In an unusual–if not historic–move, the Copyright Royalty Board has decided to re-open public comments in the controversial “frozen mechanicals” rate hearing to set the government rate for mechanical royalties paid on physical records and downloads. It is absolutely crucial that the Judges have reopened the comments because it indicates that they are bending over backwards to demonstrate their interest in being fair and deliberative and not allowing themselves to be used to bootstrap an unfair freeze on mechanical royalties. (If you need to catch up, there are many posts on Trichordist about “frozen mechanicals“.)
The Board gave this reason for reopening the comments:
The Joint Submission [by the NMPA, NSAI and the major labels] included arguments that the MOU is irrelevant to the Judges’ consideration of the proposed partial [frozen mechanicals] settlement and proposed regulations and that the MOU does not call into question the reasonableness of the proposed partial settlement and proposed regulations. Because interested parties other than those who submitted the Joint Submission may have been unable to adequately view or comment upon the MOU prior to the close of the Judges’ extended comment period, the Judges are reopening the comment period. The Judges will allow 30 days for comments [from October 19] regarding the impact, if any, that the MOU should have on the Judges’ consideration of whether the proposed partial settlement and proposed regulations provide a reasonable basis for setting statutory rates and terms.
Quick recap–remember that the NMPA, NSAI and the major record companies decided to keep the freeze on mechanical royalties for physical and downloads that these same groups and companies decided to impose on the world back in 2006. If these people win this argument before the Copyright Royalty Board, the rate will be frozen at 9.1¢ for another five years–until 2027. NMPA and the major labels also made a side deal (called an “MOU”) as a quid pro quo that appeared to be additional incentive to the NMPA to accept the frozen mechanical rate that applied to every songwriter but includes undisclosed payments.
What is particularly offensive about this freeze is that the majors and a lot of indie labels have “controlled compositions” clauses in their recording agreements that give them all kinds of downside protection against rate increases. These include a “rate fixing” clause that freezes the mechanical rate for songs at the rate in effect when the recording is initially released. That’s why there are still many songwriters paid at the 2¢ rate that hasn’t been around since 1977. So giving a rate increase is not anywhere near a 1:1 cost increase for the record companies.
David joined with Helienne Lindvall and Blake Morgan to file a comment asking for the Copyright Royalty Board to give the NMPA and NSAI the deal they made but raise royalty rates for songwriters who don’t get the benefit of the MOU payments (whatever they are). Many other distinguished songwriters, songwriter advocacy groups (12 in total) and publishers filed their own comments opposing the freeze.
And then something strange happened as we reported on August 16 with a copy of the brief joined by Austin music lawyer Gwendolyn Seale:
[Chris Castle says: Here’s the context of this post. As it turns out, the CRB extended the filing deadline for comments due to what they said was a technical difficulty, although we have yet to meet anyone who couldn’t file their comment on time. This extension seems contrary to the CRB’s February revised rules for filings by participants. The CRB procedures presciently have an email filing procedure in the case of technical problems arising out of their “eCRB” document filing system. It will not surprise you to know that the NMPA, NSAI, and major labels filed what is essentially a reply comment after the close of business on the last day of the extension, after at least our if not all commenter accounts were disabled, the practical effect of which was that no one could respond to their comments through the eCRB, i.e., on the record.
We tried, and drafted a reply to the most important points raised in the majors’ comment. We emailed our comment to the CRB during business hours on the next day in line with the CRB’s own “Procedural Regulations of the Copyright Royalty Board Regarding Electronic Filing System” (see 37 CFR §303.5(m)) or so we thought. But not so fast–we were told by an email from a nameless person at the CRB that we would need to file a motion in order to get approval to file the comment less than 24 hours late for good cause–which of course, we are not able to do since we are not “participants” in the proceeding. See how that works? According to this person’s email, we’d also need to contact CRB technical support to get our accounts reopened which would make the comment later still even if we were able to file a motion. Instead, we decided to just post our reply comment on the Internet. A wider audience. Unfortunately not part of the record, but we’ll see what happens.]
We all have to be grateful to the Copyright Royalty Board for re-opening comments on the frozen mechanicals crisis. That is an indication that the Judges do not intend to be a rubber stamp and let the rich use the CRB to bootstrap their private deal onto every songwriter in the world.
We want to stongly encourage you to file your own comments in the frozen mechanicals hearing, tell your own stories and give your own point of view about how to handle the crisis. If you want to file a comment, you need to register for an account at the Copyright Royalty Board. Chris Castle has a helpful guide to setting up your account.