U-S Senate Passes Music Modernization Act

The U.S. Senate approved the Music Modernization Act on Tuesday, putting the first substantive reform to the nation's music copyright laws on the precipice of becoming law, according to The Tennessean.

Stakeholders representing virtually every corner of the music industry backed the legislation, which received rare bipartisan support from a bitterly partisan Congress. The legislation has been championed by everyone from Paul McCartney to Maren Morris for the promise of improving the licensing system and increasing digital royalty payouts to songwriters.

Before the Music Modernization Act becomes law, a reconciled version of the bill must be approved by the House and then President Donald Trump must sign it. Neither of those actions is viewed as an obstacle by the bill's backers.

The Music Modernization Act creates a new organization to identify the copyright owners for a song's composition and to pay them the digital royalties they are owed when their music is played on Spotify, Apple Music and other streaming services.

The new organization will be run by publishers and songwriters, and the onus for finding copyright owners and paying them will no longer fall to the streaming services. That is why Spotify and the streaming trade association backed the bill. Those companies have been subject to expensive class-action lawsuits and subsequent settlements by songwriters who said their songs were used without proper licenses.

The bill also aims to improve royalty payouts for songwriters by creating a new legal standard that judges can use to set rates. Under the new standard, judges can factor in a song's free market value — including how much a song fetches when placed in a commercial or television show, and how much a record label is paid for a similar license. Those standards should raise streaming rates and therefore increase the paydays for songwriters, who have complained the copyright system is antiquated and unfair.

The bill closes a federal copyright loophole that allowed internet radio companies such as SiriusXM and Pandora to play songs recorded before 1972 without paying royalties to the artists and record labels responsible for those songs. SiriusXM opposed this portion of the bill and late Tuesday afternoon the Nashville Songwriters Association International called out Sen. Lindsey Graham, R-South Carolina, for holding up the bill.

Finally, the Music Modernization Act creates a new digital royalty for producers and engineers. In many cases, those professionals are already receiving royalties after a song is streamed, but the legislation adds the new royalty to the copyright law.