US Copyright Office publishes new document amending rule on streaming royalties

US Copyright Office publishes new document amending rule on streaming royalties

On 9 July, the US Copyright Office (USCO) published a final rule aimed at clarifying issues relating to derivative works under the US Copyright Act and explaining how termination rights apply to the so-called mechanical blanket licences established by the Music Modernisation Act of 2018. Thus, among other points addressed, the rule seeks to ensure that songwriters who exercise their termination rights to regain control of their songs will receive royalties from streaming platforms.

The new rule mainly addresses issues related to the licensing of the Mechanical Licensing Collective (MLC), the official US organisation created by the Music Modernisation Act that issues so-called blanket licenses (i.e. a license that provides unlimited access to an author’s entire repertoire for the duration of the license for a single fee) to qualified streaming services in the US, in order to obtain streaming royalties. Also, the USCO rule deals with termination rights, i.e. the provisions of the US Copyright Act that allow artists and composers to recover full ownership rights of licensed works after 35 years.

Thus, with regard to streaming platforms, the previous MLC policy, issued in 2021, determined royalty payments based on the date a song was uploaded to a digital platform. Thus, if the song was uploaded to the platform before the songwriter invoked termination rights, the royalties would continue to flow to the former owner indefinitely. According to the new rule, songwriters who terminate their rights have the right to be paid for the use of their works after termination, in accordance with the license.

In addition, the document clarifies the exception to termination rights in relation to derivative works, provided for in Section 115 of the US LDA. The exception provides that if a song is ‘sampled’ or placed in a film or TV programme as part of a synchronization agreement, the publisher’s right to receive royalties from that specific use continues even after termination. The new rule states that this exception cannot be applied to blanket licenses.

The rule also addresses other relevant issues such as identifying the proper beneficiary to whom the MLC should distribute royalties and the requirement for ‘corrective royalty adjustments’ to rectify any improper payments made under the old policy.

The US Copyright Office’s final rule can be accessed via the link: Termination Rights, Royalty Distributions, Ownership Transfers, Disputes, and the Music Modernization Act