The Music Modernization Act is definitely the gift that keeps on giving. It seems like every time I read it, a new toad jumps out from under a rock.
The latest one I found is a new burden the MMA places on all sound recording owners, large and small, to help the digital services comply with their obligation to locate song copyright owners in order for the services to keep the new “reachback” safe harbor also referred to as the “Limitation on Liability”. This is the retroactive safe harbor given effect on January 1, 2018 regardless of when the bill actually is passed by both houses of Congress and signed by the President.
Here’s the relevant clause (at pages 100-101 of the House bill):
REQUIREMENTS FOR LIMITATION ON LIABILITY.—The following requirements shall apply on the enactment date and through the end of the period that expires 90 days after the license availability date to digital music providers seeking to avail themselves of the [reachback safe harbor]:
‘(i) No later than 30 calendar days after first making a particular sound recording of a musical work available through its service via one or more covered activities, or 30 calendar days after the enactment date, whichever occurs later, a digital music provider shall engage in good-faith, commercially reasonable efforts to identify and locate each copyright owner of such musical work (or share thereof). Such required matching efforts shall include the following:
(I) Good-faith, commercially reasonable efforts to obtain from the owner of the corresponding sound recording made available through the digital music provider’s service the following information:
(aa) Sound recording name, featured artist, sound recording copyright owner, producer, international standard recording code, and other information commonly used in the industry to identify sound recordings and match them to the musical works they embody.
(bb) Any available musical work ownership information, including each songwriter and publisher name, percentage ownership share, and international standard musical work code.
And yes, that is a double “good-faith, commercially reasonable” predicate–a drafting bugaboo of mine. I guess it means really, really, really good faith and absolutely positively commercially reasonable since they said it twice.
So what this means is that labels are required to provide to digital services a lot of song ownership information that they may or may not have. For example, if the label licenses in a sound recording and puts the publishing payments on the licensor (very common practice) the information might be “available” but it is just not available to them.
Note that despite the fact that “good faith” and “commercially reasonable” are repeated twice for emphasis, those concepts modify the efforts of the digital service and not the efforts of the label to respond. (Not surprising, if you believe as I do that the MMA was largely written by the lobbyists for the services and not the publishers or songwriters.)
At a minimum, the clause should be revised to extend the “good faith” and “commercially reasonable” modifiers to the label’s efforts to provide song information. Having said it twice, why not three times?
There’s also no procedure for how this request is to be made or responded to, nor is there reimbursement of the costs incurred by the label in complying. There’s also no limitation on liability for the label if it provides the service what turns out to be incorrect information.
Of course, what should really happen is that the entire paragraph (bb) should simply be struck. It has long been the practice of record companies to refuse to provide publisher information to digital services and it has long been the practice of digital services to not ask for it.
In all likelihood, the services will engage a third party to do their song research, which is covered in the very next clause:
(II) Employment of one or more bulk electronic matching processes that are available to the digital music provider through a third-party vendor on commercially reasonable terms, but a digital music provider may rely on its own bulk electronic matching process if it has capabilities comparable to or better than those available from a third-party vendor on commercially reasonable terms.
Taking a long look at the clause, it seems reasonable to simply strike the entire clause (I) and keep the labels out of it as has long been the practice, and require the services to either use their own systems or hire a vendor. And that’s where there should be some criteria for what constitutes a proper vendor. If there’s going to be any work done by the labels, then–as advertised–the digital services should pay the label’s cost of compliance as part of the assessment and the label should have no liability if they happen to not have the song information “available”–in a commercially reasonable manner.
We all want the MMA to work, but we also all want to avoid unfunded mandates imposed by the federal government that create unintended consequences.