An Economist's View of the Music Modernization Act: Steps toward a More Market-Oriented Approach to Rate Setting

AuthorChip Hunter
Pages20-23
Published in Landslide® magazine, Volume 12, Number 3, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2019 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
An Economist’s
View of the Music
Modernization Act
Steps toward a More Market-Oriented
Approach to Rate Setting
By Chip Hunter
T
he Music Modernization Act (MMA), signed
into law in late 2018, provides for a range of new
regulations and practices in the music business.
This includes clarication of federal remedies
for copyright infringement of sound recordings
made before 1972, a new collective to handle roy-
alty collection and distribution for compulsory
mechanical licenses, and a means for poten-
tially paying producers and engineers a portion
of sound recording royalties collected under the
statutory § 114 licenses.1 While many aspects of the MMA are
interesting from an economist’s point of view, perhaps most inter-
esting are those that move the standards and tools for rate setting
closer to a market-oriented perspective in the context of digital
uses of music. It is those developments that will be reviewed here.
The next section provides a high-level overview of the
framework for copyright license fees associated with the use of
musical works (in public performances and digital downloads)
and the public performance of sound recordings. The section
following describes some of the interesting economic implica-
tions for future royalty rate-setting proceedings, and the nal
section concludes with a brief summary of what some would
call unnished work in the music licensing world.
Overview of Music Royalties
From the Spotify playlist at the gym, to the hold music while
waiting for a conference call, to the theme song of your
favorite TV show, music is ubiquitous in our daily lives.
While listening to music might be a simple act, the systems
that govern which copyright holders get paid—and how much

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