The Music Modernization Act was passed in October 2018 and the US music publishing community is deep in the process of implementing the legislation, which includes a shift to blanket licenses for mechanical rights in on demand music streaming, the removal of statutory damages under this business model, and the creation of a central mechanical licensing collective. These shifts make significant strides in addressing deep problems related to the licensing, usage and collection of mechanical royalties for Spotify and Apple-like music services. But how will this impact the broader music market?
First, in the US, this legislation will create a central, publicly accessible database of mechanical rights, improving accuracy and helping licensees and licensors to ensure greater precision in rights ownership and pay-outs. More money flowing means greater value for publishers and songwriters.
Second, in the US, the removal of statutory damages will de-risk the music streaming marketplace and will likely mean new entrants onto the scene, and more innovation of models and user experiences.
Third, globally, our belief is that this legislation will be a catalyst for societies and publishers throughout the world to modernize their systems, reduce duplication of efforts, and improve efficiency. This means more time and effort can be spent with creators, and less on silos of data.
All of the above will lead to an even more robust publishing business in the next five years, with greater efficiencies and growth potential. As publishing catalogues increase in value, there will also be shifts of ownership and acquisitions, as well as greater transparency for songwriters to manage their income streams. At 23 Capital, we thrive on supporting the growth of the music sector and offer a new source of flexible capital for artists, labels, publishers and songwriters.