Royalty and Licensing Policy Solution, Essay Example

The shift from the sales of records to music streaming has significantly revolutionized and changed the music industry. Presently, the federal copyright regime, rooted in the system of economic rewards, is based largely on sales, a move that has been slowly adopted. Therefore, such measures impair the capacity of the copyright laws to establish and channel effective and appropriate royalties to the music publishers, songwriters, and recording artists, especially when their works are streamed to displace the record sales (Yang, 2017, p.83).  Given this, the Music Modernization Act (MMA) was ratified and passed into a bill unanimously primarily by the Senate and the House of Representatives before its signing into law later in 2018 by the Trump administration. MMA’s overall purpose lied in the modernization of the US copyright laws by ensuring that it matches the needs of the modern times (Boccard, 2010, p.18). One of the fundamental facets of this Act lies in the fact that it sets apart measures that may be used in creating Mechanical Licencing Collective (MLC) systems that are funded by the digital music to provide varied services intended at granting blanket mechanical licensures for interactive streaming or rather digital downloads on the musical works. The MLC is considered an outcome of Tittle 1 in the MMA that embodies different titles (Kabiraj, 2017, p.750). Title I focuses on assisting the music licensing industry even amid the continuous development of several streaming services that continue to emerge. Before its revision, the streaming services mainly relied on individual licenses required to notify copyright holders to pay their royalties.

As an existing bipartisan bill, Elton establishes that the MMA remains a phenomenon that has been met positively by the House of Judiciary Committee. The bill plays a fundamental role in restructuring the existing music licensing process (15). This plays a fundamental role in increasing the element of royalty payments specifically to the copyright holders within the music industry.  Secondly, the positives of the MMA lies in reforming §§ 115 and 114 of the Copyright. This, therefore, means that the deal primarily addresses other specified reforms that include the establishment of a single licensure entity, the appointment of a new Copyright Royalty Board (CRB) to restructure the rates under the willing buyer/willing seller approach, repealing § 114(i) that allows the rate court judges to take consideration of sound recording marketplace in the setting of the rates, and the standard initiation of a wheel approach and system in rate courts.  For instance, Section 115 enshrined in the Copyright Act asserts that:” …to make and distribute phonorecords, subject to compulsory licensing” (Elton, 2019, p. 17). Therefore, the Section defines the parameters of an exclusive right within a nondramatic music work that requires and calls for compulsory licensure in the making and the distribution of phonorecords. The MMA, on the other hand, streamlines the process of regulating compulsory licensure through the amendment of the laws. In other words, the bill primarily calls for the creation of blanket mechanical licensures specifically for the streaming of music works and interactive digital downloads (Elton, 2019, p. 18). The licensures are overseen and regulated by centralized mechanical licensing systems and entities entitled to the MLC.  Fourthly, the MMA has made significant changes to the statutory rates and standards established in § 801(b) that defines the willing buyers and willing sellers (Kabiraj, 2017, p.749). The changes play a fundamental role in the creation of digital licensing measures.

On the other hand, the digital music providers, self-providers, and unpublished writers are likely to face challenges with the element of song identification. Due to the existing copyright registration challenges, misspellings, incomplete data, and other issues on their songs may lose the independent writer’s royalties. This means that the failure to collect royalties, the music publishers get 100% of the unclaimed royalties (Talbot, 2013, p.79). On the other hand, this establishes the need for the bill’s amendment, efforts that may allow the self-published and unpublished writers to acquire or claim their royalties if they encounter such challenges.  On the other hand, the MMA does not have an established grievance process specifically for excluded writers, such as the lack of paid royalties.  This has seen major songwriters who can afford accountants and lawyers audit their publishers, a factor that is detrimental to other songwriters (Talbot, 2013, p. 80). Remedying this issue details the need to ensure that the bill integrates a grievance process that allows independent parties to address some of the songwriters’ issues. Lastly, the bill equally compromises a section of its prospects, making it more complex. In other words, copyright law should be focused on building incentives primarily for the new creative works, efforts that are driven towards enriching the industry and the public (Talbot, 2013, p. 82). The addition of other new rights to the old recordings remains a factor limiting the creation of incentives for some of the newest creative works; a challenge exhibited in this bill.

Efforts driven toward fixing the challenges that come with the MMA bill lie in the need for strategic measures. Therefore, this framework seeks to address challenges related to the compensation of songwriters specifically for their produced works within this streaming era. Therefore, this framework proposes the need for the amendment and repeal of legislation that mandate and legitimize the creation of mechanical licensing in a collective way with transparency to ensure it matches the copyright owner’s demands (Meniere & Parlane, 2010, p.179). The framework equally focuses on assigning and according to respond to digital license coordinators. The coordinators will play a fundamental role in representing the demands and interests of entities that wish to purchase song licenses. Secondly, in a free market, entities need to focus on perfecting the produced products and services with the intent of competing. Therefore, the framework establishes the need for organizations focused on working with MLC to gain a comprehensive understanding of the demands and needs of the songwriters (Mukherjee, 2010, p.736). This is evident because entities such as Amazon, Google, and Facebook currently dabble within the music industry. After all, this is not their niche. However, these behemoth brands fail to have a complete understanding of the songwriters’ challenges and needs.

Secondly, this framework will focus on managing financial responsibilities and obligations to the intellectual property owners. This will be achieved through the licensing of contracts and in setting terms and conditions that are viable. The framework suggests the need for the automation, generation, and tracking of payment requests. Therefore, these efforts will aid in reconciling the variances that ensue between the actual royalty expenses and the guarantees to review the payable future and aging of cash requirements (Niu, 2013, p.12). On the other hand, the framework will focus on establishing measures that may be used in making timely payments to take advantage of the potential early payment discounts. Therefore, the framework will establish structures that may track revenues from the licensed contacts and ensure that timely payments are made to the agents (Talbot, 2013, p. 79). The automation and generation of invoices remain another feature that this framework seeks to address. This will play a fundamental role in reconciling the guarantees against the collected revenues based on the collected royalties.

References

Boccard, N. (2010). On royalty licensing. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1623762

Elton, S. (2019). Mechanical licensing before and after the music modernization act. Journal of the Music and Entertainment Industry Educators Association, 19(1), 13-35. https://doi.org/10.25101/19.1

Kabiraj, T. (2017). Fee vs. royalty licensing and consumers’ welfare. Journal of Quantitative Economics, 16(3), 749-767. https://doi.org/10.1007/s40953-017-0111-6

Llobet, G., & Padilla, J. (2014). The optimal scope of the royalty base in patent licensing. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2417216

Meniere, Y., & Parlane, S. (2010). Decentralized licensing of complementary patents: Comparing the royalty, fixed-fee and two-part tariff regimes”. Information Economics and Policy, 22(2), 178-191. https://doi.org/10.1016/j.infoecopol.2009.10.003

Mukherjee, A. (2010). Licensing a new product: Fee vs. royalty licensing with the unionized labor market. Labour Economics, 17(4), 735-742. https://doi.org/10.1016/j.labeco.2009.09.003

Niu, S. (2013). The equivalence of profit-sharing licensing and per-unit royalty licensing. Economic Modelling, 32, 10-14. https://doi.org/10.1016/j.econmod.2013.01.033

Talbot, M. (2013). Early music as a rebalancing act. Early Music, 41(1), 79-80. https://doi.org/10.1093/em/cas156

Yang. (2017). Copyright royalty regulation and competition in the retail music market. KDI Journal of Economic Policy, 39(1), 83-102. https://doi.org/10.23895/kdijep.2017.39.1.83