All week we digging into the Music Modernization Act currently before Congress. Yesterday, we learned that under the widely endorsed bill, songwriters would lose unclaimed royalties, as well as, some important rights to litigate. Today, Chris Castle explores a missed opportunity for the MMA - not dealing with the mass NOIs that allow streamers to use songs even when they can't find the proper license holders.
"the government takes away a songwriter’s property right to control how their songs are exploited"
By Chris Castle of Music Tech Solutions
Readers will recall what I’ve called the “mass NOI” problem–the flawed loophole in the Copyright Act created in 1976 that the biggest digital services have turned into a cottage industry to avoid embracing comprehensive song licensing on their services.
In a nutshell, the government takes away a songwriter’s property right to control how their songs are exploited and forces songwriters to allow those songs to be reproduced and distributed by others. This is a Bill of Rights constitutional issue because the government is prohibited by the 5th Amendment from taking property from citizens without just compensation.
The compensation in the case of the compulsory mechanical license is that the government requires the user to comply with certain requrements that increase the likelihood that the songwriter will know of the use and have the ability to chase the royalty that the government also sets as part of the “just compensation” for taking away those rights. (Professor Richard Epstein wrote a highly influential and must-read book on the subject of “takings.”) Thus you have the quid–the compulsory license–and the pro quo–the obligation to notify, account and pay royalties.
The government froze the mechanical royaly from 1909 to 1978 and again in 2009 for no apparent reason, but that’s another story. Aside from the inexplicable failure of the controversial Music Modernization Act to modernize the 2009 freezing of the mechanical rate.
After the class actions filed by David Lowery and Melissa Ferrick in December 2015 and January 2016 respectively, Amazon, Google, Spotify, Pandora and others suddenly became very interested in a loophole in the Copyright Act relating to filing these notices. If they can’t “find” the copyright owner in the public records of the Copyright Office, then these services can send their notice of intent to use (or “NOI”) to the Copyright Office and receive a rebuttable compulsory license–without the obligation to pay royalties until the copyright owner became identifiable in the Copyright Office records.
"no foreign owner is obligated to register as that is a clear violation of international law"
Sounds reasonable, right? Wrong. What may have seemed reasonable in 1976 is certainly not in 2016 or now. Note that the obligation isn’t to find the copyright owner, the obligation is only to find the copyright owner in the public records of the Copyright Office. The most common way for song owners to end up in those public records is by registering their songs which they are not obligated to do unless they want to sue for statutory damages and attorneys fees under the Copyright Act’s “private attorney general” provisions. Certainly no foreign owner is obligated to register as that is a clear violation of international law.
As MTS readers know, the digital services, many of whom are represented by the Digital Media Association or the MIC Coalition, began filing these notices at the Copyright Office at a rate of millions of notices per month. There is a growing belief that none of these services are actually attempting to find the copyright owners at all, they are simply serving all these notices on the Copyright Office. The party in the best place to determine the legitimacy of these notices is, of course, the Copyright Office itself, which has not lifted a finger that I can see to even confirm if a sample of these notices have been correctly filed.
Now comes the Music Modernization Act (“MMA”) which has a golden opportunity to clean up the past and to require retroactive payment of royalties on all these notices–no black box required because each song has already been identified and no royalties have been paid at all to date.
Unfortunately, the MMA does nothing that I have been able to find to address the some 60 million of these notices that have been served on the Copyright Office other than to say that the MMA’s blanket license would govern and that:
previously filed notices of intention will no longer be effective or provide license authority with respect to covered activities; provided, however, that there shall be no liability pursuant to section 501 [for infringement] for the reproduction or distribution of a musical work (or share thereof) under a validly filed notice of intention through the license availability date [Jan 1 following the second anniversary of the passing of MMA].
"No retroactive payment, no review of the mass NOIs, nothing except a sweep of the magic wand..."
No retroactive payment, no review of the mass NOIs, nothing except a sweep of the magic wand from Washington–because they’re here to help. Absolution for all involved.
This is simply wrong. The solution to the issue is to freeze the mass NOIs (since they like freezing royalties so much), review what harm has been done, and enact suitable regulations to provice the legitimate safety valve that the Congress intended in 1976. The fact that Members didn’t anticipate the loophole seeking behavior should not be bootstrapped into a payday holiday for companies with a combined market cap of over $2 trillion in the business of search. Otherwise, the government is rewarding loophole seeking behavior and abusing the 5th Amendment protection from takings of property without just compensation–property that is itself created by the same Constitution in the case of copyright.
But the MMA misses this opportunity to right a wrong. As songwriter Guy Forsyth said in his iconic “Long Long Time,” Americans are freedom loving people and nothing says freedom like getting away with it.