Notice to Operators Who Stream Pre-1972 Recordings Regarding Upcoming Statutory Deadline

Operators who have digitally streamed sound recordings that were recorded before February 15, 1972 (“pre-1972 recordings”) should be aware of an upcoming deadline—July 8, 2019. For anyone who was previously carving pre-1972 recordings out of royalties paid to SoundExchange, this is the date by which to true up those payments, in exchange for a form of immunity from state law claims over the past use of those recordings.

A bit more background and context: Historically, the IP rights in pre-1972 sound recordings were governed by state law, rather than federal law. As a result, it was unclear whether paying SoundExchange for digital streams of pre-1972 recordings actually afforded protection from liability for using them, since those payments are part of a federal statutory licensing regime. Some music users nevertheless paid SoundExchange on their streams of pre-1972 recordings; others didn’t. A wave of lawsuits followed, brought by copyright owners of pre-1972 recordings alleging that music services and broadcasters had violated their state-law rights by digitally streaming those recordings—irrespective of whether SoundExchange had been paid or not.

On October 11, 2018, Congress enacted a law (the Music Modernization Act or MMA) that creates a new federal legal regime for digital streaming of pre-1972 recordings. Going forward, the MMA eliminates state-law claims related to streaming of pre-1972 recordings. It is now explicit in the law that broadcasters must pay SoundExchange for streams of pre-1972 recordings at the established statutory rate, and in turn receive a license.

Importantly, the MMA also provides a way for broadcasters to immunize themselves from any potential state-law claims related to streaming that took place before the MMA’s enactment on October 11, 2018. To obtain that immunity, broadcasters must pay SoundExchange, on or before July 8, 2019, for any digital streams of pre-1972 recordings that were not otherwise paid for during the three years immediately preceding the MMA’s enactment.

If you already paid SoundExchange for all of your digital streams (whether for pre-1972 or post-1972 recordings) for the three-year period predating the MMA’s enactment, you may not need to make any additional payments. The decision whether to make payments will turn on facts and circumstances specific to each operator, and we encourage broadcasters to consult with their attorneys for further guidance.

If you are unsure what you should do, please consult your attorney for additional information.

This alert to the impending deadline is courtesy of RMLC.