U.S. Copyright Office Finalizes Rule to Ensure Fair Streaming Royalties for Songwriters
The U.S. Copyright Office has finalized a new rule to guarantee that songwriters who exercise their termination rights to regain control of their music will receive streaming royalties. This ruling addresses concerns that previous policies would have continued to send royalties to former owners, even after songwriters reclaimed their rights.
The new rule addresses the MLC's blanket license for streaming royalties, created by the Music Modernization Act of 2018, and termination rights — federal provisions allowing authors to reclaim rights to their copyrighted works after decades. While termination rights empower songwriters to regain control, they also permit publishers to continue profiting from "existing derivative works" created under their ownership.
The MLC's previous policy, issued in 2021, determined royalty payments based on when a song was uploaded to a digital platform. If the song was uploaded before the songwriter invoked termination rights, royalties would continue to flow to the old owner indefinitely. This approach was intended to prevent disputes that could delay payments but was criticized for undermining termination rights.
In October 2022, the Copyright Office proposed a new rule, stating that the MLC's policy misinterpreted the law. The new rule mandates that royalties should be paid to the songwriter once they reclaim their rights, ensuring they benefit from their reclaimed works.
The final rule has undergone modifications to address practical concerns raised by industry stakeholders. It provides clear guidance on identifying the payee for royalties and allows the MLC additional time to update its systems and processes.
The National Music Publishers’ Association (NMPA), initially a principal critic, argued that the MLC's approach was consistent with historical precedent. However, the Copyright Office rejected these arguments, asserting that the new rule simply clarifies existing law. NMPA President & CEO David Israelite ultimately expressed support for the final rule, highlighting its importance in ensuring proper and timely payments to songwriters.
The new rule also mandates "corrective royalty adjustments" to rectify any improper payments made under the old policy. These adjustments are expected to be minor, as the MLC had voluntarily suspended the old policy during the rule-making process.
