Comment to Copyright Office on Termination, the Black Box and Lawlessness at MLC


January 5, 2023

By Regulations.gov

Suzanne Wilson
General Counsel and Associate Register of Copyrights
U.S. Copyright Office
101 Independence Avenue S.E.
Washington D.C. 20559

Re:   Notice of Proposed Rulemaking: Termination Rights and the Music Modernization Act’s Blanket License 
         Docket No. 2022-5 Comment

Dear General Counsel Wilson:

Thank you for the opportunity to make this comment on the docket referenced above.[i]    

I am a music lawyer in Austin, Texas and write this comment on my own behalf only and not on behalf of anyone else.  

Others will address the substantive termination issues that are well-described and assayed in the Notice, so I will focus on the procedural tension between The Mechanical Licensing Collective, Inc. (“The MLC, Inc.”) currently designated as the mechanical licensing collective (“MLC”), its officers and directors, and the law as described in the Notice.  

I argue that the need for this Notice is symptomatic of a larger problem in the relationship between Congress and The MLC, Inc. I hope the Office will consider resolving this tension as it has been authorized to do under the Music Modernization Act[ii] such as through regulations establishing the type of code of conduct that is common for other federal contractors.  

This tension is alarming.  The Notice states the MLC “does not follow the Office’s rulemaking guidance”[iii] regarding terminations, and that The MLC, Inc. “declin[es] to heed the Office’s warning….”[iv]  These disclosures are diametrically at odds with the clear intent of Congress in crafting the MLC’s role.[v]

The disclosures confirm clearly that there are governance and oversight controversies at The MLC, Inc. that in my view need to be conclusively disposed of, and quickly.[vi]  These governance issues are symptomatic of what may be much greater problems with the administrative capabilities of The MLC, Inc. that may be metastasizing but have not yet risen to the level of a public inquiry.

The recklessness that gives rise to the Notice also highlights The MLC, Inc.’s general lack of accountability and suggests a conscious disregard for the Copyright Office’s oversight role on a significant matter of law that is not capable of proper resolution through any “business rules.”[vii]  

I also note this troubling statement in the Notice:

But, having reviewed the MLC’s policy, the Office is concerned that it conflicts with the MMA, which requires that the MLC’s dispute policies ‘‘shall not affect any legal or equitable rights or remedies available to any copyright owner or songwriter concerning ownership of, and entitlement to royalties for, a musical work.’’[viii]

It seems clear that The MLC, Inc.’s conscious failure to comply with Congressional intent as well as the Office’s guidance is, or ought to be, a decision of some import that surely must have been taken by someone—that is, one or more persons—employed or appointed by the MLC.  It seems likely to be a subject that would have been reviewed both by its General Counsel and as part of the millions in outside counsel fees[ix] spent by The MLC, Inc.  

The fact that the decision-making process is not readily known is itself of concern and leads one to further consider developing a code of conduct for The MLC, Inc. to assure the Office, the Congress and the public of its administrative capabilities.

Respectfully, I request that you determine how this decision was arrived at and what internal controls The MLC, Inc. has put in place to assure the Congress, the Office and interested parties that these mistakes will not happen again.  This should not be an “oh well” moment and should be taken seriously by The MLC, Inc.

If The MLC, Inc. fails to disclose what it is doing by establishing opaque “business rules”, it is essentially creating de facto regulations that have the practical effect of law or regulations made behind closed doors unless the Office or other oversight agency happens to catch them out.  The public will never know that the business rule was established, how the “business rule” was arrived at, or have a meaningful opportunity to comment such as in response to this Notice.

For example, do the minutes of The MLC, Inc.’s board of directors or statutory committees reflect a discussion or vote on the adoption of the MLC’s policies on termination treatment? Did such a vote implicate any conflicts of interest?  Who determined that there was or was not a conflict of interest in the MLC’s decision to adopt the termination policy, however it was taken?  Were there any dissenting votes recorded?  Did an officer or director of The MLC, Inc. certify the completeness of the record in these findings in the corporate minute book?

This leads to other concerns under public discussion regarding the hundreds of millions of “black box” monies being held by The MLC, Inc. Given that the public has very little information available to it regarding the results and implications of the MLC’s operational decisions, I respectfully request that you determine what, if any, financial implications have arisen as a result of The MLC, Inc.’s reckless failure to comply with the law and the guidance of the Office in implementing its termination policy.  Such determination should likely include any funds[x] that The MLC, Inc. is apparently trading in the market for its own account.[xi]  Any curative action required by the Office should, of course, be retroactive in scope which will require considerable before-and-after accounting disclosures.

It must be asked whether the “business rule” established for terminations increases or decreases the enormous black box which was of considerable interest to Chairman Leahy at the recent Copyright Office oversight hearing at which the Register testified.[xii]  This is particularly true if the implementation of the business rule results in financial harm to interested parties who rely on The MLC, Inc. to get it right.  

The subject of black box came up in the Questions for the Record from Chairman Leahy.  The Copyright Office’s response to Chairman Leahy’s inquiry about the hundreds of millions in black box held by the MLC directed the Chairman to the MLC’s annual report for answers.  

Respectfully, I find this odd.  Chairman Leahy did not ask what the MLC told the world in its annual report; rather he asked, “What can the Copyright Office do to help ensure that the MLC is working to make sure that rightful owners of music works are identified and paid?”[xiii]The question is transitive:  We have oversight of you, you have oversight of The MLC, Inc., therefore we have oversight of the MLC.  

Surely no one is surprised by this.  The question many have is why The MLC, Inc. itself—a quasigovernmental organization operated by inferior officers[xiv] of the United States–is not the subject of an oversight hearing at Senate Judiciary regarding the hundreds of millions it is sitting on.  Maybe next time.

It must also be said that the answer to Chairman Leahy goes on:

Notably, the MLC plans to wait to process historical unmatched royalties from the Phonorecords III rate period [2018-2022] until the Copyright Royalty Judges finalize those rates in the ongoing remand proceeding and digital music providers provide adjusted reports of usage and royalty payments. It is the Office’s understanding that the bulk of historical unmatched royalties come from that period.[xv]

Without getting into the timeline of what came when, how is it exactly that The MLC, Inc. took the decision in February 2021—nearly two years ago–to sit on top of hundreds of millions of other peoples’ money that they were somehow investing under their undisclosed “Investment Policy”?  Was anyone asked?  Who gave the MLC the permission to do this?  Do they not hold the black box corpus in trust for songwriters and copyright owners yet to be identified?  Does this not compound the already painful series of failures that resulted in the black box in the first place, the delay in accounting to songwriters (or their families) under Phonorecords III remand, and still more delay while legions of lobbyists and lawyers argue over the post-remand true up accountings?

The MLC reported $2,529,910 investment income on its 2021 US Federal tax return 990

Respectfully, there is also, of course, a larger question that the Office may consider answering:  If The MLC, Inc. adopts a policy or takes some action outside of the law or its remit, is that policy binding on any future entities designated by the Office as the MLC?  

These are all questions that I would expect to have answers that are readily available to the public given that The MLC, Inc. is in a position of public trust administering a compulsory license on behalf of the United States and has been given great privileges under the MMA.[xvi]

Thank you again for the opportunity to comment.

Very truly yours,

Christian L. Castle

CLC/ko


[i] U.S. Copyright Office, Notice of Proposed Rulemaking, Termination Rights and the Music Modernization Act’s Blanket License 87 FR 64405 (Oct. 25, 2022) (Doc. No. 2022-5) (hereafter “Notice”).

[ii] Orrin G. Hatch-Bob Goodlatte Music Modernization Act, Public Law 115–264, 132 Stat. 3676 (2018) (“MMA”) and specifically Title I thereof.

[iii] Notice at 64407.

[iv] Id.

[v] See S. Rep. 115-339 (115th Cong. 2nd Sess. Sept. 17, 2018) at 7 (“Senate Report”).  (“The collective is expected to operate in a transparent and accountable manner.”) 

[vi] I would hope that this failure will be weighed and measured by the Copyright Office as part of The MLC, Inc.’s quinquennial review as is required under the legislative history.  See, e.g., Senate Report at 5 (“[E]vidence of fraud, waste, or abuse, including the failure to follow the relevant regulations adopted by the Copyright Office, over the prior five years should raise serious concerns within the Copyright Office as to whether that same entity has the administrative capabilities necessary to perform the required functions of the collective.”)(emphasis added).

[vii] It must be said that the MLC’s disregard for this particular matter may present a moral hazard (at best) for the publishers represented by at least some of its board members.

[viii] Notice at 64407 (emphasis added).

[ix] Annual Report at 16.

[x] See the MLC’s annual report stating that the MLC invests the black box according to its internal “Investment Policy” established by its board of directors but not made public.  MLC 2021 Annual Report at p. 4 available at https://www.themlc.com/hubfs/Marketing/23856%20The%20MLC%20AR2021%206-30%20REFRESH%20COMBINED.pdf(“Annual Report”) (“Investment Policy: This policy covers the investment of royalty and assessment funds, respectively, and sets forth The MLC’s goals and objectives in establishing policies to implement The MLC’s investment strategy. The anti-comingling policy required by 17 U.S.C. § 115(d)(3)(D)(ix)(I)(cc) is contained in [The MLC, Inc.’s] Investment Policy. The Investment Policy was approved by the Board in January 2021.”) (emphasis added).

[xi] Realize that every CMO is confronted with the decision about what to do with the royalty float and black box, but not every CMO decides to invest these funds in the market. If they do invest the funds, it is generally the case that any trading profits, dividends or interest goes to offset the CMO’s administrative costs that otherwise would be deducted from collected royalties.  However, the MLC, Inc.’s administrative costs are paid by the users of the blanket license (making the United States, I believe, the only country in history or the world that charges for the use of a statutory license). Therefore, the return on the MLC’s investment of the songwriters’ money would not be used for the same purpose as all the world’s CMOs that follow a similar practice.  The continuity in ownership for profits derived from The MLC, Inc.’s trading is also unclear;  if The MLC, Inc.’s existing designation is not continued but securities are being held or profits generated, what happens? 

[xii] Senate Judiciary Committee, Subcommittee on Intellectual Property, Oversight of the U.S. Copyright Office, Responses to Questions for the Record by Shira Perlmutter, Register of Copyrights and Director of the Copyright Office (Sept. 7, 2022), available at https://artistrightswatchdotcom.files.wordpress.com/2022/10/qfr-responses-perlmutter-2022-09-07.pdf. (“Questions for the Record”) (“With respect to the historical, pre-2021, unmatched royalties, which were reported to be about $426 million, the annual report says that the MLC recently started distributing those that it has been able to match. It also says that the MLC has begun making associated usage data for historical unmatched royalties available to copyright owners, which will facilitate further claiming and matching.”) 

[xiii] Id. at 4.

[xiv] President Donald J. Trump, Statement on Signing the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (October 11, 2018) available athttps://www.govinfo.gov/content/pkg/DCPD-201800692/pdf/DCPD-201800692.pdf (“Because the directors are inferior officers under the Appointments Clause of the Constitution, the Librarian must approve each subsequent selection of a new director.”)

[xv] Questions for the Record at 4.

[xvi] See, e.g., Senate Report at 5 (emphasis added).  “For the responsibilities described in subparagraphs (J) [distribution of unclaimed royalties] and (K) [dispute resolution] of paragraph (3), the collective is only liable to a party for its actions if the collective is grossly negligent in carrying out the policies and procedures adopted by the Board of Directors pursuant to section 115(d)(11)(D). Since the Register has broad regulatory authority under paragraph (12) of subsection (d), it is expected that such policies and procedures will be thoroughly reviewed by the Register to ensure the fair treatment of interested parties in such proceedings given the high bar in seeking redress.” 

@northmusicgroup Calls Out The MLC’s Ability to Make “Law” Through Business Rules that Hurt Songwriters and Skew the Black Box to Benefit Majors — Artist Rights Watch/Music Technology Policy

In this comment to the Copyright Office, Abby North (independent publisher and Artist Rights Symposium III Moderator) calls on the Copyright Office to stop the MLC quango from unilaterally establishing “business rules” that hurt songwriters and their heirs and protect working families from these arbitrary actions of The MLC. The passing of Jeff Beck reminds us once again that we must take care to protect the heirs of creators.

Read the original comment here on Regulations.gov

January 5, 2023

Via Electronic Delivery

Comments of Abby North

Docket No. 2022-5

Re: Termination Rights and the Music Modernization Act’s Blanket License

To the United States Copyright Office:

My name is Abby North. I am a music publishing administrator based in Los Angeles. My views expressed in this letter are solely my own. 

With my husband, I am a copyright owner of the classic song “Unchained Melody,” among other copyrights. I also administer musical works and sound recordings on behalf of songwriters, their families and heirs. In many instances, I assist my clients in identifying their termination windows, assist in the research required, and interface with the attorneys who process termination filings.

Abby North, Helienne Lindvall, Erin McAnaly, Melanie Santa Rosa speaking at UGA Artist Rights Symposium III (Nov. 15, 2022 in Athens, GA)

I’m thankful for the opportunity to submit comments in support of the Copyright Office’s proposed rule.

The ability to recapture rights via the United States copyright termination system truly provides composers, songwriters and recording artists and their heirs, a “second bite of the apple.” Many of my clients exercise this right, and in doing so grow their family’s revenue, which, given today’s inflation and very high interest rates, coupled with a depleted stock market, is absolutely necessary.

Allyn Ferguson was a successful composer of film/television scores including “Little Lord Fauntleroy,” “Les Miserables,” “Charlie’s Angels,” and “Barney Miller.” According to Variety in its June 27, 2010 obituary, Ferguson was “among the most prolific composers of TV in the past 40 years.” My company North Music Group administers works controlled by Ferguson’s family.

In addition to his scores, Ferguson wrote songs performed by artists including Johnny Mathis, Count Basie Band and Freddie Hubbard. While the bulk of his film and television scores were created on a work for hire basis, and therefore are not eligible for termination under US copyright law, Ferguson’s commercial compositions and songs were not created as works for hire. Ferguson’s family has been able to exercise its termination rights in various musical works,

thereby increasing its earnings as it now collects the publisher share of United States royalties generated by the terminated works. Individual songwriters and composers and their heirs are not copyright aggregators. Every musical work, and every penny generated is very necessary to these families.

The Music Modernization Act created the blanket digital mechanical license. This move from one-off copyright licenses to a blanket license was a dramatic improvement in US mechanical licensing. However, the suggestion that rights held at the inception of this blanket license might remain, in perpetuity, with the original copyright grantee was frightening. I concur with the Office’s proposed rule and legal analysis of the relevant statutes and authorities.

I appreciate the Office requesting comments on the mechanics of solving the payment issues, because for the independent publishers I speak with and for me personally, many operational questions arise regularly regarding The MLC’s uncharted territories.

As one of The MLC’s statutory goals is to provide transparency to songwriters and copyrightowners, I would ask that the Office require The MLC to notify copyright owners (1) if The MLC’s unilateral termination policy has already been imposed on payments previously paid or that are being held in the historical or current black box, and (2) when the adjusting payment required by the proposed rule had been made.

To be clear, this rule must absolutely be retroactive to inception date of The MLC. Beyond the simple, clarifying amendment to the MMA, I believe there are additional, related issues that must be resolved:

1) What is The MLC’s “business rule” regarding the MLC/HFA Song Code for the terminated work? Prior to the inception of The MLC, the Harry Fox Agency would assign one HFA Song Code fr the work and its pre-termination parties, and a different HFA Song Code for the work with the post-termination parties.

What happens now? Do these multiple HFA Song Codes remain in The MLC’s database? Will there continue to be two separate MLC/HFA Song Codes, particularly given the Harry Fox Agency continues to license physical and download mechanicals on behalf of many publishers? Is it reasonable for the HFA Song Code to be the same as The MLC Song Code, when there is no derivative works exception in Section 115?

2) Which party is entitled to the Unmatched (Black Box) royalties, the related interest fees and to The MLC’s investment proceeds for a terminated work?

Finally, it should be noted that the initial concept proposed by The MLC Board (that the server fixation date should impact termination dates) most likely would have served large publishers, not songwriters.

It is crucial that the Copyright Office exercise vigilant oversight and governance of The MLC’s reporting regarding any payment obligations to copyright owners. Specifically, composers, songwriters and their heirs must have as significant a voice as the largest publishers and copyright aggregators.

Additionally, in the spirit of full transparency, I request full disclosure of board or committee votes, minutes of meetings or other documentation of process. For me and others like me, this would tremendously enhance our understanding of The MLC.

Decisions are being made by The MLC’s board and committee members, while the general MLC member or songwriters have no mechanism to gain information regarding the discussions, the decisions and the implementations thereof. Access to minutes and notes would provide valuable insights to the general membership.

I applaud the Copyright Office for moving swiftly to create this rule and clarify and codify how The MLC must treat copyright terminations. It is important that this rule be dictated by the Office as it is absolutely not The MLC’s job todecide who controls rights and is entitled to collect royalties. 

That said, a “business rule” established by The MLC could have the effect of law absent vigilance by the Copyright Office.

On behalf of my family and clients, I wholeheartedly support this proposed regulation, and I truly appreciate the Copyright Office’s consideration of my comments.

Sincerely,

Abby North

North Music Group LLC

@northmusicgroup Calls Out The MLC’s Ability to Make “Law” Through Business Rules that Hurt Songwriters and Skew the Black Box to Benefit Majors — Artist Rights Watch–News for the Artist Rights Advocacy Community — Music Technology Policy

The @CMAgovUK UK Competition and Markets Authority’s Missed Opportunity: Reaction from @MrTomGray #BrokenRecord

The literature suggests that in the presence of…positive feedbacks [from the Get Big Fast strategy], firms should pursue an aggressive strategy in which they seek to grow as rapidly as possible and preempt their rivals. Typical tactics include pricing below the short-run profit-maximizing level (or even below the cost of goods sold), rapidly expanding capacity, advertising heavily, and forming alliances to build market clout with suppliers and workers and to deter entry of new players. Intuitively, such aggressive strategies are superior because they increase both industry demand and the aggressive firm’s share of that demand, stimulating the positive feedbacks described above.

Limits to Grown in the NEw Economy: Exploring the Get big Fast strategy in ecommerce https://scripts.mit.edu/~jsterman/docs/Oliva-2003-LimitsToGrowthInTheNewEconomy.pdf

By Chris Castle

You may have seen that the UK Competition and Markets Authority released a report on music streaming in the UK. Of course, because the same players dominate the UK market like they do in France…sorry, I meant Germany…sorry I meant Canada…sorry I meant Sweden…sorry I meant the United States…how different could the competition issues be for US artists and songwriters? You have the biggest corporations in commercial history (Apple, Amazon, Facebook and Google) and the “get big fast” wannabes like Spotify (and Pandora in the US) on one side, the three major labels and the music publishing affiliates on the other side and the artists, songwriters, indie labels, indie publishers and especially the session musicians and vocalists squeezed in the middle.

Plus you have all of the biggest of Big Tech companies as well as wannabe Get-Big-Fast acolytes like Spotify and Pandora setting almost identical price points and freezing them there for a decade while refusing to exercise pricing power and nobody finds that just a trifle odd? Then in the grandest of grand deflections passing this off as the “pie” that everyone should look at instead of acknowledging that it’s the poptart served at the kid’s table in the nursery instead of the feast at the adult’s table in the dining room where the gravy bowls of shares of public stock are handed out dot-bomb style with a side of advertising barter. All while singing an apologia for payola and consumer welfare based on cheapness? You know there’s another way to get really, really cheap goods for consumers that ain’t quite so well received in history.

And yet somehow the Competition and Markets Authority passes this off as good for the consumer? With no meaningful discussion of the Malthusian and anticompetitive effects of the pro-rata model and pretty much summarily ignoring the actual revenue earned by “successful” artists in the beggar-thy-neighbor pricing and revenue charade. Not to mention the complete failure to discuss the supervoting stock at Spotify, Google and Facebook and all the other accoutrements of power that give Daniel Ek, Martin Lorentzen, Tim Cook, Sergey Brin, Larry Page, Mark Zuckerberg and Jeff Bezos control over the global music industry–pale males one and all and also looking pretty stale around the edges the singularity notwithstanding. And then there’s Bytedance and Tencent.

The logic of the CMA in avoiding these issues rivals the Warren Commission’s Single Bullet Theory. But makes total sense as the triumph of the lobbyists for the biggest corporations in commercial history. And sometimes you just might find you get what you need.

We will continue to dig into this latest report and its methodology as will others like Tom Gray, the dynamic founder of the hugely effective #BrokenRecord campaign that led to this investigation which is not over by a long shot. Tom had this reaction to a what’s next question and we take his guidance:

The CMA’s initial findings are:

the music market doesn’t have much competition;

the actions of the Majors and DSPs actively reduce that competition;

artists and songwriters are mostly, if not entirely, doing badly out of it;

but they accept the status quo using the narrowest paradigm of competition and its value to the consumer. It doesn’t go near the fact that the Majors used market power to create the very ‘norms’ the report resigns us to.

A difficult read: one which points to the weakness or indifference of national ‘authorities’ in the face of the gross expansion of multi-nationals unfettered by regulation. Monopolies should be broken to protect citizens and workers, not only to defend consumerism’s need of a saving.

What’s most ironic is you could take the CMA’s findings to a different authority with a more progressive outlook and get a completely different result. They simply don’t seem to have considered it their job to care about the hugely visible negative consequences of concentrated power on musicmakers.

If you would like to tell the Competition and Markets Authority what you think about their statements they want to hear from you.

Save the date: A2IM Indie Week Panel with @musictechpolicy on the Impact on Indie Labels of Unfreezing Mechanicals

If you are coming to Indie Week, Trichordist readers might enjoy a panel Chris Castle is on to discuss the impact on indie labels of the Great Unfreeze! 

Entitled How the CRB’s Rejection of Frozen Mechanicals Will Affect Your Label?, the panel goes off at 10:30 am ET on Wednesday, June 15 at the New York Law School.

Speakers are Victor Zaraya: Concord (Moderator), Danielle Aguirre: NMPA (National Music Publishers’ Association), Glen Barros: Exceleration, and Chris.

If you want to read up on the issues that caused the Copyright Royalty Board to reject the failed settlement, here’s some background:

Copyright Royalty Board’s Rejection of NMPA, NSAI, Sony, Warner, Universal settlement

Copyright Royalty Board’s Reaction to Second Settlement Proposal by NMPA, NSAI, Sony, Warner and Universal

Survey Results from Songwriter Survey on Frozen Mechanicals

Comments:

Rosanne Cash

Helienne Lindvall, David Lowery, Blake Morgan

David Poe

Abby North, Erin McAnally, Chelsea Crowell

Kevin Casini

NMPA, NSAI, Sony, Warner, Universal Comment with Copy of MOU4

Chris will post about the panel afterward.

Survey Results: Physical and Download Mechanical Rates Survey–Artist Rights Watch

Many readers participated in the Physical and Download Mechanical Rates Survey that various organizations have sent to their members over the last few weeks. Here are the results of the main questions for which we had 361 respondents who self-selected their participation. (Other answers included comments which we chose not to publish for privacy reasons.). 

The results suggest that participants were mostly informed songwriters who had never been asked before what they thought about the issues in the Copyright Royalty Board. We would have to conclude that any of our regular readers would be a bit skewed toward knowledgeable because between the Trichordist, MusicTechPolicy, ARW, Hypebot and Celebrity Access we were probably carrying a very high percentage of the available information on the frozen mechanicals issues.

It also is striking how few respondents said they had ever been asked what they think about any mechanical rates (physical, download, streaming), an important and easily measurable issue. This is something to add to the learning from this episode. It may be that our data is skewed, but even so we didn’t expect that 68% would say they’d never even been asked their opinion. An easy way to find out what people think about something is to ask them. 

Keeping the Songwriter Survey Open!!

Thanks for the HUGE response to the songwriter survey on what you think the new unfrozen mechanical rate should be!! The response has been so strong we’re going to keep the survey open so more of you can participate.

This Survey Monkey questionnaire is anonymous and easy to take–3 minutes to complete–and you could really help a lot by giving your opinions on what you think the rate should be! We will post the results so everyone can see.

You can start the survey at this link. Thank you!

Stay tuned for a songwriter royalty questionnaire!

After all the effort and achievement by our great audience in support of songwriters getting paid fairly in the #FrozenMechanicals crisis, we are finally coming to where the rubber meets the road and trying to decide how much songwriters should get paid by record companies selling music in three ways (called “configurations”): 

permanent downloads, like iTunes and Amazon; 

vinyl discs, like you buy in record shops on Records Store Day;

and compact discs (CDs).

We’re expecting the final proposal to get made in a matter of days, and we thought it would be good to start with a short Survey Monkey questionnaire to get an idea of what this audience thinks. We’re collaborating with a number of songwriter organizations to distribute the questionnaire to their members and friends.

All the data will be anonymous and will be released when the questionnaire is done!

The plan is to get some more evidence of what we all think about a few core pricing ideas, thanks to the awesome Copyright Royalty Judges who have rejected extending the 16 year freeze in response to comments from the public and objections by George Johnson, the only songwriter in the Phonorecords IV proceeding.

Watch this space!!

Copyright Royalty Judges Reject “Settlement” Extending Freeze on Physical Mechanicals

By Chris Castle

More on this to come, but the Copyright Royalty Judges have rejected the frozen mechanicals settlement in a very well-reasoned and methodical filing in the docket for Phonorecords IV. I will reproduce the conclusion of the filing here, but you should read the whole thing.

The upshot of the Judges’ ruling rejecting the extension of the frozen rates is that both George Johnson as a participant and a host of commenters brought up many valid points about problems with the settlement. I suppose the next step will be for the Judges to either set rates themselves and let the parties react to them or ask the parties to resubmit a new proposal in line with the Judge’s ruling.

Either way, the settlement is rejected and we have to thank the Judges who listened thoughtfully, George Johnson who toils alone representing himself (and the independent songwriter’s view) as an actual participant in the proceeding, and all the songwriters, independent publishers, lawyers and songwriter groups who took the time to comment.  And of course a huge thank you to all the Trichordist readers who supported fairness and justice and all the heartfelt comments against frozen mechanicals.

The wheels of justice turn slowly, but they do turn. Don’t forget it–the price of liberty is eternal vigilance.

Here is the Judges conclusion:

Rightsholders are free to choose their representation in these proceedings. Admittedly, individual songwriters and self-publishers have traditionally chosen not to expend the resources necessary to participate in these proceedings at the same level as trade organizations and major technology companies. Nonetheless, the outcomes of these proceedings can have a significant impact on the lives of the individual rightsholders. In this proceeding, the Judges received lengthy comments from SGA, which claims to represent thousands of songwriters. For SGA’s comments to have independent influence, however, SGA would have needed to join the proceeding as a participant. Nonetheless, with regard to the present proposed settlement, the comments of non-participants cumulatively served to amplify those of the objecting participant.

Pursuant to section 801(b)(7)(A)(ii), based on the totality of the present record—including the Judges’ application of the law to that record, as well as GEO’s objections, which, as noted supra, are consistent with the non-participant comments—the Judges find that the proposed settlement does not provide a reasonable basis for setting statutory rates and terms. Furthermore, the Judges find a paucity of evidence regarding the terms, conditions, and effects of the MOU. Based on the record, the Judges also find they are unable to determine the value of consideration offered and accepted by each side in the MOU. These unknown factors, as highlighted in the record comments, provide the Judges with additional cause to conclude that the proposed settlement does not provide a reasonable basis for setting statutory rates and terms.

@SoundExchange CEO @mikehuppe Nails NAB Hypocrisy on Artist Pay for Radio Play–#IRespectMusic — Artist Rights Watch

The hearing on Groundhog Day (Feb. 2) for the American Music Fairness Act (or “AMFA”) was a fantastic opportunity for artists to be heard on the 100 year free ride the government has given broadcast radio. We know it went well because the National Association of Broadcasters sputtered like they do when they’ve got nothing to say.

But what’s really hysterical was how they talked out of both sides of their mouths in two different hearings–which makes you think that NAB president Curtis LeGeyt was doing his impression of Punxsutawney Phil. Yes, when it came to broadcasters getting paid by Big Tech, the broadcasters wanted their rights respected and to be paid fairly. But when the shoe was on the other foot, not so much. In the Senate, the NAB asked for more money for broadcasters in a hearing for the Journalism Competition and Preservation Act–to protect the mega radio broadcasters from the mega tech oligarchs. And if broadcasters don’t get more money, they want to be exempt from the antitrust laws so they can pull their content. Just like artists do to them…NOT.

Then the NAB comes over to the House Judiciary Committee–on the same day being Groundhog Day–and asks the government to continue their 100 year free ride. We call bullshit.

SoundExchange CEO Mike Huppe nailed this in his Billboard post:

The AMFA witnesses didn’t ask for an antitrust exemption, like the broadcasters did. They simply asked that recording artists be granted similar copyrights as others.

They didn’t ask for more money, like the broadcasters did. They simply asked for at least some payment, since they now receive none when broadcast radio stations air their music.

They didn’t ask for special treatment, like the broadcasters did. Rather they asked that they be treated the same as all other artists around the world, and even the same as artists on virtually all other media platforms in the U.S.

And they didn’t ask for rigts to negotiate and withhold content, like the broadcasters did. Under AMFA, radio stations would still be allowed to play music as they please. Artist advocates simply asked that the biggest-of-the-big stations pay a modest royalty set according to market rates. Stations making less than $1.5 million per year would pay a flat, annual royalty of $500 (less than $1.40 per day) for as much music as they choose to air. And the smallest stations’ payments would drop all the way down to $10.

No station is going to go bankrupt over these royalties.

Huppe has a very strong point here. This legislation has been picked over for years. AMFA bends over backwards to protect community radio and small broadcasters and repects everyone’s contribution to radio’s success.

But that’s the point–it respects everyone‘s contribution.

You can watch the hearing here:

Save the Date: Feb 2, 10am ET: Artist Pay for Radio Play Gets a Hearing in the House Judiciary Committee #IRespectMusic

We want Trichordist readers to now how much we appreciate your commitment to artist rights and especially your long-term support for the #IRespectMusic campaign. You were there early and your support has never wavered. But it’s time to step up once again!

It’s time to tell Congress we are still here and we still want them to make this happen. It’s fair and it’s the right thing to do. As Blake Morgan asked in a viral blog post in The Hill:

We musicians are used to fighting. For our livelihoods, our families, our dreams. In recent years we’ve fought battles we’ve neither sought nor provoked, against powerful corporate forces devaluing music’s worth. Streaming companies, music pirates, and AM/FM radio broadcasters who, in the United States, pay nothing––zero––to artists for radio airplay.

It’s shocking, but true: The United States is the only democratic country in the world where artists don’t get paid for radio airplay. Only Iran, North Korea, and China stand with the United States in this regard.

Broadcasters make billions of dollars each year off our music, and artists don’t earn a penny. This impacts not only the artist, but session musicians, recording engineers, songwriters. Virtually everyone in music’s economy. 

Isn’t being paid fairly for one’s work a bedrock American value?

The super-consolidated U.S. broadcast radio monopolies represented by the National Association of Broadcasters shillery has fought fair treatment for all recording artists since the dawn of radio. Thanks to the voices of fans and artists from around the United States, fair pay for radio play has become a local issue, and Congress is responding.

Tune in on February 2nd at 10 am ET for the House Judiciary Hearing, “Respecting Artists with the American Music Fairness Act” thanks to Rep. Ted Deutch and Rep. Darrell Issa, the bi-partisan co-sponsors of the historic legislation.

Rep. Ted Deutch and Blake Morgan

In the mean time, please sign the petition at #IRespectMusic and let your Member of Congress know you support the bill and want to bend the arc of the moral universe to fight artist exploitation. Please tell your friends, share on your socials and with your fans!

You can read the bill here, and if you want to drill down, you can watch this in-depth video on the issues sponsored by Texas Accountants and Lawyers for the Arts, I Respect Music Austin, Austin Music Foundation, SoundExchange, Austin Texas Musicians and Artist Rights Watch.