The Music Modernization Act of 2018 and What It Actually Meant for Songwriters

President Trump signed the Music Modernization Act (MMA) into law on October 11, 2018. The legislation was the product of years of negotiation among the major stakeholders in the music industry: performing rights organizations, digital service providers, major publishers, independent publishers, and songwriter advocacy groups. The resulting law made the most significant changes to music copyright infrastructure in the United States since the Digital Millennium Copyright Act of 1998.

For independent songwriters, the practical implications of the MMA were both significant and, in some cases, misunderstood in the immediate period following its passage. Understanding what the law actually did required separating its three main components and evaluating each on its own terms.

The Three Components

The Music Modernization Act consisted of three separate bills that were merged into a single legislative package. The first and most significant, the Musical Works Modernization Act, addressed the mechanical licensing system for digital streaming. The second, known as CLASSICS, addressed royalty protections for pre-1972 sound recordings, which had previously been excluded from federal copyright protection. The third, the AMP Act (Allocation for Music Producers), addressed royalty payments to record producers and engineers.

Each component addressed a different aspect of the streaming royalty infrastructure, and each had distinct implications for different categories of music creators.

The Mechanical Licensing Collective

The most consequential change for independent songwriters was the creation of the Mechanical Licensing Collective (MLC), a new body authorized to collect and distribute mechanical royalties from digital service providers (streaming platforms) on behalf of songwriters and music publishers.

Before the MMA, digital streaming platforms were required to obtain mechanical licenses for each song they streamed. The pre-existing system was fragmented: streaming platforms had to identify the correct publisher for each song, negotiate or obtain compulsory licenses, and make direct royalty payments. The practical result was that platforms routinely streamed songs for which they had not successfully identified the correct rights holder, resulting in large pools of unclaimed mechanical royalties that songwriters were theoretically owed but never received.

According to NMPA (National Music Publishers Association) documentation of the MMA, the unmatched royalty pool at major streaming platforms had accumulated to hundreds of millions of dollars before the MMA addressed the structural problem that allowed it to accumulate.

The MLC, which became operational on January 1, 2021, required digital service providers to pay all mechanical royalties to the MLC, which then held responsibility for identifying and distributing those payments to the correct rights holders. The structural benefit was that the responsibility for rights matching shifted from the streaming platforms to a centralized body specifically designed and funded for that purpose.

For independent songwriters who had previously struggled to collect mechanical royalties directly from streaming platforms, the MLC created a single place to register songs, verify ownership, and collect payments. The practical improvement was significant: registration with the MLC gave independent songwriters access to mechanical royalty income that had previously required either a music publisher or a separate mechanical licensing arrangement to collect.

The CLASSICS Provision

The CLASSICS provision created a federal performance royalty for pre-1972 sound recordings, which had previously been governed by a patchwork of state laws and had often generated no digital performance income for the artists who performed on those recordings.

The significance for living artists who had recorded before 1972 was direct: songs they had performed, and for which they held performance royalty interests, would now generate federal digital performance income through SoundExchange for streaming and digital radio play. The provision created a framework for income that many older artists had never received from digital platforms.

What the MMA Did Not Do

The MMA was significant legislation, but it was not a comprehensive solution to every royalty problem facing independent songwriters. The statutory mechanical royalty rate, set by the Copyright Royalty Board rather than the MMA directly, remained the subject of ongoing rate proceedings that would determine the actual dollar amounts songwriters received per stream.

The MMA also did not address the performance royalty rate structure directly. Performance royalties, paid by Spotify, Apple Music, and others to PROs (performing rights organizations) for the public performance of compositions, were subject to a separate rate-setting process and remained a distinct revenue stream from the mechanical royalties that the MMA's MLC addressed.

Independent songwriters benefited most from the MMA when they took the practical steps it enabled: registering their works with the MLC, verifying their metadata, and ensuring that their ownership information was accurate in the databases that the MLC used to identify and distribute royalties.

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FAQ

What is the Music Modernization Act? The Music Modernization Act is legislation signed into law on October 11, 2018, that made significant changes to music copyright infrastructure in the United States. Its three components addressed digital mechanical licensing, pre-1972 sound recording royalties, and royalty payments to producers and engineers.

What is the Mechanical Licensing Collective? The MLC is a body created by the MMA to collect and distribute mechanical royalties from digital streaming platforms to songwriters and publishers. It became operational on January 1, 2021.

How did the pre-MMA system fail independent songwriters? The previous system required streaming platforms to identify the correct publisher for each song they streamed, resulting in large pools of unmatched royalties that accumulated because the platforms could not complete the rights identification process. The MLC shifted responsibility for rights matching to a centralized body.

What is the CLASSICS provision? The CLASSICS component of the MMA created federal performance royalty protections for pre-1972 sound recordings, which had previously been governed only by state law and had often generated no digital performance income for performing artists.

What did the MMA not address? The MMA did not set the mechanical royalty rate itself (that remained subject to Copyright Royalty Board proceedings) and did not directly address the performance royalty rate structure for compositions.