The Music Modernization Act’s Failure…
By: Michael Whalen
Tags: Music Business, Artist, Streaming, Congress, Monetization

Now that the hoopla and back slapping are finally over from inside the Oval Office and President Trump’s unusually big signature has been scrolled on the bill, the long term effects of H.R.5447 — The Music Modernization Act (“MMA”) are anything but clear. In the abstract, the intention of this legislation are to “update music licensing laws to improve the future for music creators”. To the contrary of my colleagues in music publishing, I do not believe that this bill will create “fairness” over the LONG term for music makers or the organizations that own and administrate this music. I believe that this new law will create a new urgency to circumvent all laws by streaming platform owners. The passing of this bill only “hot-wired” the outdated US Copyright Code into simulating something temporarily workable. We have not ended the push to the bottom on what private companies feel are fair payments to rights holders for streaming music.

The MMA has created a new Federal agency (“The Collective”) prescribing the cost of the digital mechanical license fees for streaming music and assigning Federal Judges to preside over disputes. Like all good capitalists, the operators of these streaming platforms are smiling, towing the appropriate industry line(s) and then spending every moment finding ways over, around and through the ineffective and patchwork legislative “wall” that has been thrown-up to silence 20 years of grousing about digital music rights. For example, look at Spotify’s new “direct upload” program which encourages artists to work with Spotify directly and be paid directly. It’s a slick pitch to confused musicians who may not understand what is happening. It’s like a child who is being sex-trafficked without knowing it.

In the years it took to build the industry coalition and the Congressional support to get the MMA bill passed, I fear that the bill’s many supporters may have gotten lost in the shadow of that wall. Desperation for any kind of “legal protection” led to compromise that led to this bill that will force artists to make terrible direct license deals with streaming platforms and the “gains” of the MMA will be largely curtailed if not completely nullified.

But I am ahead of myself…

“Publisher’s Row” on 28th Street in New York City in the 1920s known as “Tin Pan Alley.”

In the early 20th century, copyright laws were enacted from the decrepit 19th century rules to protect the creators and owners of intellectual property by making sure they were paid a tiny “mechanical rate” (read: a payment of about $0.01) for each copy of each song sold. The music that people enjoyed was manufactured and it was used as printed folios, vinyl discs or even reel to reel tapes. Music had intrinsic value because it existed in physical form and publishers and the fast-growing record labels had chosen certain artists to be “good enough” to manufacture and distribute their music.

For decades, the value of music grew as sales grew. In the 1960’s, music was the “tip of the spear” of a social revolution in most of the Western World and the value of music grew exponentially in financial, social and even political terms. Laws around recordings were updated to try to keep up with the financial and legal pressures being brought to bare on the Government because of the influence and the popularity of recorded music (ie: the Copyright Act of 1976).

The legacy of the US Government keeping up with technology is very poor. Into the cracks leftover by legislative myopia and compromise, legal and financial mischief has long occurred at labels, with managers and music publishers, so it’s not surprising that many in the music industry rely on these grey areas to make money. Said simply, the world around music sales has been dark, dirty and so many (older) people in the industry miss “the good ol’ days” because of the ready cash, the lack of oversight and blurry legal lines. The age of digital downloading and streaming has started a new kind of transparency that both shocked the industry and created an entirely new kind of financial black hole.

In 1998, Napster came along to teach us all what downloadable music was and how the next generation wants to use music. The age of endless choices on-line had begun. An entire generation of kids under the age of 20 discovered that an ocean of content was available for zero dollars. Within months, long held assumptions about the value of music evaporated because young people didn’t see “sharing” files or streaming music that you didn’t pay for as stealing. They felt emancipated. For those of us in the industry, we felt as if we had been assaulted and we had no idea if or how the sun would come-up tomorrow.

Onto this bloody battlefield came charging 1998’s “Digital Millennium Copyright Act”. The law attempted to try to mitigate the tsunami effect of downloading, streaming and digital content by trying to legally define digital content using terminology from the past. Most importantly, the DMCA is largely credited for creating the loopholes in the Copyright Code that allow platforms like YouTube, Facebook and others to host content without the need for licenses or payments (ie: “Digital Safe Harbor”). The combination of the legal loopholes of DMCA and Napster’s brazen assault the music industry’s control of its intellectual property caused chaos and the upending of the industry that has never quite found its groove again.

Because of the lightning-fast rise of social media, on-line shopping, content & gaming and the power & influence of these new technology companies over Congress, almost no new meaningful legislation has occurred in the 20 years since DMCA. When I personally lobbied Congress as part of advocacy group from NARAS (National Academy of Recording Arts and Sciences) (The “Grammy” people) in 2014, we heard from countless House Representatives and Senators that: “Congress will not touch rewriting the Copyright Code and we don’t want to put bandaids on things with music downloads and streaming. We want to touch the issue of music once and not deal with it again for a generation.” So, we went back and tried to create an “omnibus” bill but what was really needed was a total rewrite of the Federal Copyright Statues. The MMA is that “omnibus” bill — kinda’.

The different categories of Copyright Law — thanks to wikiHow.

The basic problem with the current copyright code is that there are different laws and rules governing different types of content (music, film, photographs, books, dance, fashion, etc.) that have existed largely unchanged since the 1970s. From the 1920s to 1990s, it made sense that these “things” would be treated differently under the law because their use, function and audience were (in most cases) very different. In a digital world, this content is all the same… content. However, copyright law still looks at what the ‘artistic’ category is on that content and doesn’t take into account how this content will be used or monetized.

So, where does this leave us? Said simply, the MMA is a failure because it does not address the fundamental issues of digital media and digital copyright. The MMA has scared the large streaming platforms into making rules of their own and artists are left out in the cold with no leverage or support. Congress has made it clear that they are not revisiting music “issues” for a long time.

As artists and creators of music, we need to make some choices:

Will we see how this new law does before doing anything?

Will we start agreeing to direct license deals under the justification that “something is better than nothing?”

Is it time to get that job at Walmart?

Maybe, it is time for artists to come together to create digital coalitions of our own that live away from the big social media and music streaming platforms.

Yes.

In a post-MMA environemnt where the music industry will be scattering for cover hoping that these large platforms will continue to serve-up indifferent eyeballs that will convert into plays of music, maybe its long past time for musicians to take control of their destinies by banding together to create networks of websites and small streaming platforms that are controlled and monetized by musicians for musicians. It could be that the ultimate effect of the MMA is to speed-up the evolution of the digital musician from hapless gatherers looking for anything monetizable on the enormous caustic environments of YouTube, Facebook, SoundCloud and others to creating our own small environments that are catered to our fans and can interface with other artists sites.

It’s time for musicians to stop being so passive and agreeable as the walls collapse on us…

What artists still have to learn is that there are an unlimited amount of streaming dollars. We are not competing with other artists — we are offering choice to our collective fans. Creating a collective isn’t a new idea. It’s an idea that been around for centuries. The guilds of the middle ages protected artists for centuries. We are once again living in the “dark ages” and it’s time for us to turn the light on for ourselves. The MMA was the “best” we were going to get from the Government. As the survivors of hurricanes, gun violence and droughts learn every year, the Government’s “best” is barely anything at all…