ARTICLE
30 January 2023

Paying Post-Termination Streaming Royalties To Creators And Their Heirs Is "Common Sense": Recent Comments On The Proposed Rule On Termination Rights Under The Music Modernization Act

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Donahue Fitzgerald Attorneys
Contributor
Donahue Fitzgerald has been helping innovators bring their dreams to life since 1883. With passion and entrepreneurial spirit, our clients are innovators in diverse fields. We’ve represented many of our clients for generations. Throughout our long history, we have successfully guided our clients through evolving legal landscapes and economic cycles.
Sections 203 and 304 of the Copyright Act allow creators, or their heirs, to terminate copyright grants after a period of time.
United States Intellectual Property
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Sections 203 and 304 of the Copyright Act allow creators, or their heirs, to terminate copyright grants after a period of time. This gives authors and their heirs the opportunity to recapture important rights and negotiate better agreements, including increased royalties. Music copyrights can generate a lot of income from streaming royalties and there has been uncertainty as to whether a music publisher whose rights have been terminated could continue to receive streaming income once a copyright termination is effective.

The policy of the Mechanical Licensing Collective (MLC), which was created by the recent Music Modernization Act to handle streaming rights and income, has been to pay these royalties to the terminated publishers who originally entered into the streaming agreement. In response to this policy, the Copyright Office proposed a new rule (87 FR 64405, 87 FR 71286) that would instead allocate the streaming royalties for musical compositions to the owners of recaptured copyrights – i.e., authors or their heirs. According to Business Wire, global music streaming is expected to be worth over $45 billion in 2026, so the financial consequences of this proposed rule will be significant for many older works.

Both publishers and authors submitted comments on the proposed rule. Advocacy groups writing on behalf of creators – including the Authors Alliance, American Library Association, the Electronic Frontier Foundation, Songwriters of North America, Black Music Action Coalition, and Music Artists Coalition – support the new rule and the financial benefits it would give to authors and their heirs. Some publishers, too, are expressing support for the proposed rule, including Wixen Music Publishing, noting that the MLC's rule is not in line with the Copyright Act, case law, or common sense. Other organizations writing on behalf of publishers have raised legal concerns about the proposed rule, while still supporting the goal of compensating creators and their heirs. The National Music Publishers' Association and the Nashville Songwriters Association even advocated for an alternative, citing to their own draft bill, the "Termination of Royalties through the MLC Act."

The window for public comments has now passed and, given the weight of the comments in favor, the Copyright Office's proposed rule is likely to be enacted. Time will tell whether the rule will be challenged in court, but it looks like a significant victory is on the horizon for those songwriters and their heirs who have filed copyright terminations to recapture their rights to their compositions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
30 January 2023

Paying Post-Termination Streaming Royalties To Creators And Their Heirs Is "Common Sense": Recent Comments On The Proposed Rule On Termination Rights Under The Music Modernization Act

United States Intellectual Property
Contributor
Donahue Fitzgerald has been helping innovators bring their dreams to life since 1883. With passion and entrepreneurial spirit, our clients are innovators in diverse fields. We’ve represented many of our clients for generations. Throughout our long history, we have successfully guided our clients through evolving legal landscapes and economic cycles.
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