MediaNet Trying to Cut Off Black Box Payments

You can’t say these people aren’t cagey. Remember that one of the big selling points for the Music Modernization Act was that in return for the under-reported reach back safe harbor, songwriters would get paid on “black box” income by each digital music service dating back to the inception of each service. This is what the Copyright Office wants, too, unsurprisingly since that was the deal.

The reach back safe harbor was used as a scare tactic to keep songwriters from filing infringement lawsuits against these services and the MMA’s promoters went right along with it.

But–now that the bill is about to come due, guess who wants to change the deal? Services are beginning to threaten to decline the reach back safe harbor (and with it the blanket license, presumably) if they have to treat songwriters fairly on the black box. Instead of the MMA free ride that was handed to them on a silver platter, they now want to leverage the scare tactic and run out the clock on the statute of limitations that they will no doubt say had been running. That way they’d create their own safe harbor and never pay the black box but still try to use the blanket license.

So everyone should sue all of these loathsome people today and toll that statute. If enough of these services want to play hardball, there’s a real question of why bother having the blanket license at all.

Here’s an excerpt from MediaNet’s “ex parte” letter posted today:

We understand that the Office is contemplating that the cumulative report will provide data on unmatched usage back to the launch of the service. MediaNet, however, launched its service nearly 20 years ago. In light of that, and the change in vendors, we are requesting the Office adopt a narrow exception in the cumulative reporting regulations. We think such a regulation would be consistent with the overall statutory scheme. Notably, the statute references reporting pursuant to the “applicable regulations,” when discussing the information that must be provided to the MLC. That is a reference to the pre-existing reporting regulations. Significantly, those regulations provided that documentation related to royalties and usage for a particular period of time needed to be preserved only for a period of five years.

To be clear, MediaNet is not asking the Office adopt a regulation that allows a digital music provider to exclude all data from periods of time more than five years prior to license availability date (though such a rule would be consistent with the statute). Instead it is seeking a narrower provision that will provides all available data to the MLC. This would be in the form of a new paragraph in 37 C.F.R. § 210.20(c)(4) of the proposed rule:

(iii) The digital music provider shall be excused from providing the information set forth in paragraphs (i) and (ii) where the usage is from a period of time more than five years prior to license availability date, and the digital music provider certifies the following: that the information was solely held by a vendor with whom the digital music provider no longer has a business relationship, the digital music provider has requested that information from such vendor, and the vendor has informed the digital music provider that it cannot or will not provide that information.

Absent this narrow exception, MediaNet may decline to take advantage of the limitation on liability, which may deprive copyright owners of additional accrued royalties.