In our continuing review of comments on the Mechanical Licensing Collective, the Future of Music Coalition’s filing is an instructive read.  FOMC has put its finger on two core issues for Copyright Office regulations–the importance of trust in the MLC and the cost to independent publishers and songwriters of handing over all their data to the MLC for the celestial database.

The question of who will pay for these data costs is one of the issues that’s most confusing about the MLC’s messaging as well as the messaging from many groups who encouraged songwriters to support both the blanket compulsory and the “industry consensus” MLC now in control.  Originally, we were all told that “the services will pay for it,” and indeed the services are paying millions for something.  So far, however, we have not seen any budget allocated to compensating the songwriters who will be contributing data at their own expense to MLC’s core asset.

Although FOMC didn’t bring this up directly, they certainly got that thought process going.  If a publisher already has invested substantial resources in cleaning and normalizing their data, participating in MLC may not be a high cost of admission.  But if a publisher has invested in data that is sufficient for them to operate before MMA (say Excel spreadsheets), but is not reasonably exportable to MLC, then the publisher’s choice is find the money to cover these transaction costs or don’t participate. And not participating leads to the black box.

In a streaming economy where per-stream royalties start three or four decimal places to the right if  you’re lucky, the cost of the ticket may well exceed the revenue.  That will weaken the system, so those who benefit from the millions invested in MLC should arguably pay for those transaction costs.

We should also all be mindful of the CISAC and BIEM comment and remember that non-US songwriters could be in a similar position or may simply not be aware that they have to comply with the formalities of registering with the MLC (possibly separately from their own home country collecting society) or even separate from registering for copyright in the US (which will be some but not all non-US songwriters by any stretch).  Even if songwriters don’t register for copyright with the Copyright Office they will still have to register their works with the MLC unless there’s some reliable work around that presents itself in the future.

With that in mind, this passage from the FOMC comment is particularly illuminating:

The success of the new mechanical royalty system created by MMA is dependent on broad participation, and participation is dependent on trust. Unfortunately, cultivating trust can be challenging in the music industries, where old stories of exploitation and bureaucratic failure are plentiful. Different stakeholders may have vastly different levels of legal sophistication, technical skill, and access to resources.  The Copyright Office’s task in its rulemakings is to optimize for trust and accountability for all parties, and should give special consideration to the needs of creators who might otherwise lack leverage. This outcome would not be to the sole benefit of creators, but would benefit all stakeholders. The more accountability, detailed guidance, and ongoing oversight the Office empowers itself to offer the MLC, the more successful the entire endeavor will be.

You should really spend a little time reading the FOMC submission.  It’s not that long but filled with nuggets.

What comes from the Copyright Office in the regulations governing the MLC may be the most important part of this entire process given the flawed parts and omissions from MMA.