USCO announces plans to retool Music Modernization Act

On Behalf of | Nov 18, 2022 | Copyright Law |

Government agencies often announce plans to revamp or create new regulations before making final decisions. This approach allows citizens and businesses to weigh in with opinions on the proposed changes. Such is now the case with the U.S. Copyright Office (USCO), which recently requested comment on proposed rulemaking of Termination Rights and the Music Modernization Act’s (MMA) Statutory Mechanical Blanket License. This change will affect the rules regarding statutory termination of rights involving works whose royalties are handled by the Mechanical Licensing Collective (MLC), which involves eligible streaming and download services.

What kind of termination?

The Copyright Act allows content creators or their heirs to terminate copyright grants within specific windows of time and, under certain circumstances, to terminate copyright grants of licensed usage or transfers. However, “exceptions” enable continued use if the derivative works were granted before the termination was exercised. This approach would now carry over to a mechanical blanket license created by the MMA.

How the blanket licenses work

The MMA uses a blanket licensing system for streaming and downloading rather than a traditional song-by-song license structure. Only some digital providers are eligible for the blanket license, and some will not need them. Instead, the blanket license is for digital phonorecord delivery of non-dramatic musical works that are:

  • Permanent downloads owned by the user not based on number of listens
  • Limited download based on the number of listens or a limited time frame
  • An interactive or on-demand service

The arrangement must involve a subscription, contract or economic understanding. The music provider must exercise direct control and report revenues and numbers regarding usage.

Who doesn’t the blanket license cover?

It cannot make over 5,000 different songs available per day or generates revenue of over $50,000 per month and $500,000 in the preceding 12 months. They are not for public broadcasting and are not streams of songs 90 seconds or less, and do not generate income from streams. It also doesn’t cover podcasts or online entities engaged in non-interactive or radio-like formats.

Why the change?

According to the USCO, the proposed rule’s goal is to clarify who the appropriate payee under the derivative work exceptions to termination rights under the Copyright Act. The rule currently is subject to an exception that allows derivative works legally prepared under the authority of the terms of the grant after the termination. The USCO created this potential regulation because there are few legal precedents regarding exceptions since the MMA and none directly addressing a statutory license.

The USCO also cites government efficiency as the reason for making these changes. Interested parties can send written comments by 11:59 PM Eastern on November 25, 2022. It accepts written reply comments until 11:59 PM on December 27, 2022.