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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 – Copyright


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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.

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