The DLC’s comment to the Copyright Office makes it clear that there is a substantial likelihood that the services are holding substantial monies in the black box—substantial amounts of other people’s money. Probably some—or a lot—of your money. The comment suggests more strongly and openly than we have seen before that not only are the services holding more money than they intend to acknowledge that they owe, they know they are and they intend to get away with it. And as our friend Guy Forsyth has written in his classic song Long Long Time, nothing says freedom like getting away with it.
The DLC’s comment makes it clearer than ever that the whole point of Title I was for the services to get away with it under the guise of doing you the huge favor of paying you the money that they already owe you in return for “stakeholders” acting under color of authority to give away the few rights songwriters have. And we’d bet you didn’t even know it happened. Yet you are going to be bound by the deal these people made who don’t represent you and had no actual authority to make any deal on your behalf. The DLC tells us:
This was the heart of the deal struck by the stakeholders in crafting the MMA: to provide legal certainty for DMPs, through a limitation on liability, in exchange for the transfer of accrued royalties. That is a crucial point for the Office to keep in mind as it crafts rules in this space. If the regulations make it less likely that a DMP will be able to rely on that liability protection when it needs it—i.e., if it increases the risk that a court would deem a DMP to not have complied with the requirements in section 115(d)(10)—a DMP could make the rational choice to forego the payment of accrued royalties entirely, and save that money to use in defending itself against any infringement suits.
Read that last clause again: “a DMP could make the rational choice to forego the payment of accrued royalties entirely, and save that money to use in defending itself against any infringement suits.”
The DLC is threatening to use your money to cover the costs of defending itself against lawsuits yet to be filed. Perhaps that assertion proves too much—if the deal was that the services would use your money to buy themselves a safe harbor, if they don’t pay you the money then they don’t get the safe harbor?
Presumably they would also seek to get their assessment money back from The MLC, too. Which of course gives them even more leverage now that the Fox is in the henhouse. Given that The MLC seems to be teetering on the edge of a complete meltdown and seems to exist for the sole purpose of driving signups to HFA, maybe songwriters should be saying, if the DLC threatens to abandon The MLC can we please get that in writing? They should understand that threatening to withhold money from The MLC is pushing on an open door for most songwriters who are not part of the insider cabal.
It’s pretty obvious from this comment that there’s an imminent danger that the monies owed by the services for the black box are likely to evaporate if something isn’t done to preserve the status quo. You couldn’t ask for a more clear and compelling reason that the concern is justified. Plus, what the services complain of is that the Copyright Office’s proposed regulations would make payments more accurate and that they might end up matching more than they already have.
They couldn’t be clearer:
DMPs supported enactment of the MMA fully intending to pay over any accrued royalties still on their books, with the assurance that the limitation on liability the MMA establishes in exchange will protect them from ruinous litigation.
Or said another way, getting caught. And that’s what they really want to avoid. One person’s “ruinous litigation” is another person’s justice. Here they say it yet again:
The Copyright Office has proposed a regulation that requires DMPs to provide a “clear and detailed explanation” of any difference between “the total royalty payable” as reported on the cumulative statement of account (which reflects the royalties for all unmatched usage) and the “royalties actually transferred to the mechanical licensing collective.” We agree with this proposal, with one minor modification: we would suggest changing the phrase “total royalty payable” to “total royalty reported,” to avoid any suggestion that the amount reflected on the cumulative statement of account is necessarily “payable” to the MLC. DLC otherwise agrees with the Office that the MLC is entitled to such an explanation when there are such discrepancies.
The difference between “payable” and “reported” is the difference between what a service in fact owes compared to what they say they owe. Remember, none of these statements will have been subject to a royalty compliance examination (or “audit”) at the time, if ever, that the money is paid over to The MLC.
Plus, we have absolutely no confidence that The MLC is going to be able to process the trillions of transactions involved which will inevitably lead to a huge black box problem that no one seems to be in a hurry to solve. So the Copyright Office is exactly right to seek as much clarity as possible on the sums paid over to The MLC. The balance of hardships tilt’s decidedly in the favor of songwriters.
Testimony provided by Jim Griffin at the June 10, 2014 Committee hearing highlighted the need for more robust metadata to accompany the payment and distribution of music royalties….In an era in which Americans can buy millions of products via an app on their phone based upon the UPC code on the product, the failure of the music industry to develop and maintain a master database has led to significant litigation and underpaid royalties for decades. The Committee believes that this must end so that all artists are paid for their creations and that so-called ‘‘black box’’ revenue is not a drain on the success of the entire industry.
It’s obvious now that the only way to save the black box from total collapse is to have the services disclose immediately how much they are holding and for which songs, artist name and track name if nothing else. There’s a real danger in not doing that—and the DLC is telling us clearly what their intentions are in a conclusive statement that raises serious questions.