The Copyright Office solicited public comments about how things are going with the MLC to help the Office decide whether to permit The MLC, Inc. to continue to operate the Collective (see this post for more details on the “redesignation” requirement). We are impressed with the quality of many of the comments filed at the Copyright Office. While comments are now closed, you can read all the comments at this link.

For context, the “redesignation” is a process of review by the Copyright Office required every five years under the Music Modernization Act. Remember, the “mechanical licensing collective” is a statutory entity that requires someone to operate it. The MLC, Inc. is the current operator (which makes it confusing but there it is). If the Copyright Office finds the MLC, Inc. is not sufficiently fulfilling its role or is not up to the job of running the MLC, the head of the Copyright Office can “fire” the MLC, Inc. and find someone else to hopefully do a better job running the MLC. Given the millions upon millions that the music users have invested in the MLC, and the hundreds of millions of songwriter money held by the MLC in the black box, firing the MLC, Inc. will be a big deal. Given how many problems there are with the MLC, firing the MLC, Inc. that runs the collective

The next step in this important “redesignation” process is that The MLC, Inc. and the Digital Licensee Coordinator called “the DLC” (the MLC’s counterpart that represents the blanket license music users) will be making “reply comments” due on July 29. The Copyright Office will post these comments for the public shortly after the 29th. These reply comments will likely rebut previously filed public comments on the shortcomings of the MLC, Inc. or DLC (which were mostly directed at the MLC, Inc.) and expand upon comments each of the two orgs made in previous filings. If you’re interested in this drama, stay tuned, the Copyright Office will be posting them next week.

If you have been reading the comments we’ve posted on Trichordist (or if you have gone to the filings themselves which we recommend), you will see that there is a recurring theme with the comments. Many commenters say that they wish for The MLC, Inc. to be redesignated BUT…. They then list a number of items that they object to about the way the Collective has been managed by The MLC, Inc. usually accompanied by a request that the The MLC, Inc. change the way it operates.

That structure seems to be inconsistent with a blanket ask for redesignation. Rather, the commenters seem to be making an “if/then” proposal that if The MLC, Inc. improves its operations, including in some cases operating in an opposite manner to its current policies and practices, then The MLC, Inc. should be redesignated. Not wishing to speak for any commenter, let it just be said that this appears to be a conditional proposal for redesignation. Maybe that is not what the commenters were thinking, but it does appear to be what many of them are saying.

Today’s comment is by music lawyer Gwendolyn Seale who makes a number of excellent points in her filing including questioning whether the compulsory license itself is fit for purpose and what might happen if the MLC, Inc. is not redesignated. In particular, she addresses an alarming trend in the MLC, Inc.’s public messaging about the black box that has grown more cloudy as the size of the black box at the MLC has grown into the hundreds of millions.

For purposes of these posts, we may quote sections of comments out of sequence but in context. We recommend that you read the comments in their entirety. You can read Gwen Seale’s comment at this link.

Words Matter: The MLC Must Improve Its Presentation of Information

Confusion Regarding the Term, “Match Rate”

Upon reviewing the MLC’s 2021 Interim Annual Report in early 2022, I noticed reference to the
MLC having attained an 86% match rate. This metric seemed impressive, however, upon
learning the MLC’s definition of “match rate” (which I only learned by asking the MLC), I was
baffled. When the term, “match” is used alone, it refers to the matching of a sound recording
from a DSP report to a particular musical work. The Copyright Office’s NOI indicates the same
regarding the term, “match.”

Please describe how the Mechanical Licensing Collective has worked to improve automated and manual matching since the blanket license became available and plans to further enhance such matching over the next 5 years, including with respect to the matching of reported sound recordings to musical works as well as the matching of those musical works to identified and located copyright owners.

Being that a “match” constitutes pairing a sound recording with a particular musical work, it is
logical to deduce the “match rate” as being the percentage of sound recordings in DSP reports
which are matched to musical works registered at the MLC. However, that is not the case and
instead the term “match rate” as used by the MLC refers to the total amount of royalties matched
to musical works registered at the MLC over a given period. This definition was not provided to
the public so far as I can tell until June 30, 2022, in its final 2021 Annual Report.

As the most popular musical works are the ones generating the bulk of mechanical royalties over
a given month and are typically owned and/or controlled by the major music publishers with the
resources and capabilities to constantly monitor activities concerning their clients’ musical works
and engage in manual matching, the current definition of match rate (i.e., the royalty-based
definition) does not mean very much by itself. It would be useful for the MLC to also provide the
monthly match rate on a recordings-to-musical works-matched basis (hereinafter, “works-based
calculation”). Doing so would shine a light on the efficacy of the MLC’s and its vendors’
matching technology and would help to ensure the musical works of countless self-published
songwriters are being matched to reported sound recordings. I understand that there are issues
with catalog “fluff” and some sound recordings do not generate a single stream over a month’s
time. Thus, a works-based calculation could be tailored in a manner where recordings with less
than x streams per month or that generate less than x cents in mechanical royalties are omitted
from the calculation. Input from the Copyright Office regarding match rate terminology would
be helpful as well.

Historical Royalties: Eliminate  Illuminate = Obfuscate

The impetus behind establishing the MLC was to ensure that songwriters and publishers could
finally collect the nearly half billion dollars in historical royalties5 owed by the DSPs from the
early 2000s through the end of 2020. The task of the MLC was to eliminate the historical
royalties by ensuring that sound recordings could be matched to registered works in the MLC
database from this period. The MLC stated that eliminating these royalties was its goal:

The MLC cannot stress enough that its goal is to eliminate unclaimed accrued royalties, and that it has developed a realistic plan to pursue this goal.

Over time, the MLC shifted the language from eliminating to “illuminating” the historical royalties, beginning with the 2022 MLC Annual report:

Together, we will not only illuminate the “black box,” but also seek to eliminate it entirely!

At present, the MLC no longer references “elimination” of the historical royalties and purports
the job is done since the historical royalties have been “illuminated:”

Is there still a Black Box of Mechanical Royalties With The MLC?
No, the data on all unmatched uses is posted and available to be searched by Members. This includes all data for historical and blanket unmatched uses. All of these remaining unmatched uses are available to be searched by Members in The MLC’s Matching Tool. With this unprecedented transparency, The MLC has illuminated the so-called “black box” of streaming mechanical royalties for the first time.

The MLC started by moving the goalposts and concluded with eliminating them altogether. This
obfuscation of language is problematic. It misleads the public about the MLC’s performance and
gaslights those with knowledge about matching works and distributing royalties. Words matter.

This issue can be quickly solved by the MLC removing that particular FAQ above, and by providing monthly data regarding the total amount of unmatched, unclaimed, and on-hold
royalties (historical + blanket) in the MLC’s possession in a place that is easy to find on its
website.

.