Institutional Racism and Royalty Distribution — A Quick Word on the Music Modernization Act

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The music industry’s shift from physical to digital revenue—and big data—has compounded inefficiencies in licensing, rights owner identification, and royalty distribution.

A proxy example of this is the “author unknown” filings to the US Copyright Office using the Notice of Intention (NOI) compulsory license under Section 115 of the United States Copyright Act. If these filings are to be taken at face value, there are over 60 million instances where digital service providers are unable to identify the copyright owners of the works in question.

This is not the case for every single filing—as always it’s more complicated—but there are a significant number of works whose owners cannot be identified.

Performing Rights Organizations and Collective Management Organizations (effectively the same role, different dressing) also struggle to effectively match rights owners to compositions.

This means royalties go unpaid and are generally held in “black boxes”.

It’s common practice for these black boxes to eventually be distributed based on publisher or label market share. Naturally independents receive the lowest proportion, if anything.

In the case of the proposed Music Modernization Act, this would remove the NOI black box, not building a mechanism for the copyright owners to be accurately matched, but by doing away with the license all together. DSPs will instead operate under a blanket license for every historical and future composition and pay into a new Mechanical Licensing Collective.

There’s something very nefarious about the current Music Modernisation Act and its default model of market share distribution.

It’s not just independents, but independents in genres that are traditionally represented by non-white artists that will miss out on these distributions. This is due to the sometimes complex royalty splits to access to services and information that would educate these artists on how royalties and copyright works.

In its current form, the Music Modernization Act reinforces the structural racism that pervades much of US legislature.

I do not think this is a conscious decision on the part of those who have architected the legislation. It is simply an example where laziness and financial interest can become complicit in building and perpetuating institutional racism.