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How the Music Modernization Act Is Going to 'Revolutionize' Artist Payments

By George Khoury, Esq. on July 05, 2018 | Last updated on March 21, 2019

Surprisingly, given the sheer number of lawsuits stemming from mis-payment of musical artists as a result of streaming music services, the legislature is actually responding to quell the continually rising tide.

However, rather than trying to put a bandage over the problem, the Music Modernization Act seeks to revolutionize the way artists get paid by streaming music services. In short, the act sets up a new method for streaming services to positively identify everyone that should be paid royalties so that we don't get repeats of the $1.6 billion Spotify lawsuit.

The Music Modernization Act

The proposed legislation already worked its way through the House, but after working its way through the Senate committee, will need to be re-approved. However, that is expected, and it is also expected to be approved by the Senate. The new law would establish a copyright clearinghouse of sorts, or database, that would allow artists and publishers to register their rights so that streaming services could license the music without the hassle of tracking down publishers and other rights holders.

The rights clearinghouse would be run as a collective by the artists and publishers, and paid for by the digital streaming services. The streaming services that go through the collective will be protected from claims by artists and other publishers.

According to the Congressional Budget Office report issued in April for the House, the cost of setting up the collective and database will be $47 million. However, given the large settlements that have come as a result of these disputes, and not to mention the attorney fees, publishers and streaming services aren't likely to shy away from shouldering those costs, especially if it can get rid of the plethora of lawsuits.

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