As we’ve discussed several times on MTP, songwriters and publishers who are compelled to accept a compulsory license under Section 115 have no way to know whether any of their statements are correct because the government denies songwriters and publishers the right to audit any royalty statement under the compulsory license.

Instead, songwriters are put in the same position they would be in if the IRS audited their tax return and refused to let them have their own representative defend them.  The government mandates moral hazard:  The only accountant who verifies the legitimacy of the royalty statement is the digital service’s own accountant.  (See the applicable section of the Federal government’s Code of Federal Regulations 37 CFR Section 201.19.)

This Kafka-esque rule may have a solution.  It’s hard to believe that the government somehow has it in for songwriters and wants to create distrust.  While the government refused to…