United States: The Music Modernization Act: What Licensee Services Need To Know About Its Implementation

Last Updated: October 13 2018
Article by A. John P. Mancini, Richard M. Assmus, Allison L. Stillman and Xiyin Tang

Having passed both the US House and Senate, the Music Modernization Act ("MMA") is about to be signed into law—a signing ceremony is scheduled for today. It will effect a sweeping overhaul of the compulsory mechanical license mechanism set forth in 17 U.S.C. §115—among other significant changes. While many in the industry have been closely following the bill as it worked its way through the legislature, the following provides an overview of key terms—and important dates—regarding the mechanical licensing procedures under the new law that every digital music service provider should know. Importantly, though many aspects of the new system require further regulation and many months (or even years) before they are effective, certain licensee obligations will begin as early as next month.

I. Overview of Key Changes to Mechanical Licensing

  1. Blanket License Administered by Mechanical Licensing Collective
    A primary feature of the new law is the creation of a blanket license for the mechanical rights implicated in interactive digital streaming and a mechanical licensing collective ("Collective") to administer the license and the associated royalties and administrative fees to be paid by the digital music service licensees. The blanket license eliminates the need for digital services to obtain licenses on a song-by-song basis through the Notice of Intent ("NOI") procedure under section 115 of the Copyright Act. It also discontinues the process of filing NOIs with the Copyright Office in situations where the copyright owner could not be located.  

    The blanket license covers all musical works (or shares of such works) available for compulsory licensing for purposes of covered activities, including interactive streaming and all copies/distributions made in connection therewith. The Collective is to be designated by the Register of Copyrights, and will have broad authority to establish and administer a centralized musical works database, collect and distribute royalties from licensees, and provide information for use in rate-setting proceedings. The Collective will also have a dispute resolution committee and an unclaimed royalties oversight committee.

    On the License Availability Date (which will likely be January 1, 2021), the blanket license will be automatically substituted in place of any preexisting compulsory license—and all compulsory licenses under the prior statute will expire. There will be no remaining compulsory license other than the blanket license after the License Availability Date.

    Once the blanket license is in effect, licensee music services must report usage and pay royalties on a monthly basis, due to the Collective 45 days after the end of each monthly reporting period. Upon receipt of usage reports and payment, the Collective will distribute the royalties to copyright owners in accordance with usage information. For royalties that cannot be distributed (for unmatched works or works subject to ownership disputes), the Collective is to deposit the royalties in an interest-bearing account. Royalties for unmatched works are to be held for three years and then distributed by the Collective to known copyright owners pro rata.
  2. Exemption of Voluntary Licenses
    Under the MMA, licensees under the blanket compulsory license need not pay royalties to the Collective for uses of a musical work that are covered by a voluntary license. The statute defines "voluntary license" as "a license for use of a musical work (or share thereof) other than a compulsory license obtained under this section." Note that although there is no obligation to double-pay royalties on those voluntary licenses, licensees must still include those works in the monthly usage reports to the Collective.
  3. Rates and Administrative Fees
    The mechanical rates to be paid under the compulsory license will continue to be set by the Copyright Royalty Board ("CRB") through scheduled rate-setting proceedings, but the standard for determining the rates will now be "willing buyer/willing seller" instead of the previous section 801(b)(1) "reasonable" rate factors.  

    In addition to setting the royalty rates for the compulsory license, the CRB will also, in a separate proceeding, determine the administrative assessments imposed on the licensee services (and on "significant nonblanket licensees") to fund the Collective. The administrative assessments will be to cover the "reasonable" total costs of the Collective and are to be assessed based roughly on the usage by digital music services, in the form of a percentage of royalties payable or some other usage-based metric that will yield "equitable" allocation (and will include a minimum fee for all digital music providers). The assessments may be offset by voluntary contributions made by licensees through private negotiation and agreement.
  4. Implications for Copyright Infringement Litigation
    Other important — but less publicized — aspects of the bill are (1) the definition of "interactive streaming" and (2) the limitation on copyright infringement lawsuits.

    The blanket license under the MMA applies to "covered activities," which is defined as "making a digital phonorecord delivery of a musical work, including in the form of a permanent download, limited download, or interactive stream, where such activity is subject to compulsory licensing under this section." (Emphasis added.) "Interactive stream" is defined as a "digital transmission of a sound recording of a musical work in the form of a stream, where the performance of the sound recording by means of such transmission is not exempt under section 114(d) and does not in itself, or as a result of a program in which it is included, qualify for statutory licensing under section 114(d)(2). An interactive stream is a digital phonorecord delivery." (Emphasis added.) This is generally consistent with past industry practice—digital music services have long been paying mechanical royalties for interactive streaming—but was not necessarily required as a matter of law. Under the MMA, interactive streaming implicates reproduction and distribution rights (in addition to performance rights) under 17 U.S.C. 106.

    While the bill removes this defensive argument, it also significantly limits infringement liability and the threat of litigation in which such an argument might have been advanced. A digital music provider that obtains and complies with the blanket license will not be subject to infringement actions. Moreover, for any copyright infringement action commenced against a digital music provider after January 1, 2018, for unlicensed use prior to the License Availability Date (i.e., within the next two years, roughly), the copyright owner plaintiff will only be able to recover royalties owed, and no other damages—removing the specter of (arguably draconian) statutory damages that has driven copyright infringement litigation over the past several years. 

    In order to be protected by the limitation of liability, existing digital service licensees must comply with certain conditions during the time period commencing 30 days after enactment and running through the period 90 days after the License Availability Date (which will be April 2021). These requirements include certain specified matching efforts. If the copyright owner is identified, the service shall provide a statement of account and pay royalties in accordance with the pre-blanket license regulations until the License Availability Date, after which the royalties and usage report are transferred to the Collective. If the owner is not found, the service is to accrue the royalties until the License Availability Date and then transfer the accrued royalties to the licensing Collective.

    Note that a service that "defaults" under the MMA and does not cure the default within 60 days of written notice will have the blanket license terminated; the service may then be subject to infringement liability and all remedies under 17 U.S.C. §§ 502-506.  Default can be caused by failure to provide complete and accurate monthly usage reports and payments, failure to pay administrative fees, and other non-compliance with the terms and conditions of the blanket license.

II. Important Dates

A number of issues remain to be resolved following enactment, and several details have been specifically reserved for the Register of Copyrights to determine through regulation—including the form of the new "notice of license" and regulations concerning usage reports. In the meantime, below is a brief timeline of important dates for licensees to keep in mind:

  1. Date of enactment: Upon enactment of the MMA, the Copyright Office will no longer accept NOIs (and NOIs filed with the Copyright Office prior to the enactment date will not provide licensing coverage after the License Availability Date).
  2. Enactment + 30 days: Compliance with requirements to take advantage of the limitation of liability. In order for a licensee to avail itself of the limitation of liability, it must comply with requirements between this date and April 1, 2021 (90 days after the License Availability Date). The requirements include engaging in certain matching efforts, including through a bulk electronic matching process, repeated every month with respect to unmatched compositions and other requirements regarding statements of account, royalties, accruals and transition to the Collective following the License Availability Date.
  3. Enactment + 90 days: Due date for publication of notice in the Federal Register soliciting information to identify the appropriate entities to serve as the Collective and as the Digital Licensee Coordinator.
  4. Enactment + 270 days: Due date for:

    • The Register of Copyrights to designate the Collective and the Digital Licensee Coordinator, if any (designations to be reviewed every five years after the initial designation); and
    • The Copyright Royalty Judges to commence a proceeding to establish the initial administrative assessment by publishing a notice in the Federal Register seeking petitions to participate.
  5. January 1, 2021: License Availability Date (substitution of blanket license and expiration of prior compulsory licenses).

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2018. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions