Music Modernization Act's Next Challenge: How to Implement the Law

Donald Trump shakes hands with Kid Rock -  October 11, 2018 - Getty-H 2018
Oliver Contreras - Pool/Getty Images

Perhaps the toughest element of the legislation will be building the global database to collect song information and match compositions to recordings.

It took two decades of intense lobbying to pass and sign into law the Music Modernization Act. Now the hard part begins: implementing the first copyright law changes in 20 years.

The most ambitious part of the new legislation, which Donald Trump signed into law Oct. 11, involves music publishing, calling for the creation of a music licensing collective to administer a blanket mechanical license that will shield digital services like Spotify, Pandora and Apple Music from copyright infringement. This requires writing regulations to guide its operation and building a database that can match compositions with records, so that the correct rights holders receive payment.

"If you think by having Trump sign the bill all we now have to do is wave a magic wand to get this done, it's far from over," says one music publishing executive involved in talks to shape how the law will unfold. The collective will need a board of directors comprising 10 publishers; four songwriters who own their own publishing; and three nonvoting advisers, including one who will represent the digital services. Once the board nominees are agreed upon, those names and an application to form the collective must be submitted within 90 days of the bill signing to the U.S. Copyright Office, which has to approve the submission in whole, says National Music Publishers' Association president and CEO David Israelite, a key player in shepherding the legislation through Congress.

Meanwhile, the collective's regulations need to be written. That's where things can get sticky as each industry sector — songwriters, indie publishers and major publishers — jockey to make sure the others don't gain an advantage. "There's always the possibility that industry politics will enter the picture when bylaws are being written," says a music exec.

But the legislation already specifically addresses some of the most thorny issues, says Israelite. "It is a very detailed, complicated bill that has anticipated many of the issues and already resolved them," he says. For example, copyright owners of unmatched songs (those with unknown publishers) will have three years to claim royalties, after which funds will be distributed by market share to publishers.

Perhaps the toughest element of the legislation will be building the global database to collect song information and match compositions to recordings. While there are many privately built song databases in existence, past attempts by the industry to build one together have "failed miserably," say sources involved in those efforts. Yet Israelite points out that now everyone will have an incentive to supply their publishing catalog information to the collective, if they want to ensure proper payments.

In nine months, the digital services and the copyright owners are expected to have an agreement on how to fund the collective for its first two years. If they fail to come to terms, the Copyright Royalty Board will initiate a fee-setting proceeding. The collective must begin operations by Jan. 1, 2021, at which time the statutory blanket licenses take effect. It took 20 years to get to this point; now the industry has 26 months for step two. 

This story first appears in the Oct. 17 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.