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Home > IPLJ > Vol. XXXI > No. 2 (2021)

 

Keywords

Music Modernization Act, Copyright Royalty Board, music

Abstract

Mechanical royalties payable to songwriters for digital reproductions of their works on services such as Spotify and Apple Music are determined through a convoluted quasi-trial in front of an administrative body called the Copyright Royalty Board (“CRB”). The CRB is itself governed by statutory rate standards that constrain the types of evidence and analyses it may consider when setting royalty rates.

In 2018, Congress passed a much-heralded, consensus piece of music legislation called the Music Modernization Act (“MMA”). The MMA attacked a broad swath of issues across the music industry, including, most visibly, establishing a blanket license for digital mechanical licenses, and a statutory entity to administer that license. But buried within the MMA was a less-celebrated wrinkle: a provision that replaced the old 801(b) rate standard used by the CRB for mechanical royalties with a new “willing buyer/willing seller” rate standard. While the new standard was seen as a victory for songwriters, its precise practical effects remain unsettled. Will it really increase rates? If so, why? What evidence, arguments, and analysis will it allow—and foreclose—relative to the old standard?

This Comment seeks to answer these questions through a comparative case study of two past CRB proceedings. First, it dissects the analyses that shaped the CRB’s Phonorecords III decision—the most recent mechanical royalty rate-setting proceeding, and the last to use the old 801(b) rate standard. Second, it undertakes a similar analysis of the CRB’s Web IV decision, the most recent instance in which the CRB applied the willing buyer/willing seller standard to a rate-setting proceeding for a different rights type (the digital performance of sound recordings). It then compares and contrasts those two proceedings to predict how willing buyer/willing seller will operate in the digital mechanical royalty context. From that comparison it concludes that, while the change does skew songwriter-friendly, there is also a significant amount of uncertainty that may render the change less significant than copyright owners hope—and music licensees fear.

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