Music Publishing Upside Down and Inside Out
On June 21, the United States Copyright Office
presented a House subcommittee the 21st Century
Music Licensing Reform Act, a draft of legislation that
could change the face of the U.S. music publishing
industry.
The Proposed Legislation would abolish the
compulsory mechanical license. As the law operates
currently, once a song is recorded and a commercial
release has occurred, any third party can record
("cover") the song. So long as proper notice,
documentation and royalties are paid pursuant to
section 115 of the Copyright Act, a compulsory
license is issued. Parties may also enter into a
negotiated mechanical license if they desire. The
Proposed Legislation allows for exclusive mechanical
licenses and the denial of licenses. In layman's terms
it means the music publisher can "just say no" to a
request to record a song.
The Proposed Legislation would also convert ASCAP,
BMI and SESAC into competing Music Rights
Organizations (MRO). An MRO would be authorized
(and required with respect to digital audio
transmissions) to license the reproduction and
distribution rights of any non-dramatic musical work
for which it was authorized to license the public
performance right. Currently the Harry Fox Agency
(the largest agency in the U.S. for granting
mechanical
licenses) does not acquire the right to grant
performance licenses for its publisher/clients. For
the Harry Fox Agency, or any other entity, to
become
an MRO the organization must have the right to
grant performance licenses for non-dramatic works.
The legislation would also remove any double-license
fees for digital audio transmissions. Digital audio
transmissions include webcasting, streaming,
downloads and other methods for delivering music in
a digital format. It has been unclear if these
methods of distribution invoke the issuance of
mechanical or performance license or both. The
Proposed Legislation would remove the quandary.
Under the Proposed Legislation an MRO's grant of
a performance license for a work includes a non-
exclusive right to distribute phonorecords of the work
in conjunction with the public performance.
One issue that is clear - back to school for all of us
working in the music business.
