Rights in sound recordings - Compulsory licensing

This edition of the James Rose Blog About Law is focused on the general scope of compulsory licensing of sound recordings and the major changes that stemmed from the Music Modernization Act ("MMA") signed into law by President Trump in October of 2018.

Section 115 of the Copyright Act of 1978 is the statute for this short blog analysis.  Parts of it are already well known.  A compulsory license may be obtained only if the primary purpose is to distribute the musical work to the public for private use.  The sound recording must be fixed lawfully in a material object known in the legal world as a phonorecord with distribution authorized by the owner of the copyright before another person may obtain a compulsory license.

An important component of the MMA is the requirements of record keeping.  The copyright owner must identify himself or herself in a registration or other public records of the copyright office.  This is an important point of detail for creative people to remember.

Another key part of the MMA is the determination of reasonable rates.  Three Copyright Royalty Judges appointed by the Librarian of Congress determine the schedule of reasonable rates and terms for compulsory licensing.  Rates and terms established must "most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller.  In determining such rates and terms for digital phonorecord deliveries, the Copyright Royalty Judges shall base their decision on economic, competitive, and programming information presented by the parties."

Licenses that are voluntarily negotiated trump compulsory licensing.  They are given effect over any compulsory license rate.  So if you have a negotiated license, it is effective.

Royalty payments are required to be made on the 20th day of each month and shall include all royalties for the preceding month.  Detailed cumulative annual statements of account are also required.

A digital music provider that qualifies for compulsory license may obtain a blanket license from copyright owners through the Mechanical Licensing Collective ("MLC") to make and distribute digital deliveries of musical works.  Billboard magazine has recently published an op-ed regarding the MLC, and you are sure to hear more about it from me soon.




Location: Nashville, TN, USA

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