overhaul in the Copyright Law, specifically addressing music; including songs and sound recordings (there are six other types of copyrights not addressed in the MMA).
But what is in the MMA and how will it affect songwriters, publishers, producers, and users of music – like churches and ministries? For the most part, the changes will take some time to implement, but overall it will make obtaining licensing and paying royalties easier and result in more revenue for song owners, artists, and producers.
Here are three important takeaways you should know about the MMA.
1. It improves and streamlines compensation for song owners. Music streaming services (called digital service providers, DSPs), like Spotify and iTunes, will work together with song publishers to streamline the licensing process, payout royalties of songs recorded before 1972, and give producers royalties as well.
IMPACT: If your church has active songwriters, whose music is being streamed, they may see an increase in royalty payments over the next several years. Many indie songwriters are currently not receiving royalties from music streaming services, because they have not made the effort to find them. In some cases, there may be back royalties available. It should not have a negative impact on churches.
2. The MMA will set up a Music Licensing Collective (MLC) to collect and pay out mechanical royalties from digital service providers (DSPs). Under the same section of the bill, the Register of Copyrights designates a mechanical licensing collective (“MLC”) to administer this new blanket license.
- The new agency will collect, distribute, and audit the royalties generated from these licenses;
- Create and maintain a public database that identifies musical works with their owners along with ownership share information;
- Make efforts to match copyright owners of musical works embodied in particular sound recordings and update the database with that information;
- Hold unclaimed mechanical royalties for at least 3 years before distributing them on a market-share basis to music publishers.
Under the old system, songwriters’ rates for streaming songs are determined by a law established in 1909, while performance royalties are determined by a 1941 law; also, songwriters and artists do not receive royalties on songs recorded before 1972, but under the MMA they will pay out royalties of songs recorded before 1972 and give producers royalties as well. The MLC will be funded by administrative assessment fees paid out by blanket licensees and by “significant non-blanket licensees.” These administrative fees will also be determined by Copyright Royalty Board judges.
IMPACT: It will be much easier to identify and find correct information on music owner’s (songs and sound recordings) once the centralized music database is established. This will simplify the process of getting music licensing for individual songs and sound recordings that are not covered under any blanket license, like CCLI, PERFORMmusic Facilities or WORSHIPcast Streaming licenses. For churches and ministries that have a commercial music streaming service or DSP, they will be able to go one place to obtain mechanical licensing and pay royalties for streaming rights. It will be easier, but it also means that royalty rates will probably increase.
3. It will take time before the MLC is established, database collected and centralized, and the system is up and running for the public. It’s great news for songwriters in churches because they will have one place to register their songs and they should see an increase in their digital streaming royalties, in particular from places like Spotify, Pandora, and potentially YouTube and Facebook. However, some rates for music publishers, performance rights organizations (PROs) – ASCAP, BMI, and SESAC will see increases. In January 2018, the Copyright Rate Court increased streaming rates for the song from 10.5 percent to 15.1 percent of revenue during the five-year term — that’s a 43.81 percent increase over the term. That 15.1 percent of revenue will be split between the mechanical and performance royalties to publishers and songwriters. The PROs negotiate a percentage of revenue royalty fee for public performance licensing to interactive services, and that fee is subtracted from the overall publishing royalty pool, with the remainder being paid out as mechanical royalties.
IMPACT: Churches and ministries should not feel any immediate impact from the MMA, but over the next few years, having a centralized database available to the public will simplify the process of obtaining some licenses. Some license rates may increase for mechanical and performance rights, specifically connected to streaming services.
NOTE OF INTEREST: Now that it has passed the Senate, the bill has been renamed the Orrin G. Hatch Music Modernization Act. The bill revamps Section 115 of the U.S. Copyright Act, combining three major pieces of legislation:
- The Music Modernization Act, which streamlines the music licensing process to make it easier for rights holders to get paid when their music is streamed online.
- The Classics Act (Compensating Legacy Artists for their Songs, Service, & Important Contributions to Society Act) for pre-1972 recordings.
- The AMP Act (or Allocation for Music Producers Act), which improves royalty payouts for producers and engineers from SoundExchange when their recordings are used on satellite and online radio.
Susan Fontaine Godwin is CCS’s Founder/CVO, an educator and long-time member of the Christian arts community with more than 33 years of experience in the Christian media industry, church copyright administration and copyright management. Susan is an author and speaker and frequently writes for several Christian magazines and online publications. She serves as an adjunct professor at the University of Mobile.
About Christian Copyright Solutions: CCS’s quest is to help churches and Christian ministries “do music right.” CCS is an expert on church music copyrights and our primary focus is providing licensing and clear educational resources to churches, as well as representation, administration, and advocacy for copyright owners. Follow us on Twitter, Facebook, Instagram, and YouTube. The information contained herein is for informational purposes only and is not legal advice or a substitute for legal counsel.