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Abstract

While it is clear, and arguably has been for the last five years, that paid subscription streaming is the future of the music industry, the law has failed to keep pace with “modern consumer preferences and technological developments in the music marketplace.” The Music Modernization Act of 2018 (MMA), which amends the U.S. copyright law, 17 U.S.C., is Congress’s effort to keep pace with the music industry by fixing our cumbersome and inefficient music licensing system. The MMA is a step in the right direction, but it falls short of Congress’s goal. Focusing on Title I of the MMA—the Music Licensing Modernization Act—I argue that, aside from creating a compulsory blanket mechanical license for musical works, Title I of the MMA has done very little to improve business transactions in the music marketplace. Moreover, instead of “present[ing] a series of balanced tradeoffs among interested parties to create a fairer, more efficient, and more rational system for all,” Title I of the MMA hyper-

focuses on the short-term interests of the music publishers and non-performing songwriters that lobbied during the MMA legislative process.

I, therefore, argue that Congress should revisit the music marketplace question and update our music licensing system with the following goals in mind: (1) protect the public’s interest in having affordable access to interactive streaming, (2) create administrative synergies in our music licensing system, and (3) increase revenues for industry players and cut costs in the music marketplace. Specifically, Congress should:

  • Replace the willing-buyer/willing-seller standard with the §801(b)(1) (repealed 2018) policy-oriented standard for statutory rate-setting proceedings;
  • Instruct the Copyright Royalty Board (CRB) to factor basic principles of federal antitrust law into royalty rate determinations;
  • Expressly communicate to the CRB that maximizing the quality of musical works made available to the public is outside the scope of the CRB’s statutory authority;
  • Reject the principle set forth by the Copyright Office that “[g]overnment licensing processes should aspire to treat equivalent uses of sound recordings and musical works alike”;
  • Authorize the formation of a new Mechanical and Performance Licensing Collective (MPLC), f/k/a Mechanical Licensing Collective (MLC), and create a compulsory individual and blanket license for the public performance of nondramatic musical works;
  • Migrate public performance rate-setting proceedings from the performing rights organization (PRO) rate courts in the Southern District of New York over to the MPLC;
  • Require terrestrial radio to pay sound recording royalties to recording artists and record companies;
  • Apportion the annual assessment (operating) costs for the funding of the MPLC f/k/a MLC among applicable licensors and licensees; and
  • Create a compulsory licensing system for the recording and commercial release of interpolations.

In the following sections—Part I, II, and III—I set forth the details of my policy proposal, identify the drawbacks of our music licensing system, and demonstrate how my recommendations seek to address these inefficiencies.

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