Author: thetrichordist

Dave Rowntree is Suing the UK Performing Rights Society Over Misallocation of Unmatched Royalties (Black Box)

According to press reports, Dave Rowntree of Blur filed the UK equivalent of a class action lawsuit against PRS (the UK version of ASCAP and BMI). The claim is a “collective proceeding” filed with the UK’s antitrust tribunal. The class action established a website to communicate about the claim with interested parties. The website says:

Collective Proceedings Against PRS for Music

If You Were a Writer Member of the Performing Right Society at Any Time Since 9 March 2017,
a Proposed Legal Claim Could Affect Your Rights

On 27 February 2024, the claim was brought against PRS that asks the Competition Appeal Tribunal for permission to go forward as an “opt-out collective action.”  The claim concerns the way in which PRS distributes, or permits to be distributed, certain royalty sums that are called in the PRS Rules and Regulations (“PRS Rules and Regulations”) and the PRS Distribution Policy Guide terms such as  “unmatchable” (including “copyright control”), “non-distributable”, and “unclaimed” and colloquially referred to within the music industry as “Black Box” royalties. The majority of Black Box royalties are royalties belonging to PRS writer members but when the Black Box royalties are distributed, the distribution is heavily skewed in favour of publishers who receive a large portion of the writer share. In other words, Black Box royalties are transferred from PRS writer members and given to PRS publisher members who have no right to those royalties.

David Rowntree seeks to represent the class of PRS writer members who have lost money arising from the proposed claim.

Of course, the Mechanical Licensing Collective is sitting on hundreds of millions of black box money for the US as well, and may end up being the defendant in a separate class action at some point in the future.

by thetrichordist

Selected Comments on the Copyright Office Proposed Rule on Termination Rights and MLC Operations: Digital Licensee Coordinator

COLC-2022-0004-0089_attachment_1Download

The Copyright Office has asked for comments from the public on important issues for rulemakings under the Music Modernization Act. This will potentially affect the operations of The MLC and related rights especially because the Copyright Office recently extended the scope of that rulemaking. The proposal drew a mixed response.

We will be posting selected comments that we think might be interesting to Trichordist readers. The project is a bit wonky, but important to stay informed on. This comment by attorney Allison Stillman representing the Digital Licensee Coordinator (who controls the purse strings for The MLC) has some interesting complaints about The MLC that are food for thought in light of the MLC’s potential redesignation coming next year.

The DLC’s firm view is that any additional costs associated with a proposed rule that upends the practices of the entire industry, without actually facilitating the payment of royalties to songwriters or music publishers, as a matter of law would not be “reasonable collective total costs” that could be imposed on the DMPs, through the administrative assessment or otherwise….

As noted in the DLC’s Initial Comments…the [Copyright Office] raises important issues regarding the need for the MLC to have a fair, efficient and transparent methodology for administering corrections and adjustments to payments. These are issues that apply…more broadly to any form of payment adjustment that may be necessary….

While some other commenters echoed similar concerns, the MLC suggests that error corrections, adjustments, disputes and payee changes outside of the specific and purportedly unique termination context “do not represent a controversial topic that would require regulation of operational details” and merely constitute part of “the normal course of business, which The MLC can administer without additional regulation.”

But the DLC members’ experiences in waiting for corrections and adjustments from the MLC where the issue has arisen so far indicate otherwise, and that is before the MLC has had to operationalize the anticipated regular practice of DMPs’ over-estimating monthly royalties [or Phonorecords III retroactive adjustments]…. The same principles underlying any regulatory approach to ensuring the prompt and transparent correction of erroneous payments to one rightsholder vs another as a result of copyright termination apply equally to require the prompt and transparent correction of [other payments to DMPs or rights holders].

by thetrichordist

The Coming COLA Adjustment for Mechanical Royalties on Physical and Downloads

By Chris Castle

We’re about to experience an historical event—the U.S. government’s statutory mechanical rate for physical and permanent downloads will increase twice in 12 months.  This is because the record companies agreed in “Phonorecords IV” to raise the statutory mechanical rate from 9.1¢ to 12¢ for physical and permanent downloads (with corresponding long-song royalties) effective January 1, 2023.

This is quite a change from the frozen rate that lasted for 17 years.  Not only did the labels agree to increase the rate to 12¢, they agreed to index that increased rate to inflation annually starting in 2024.

Indexing requires increasing the 12¢ rate to current inflation based on a “COLA” or “cost of living adjustment” by applying an uplift formula to the 12¢ rate.  That formula itself is a function of the Bureau of Labor Statistics Consumer Price Index which itself comes in a number of varieties. A common version of CPI that the record companies agreed to is the “Consumer Price Index for All Urban Consumers (U.S. City Average, all items),” or “CPI-U.”   The CPI-U is weighted toward the cost of living for urban consumers.  (Compare CPI-U to the “CPI-W” or Consumer Price Index for Urban Wage Earners and Clerical Workers which is used by Social Security, for example.)

We have experienced a time of high inflation for the last few years and given the indicators, we are likely to continue to suffer with inflation for years to come.  So the labels’ agreement to a COLA protects the purchasing power of the hard-won mechanical royalty for physical and downloads and may end up being a critical deal point over the 5 year rate period covered by Phonorecords IV.

The statutory basis for the COLA is found in 37 CFR §385.11(a)(2):

Annual rate adjustment. The Copyright Royalty Judges shall adjust the royalty rates in paragraph (a)(1) of this section each year to reflect any changes occurring in the cost of living as determined by the most recent Consumer Price Index for All Urban Consumers (U.S. City Average, all items) (CPI–U) published by the Secretary of Labor before December 1 of the preceding year. The calculation of the rate for each year shall be cumulative based on a calculation of the percentage increase in the CPI–U from the CPI–U published in November, 2022 (the Base Rate) and shall be made according to the following formulas: for the per-work rate, (1 + (Cy−Base Rate)/Base Rate) × 12¢, rounded to the nearest tenth of a cent; for the per-minute rate, (1 + (Cy−Base Rate)/Base Rate) × 2.31¢, rounded to the nearest hundredth of a cent; where Cy is the CPI–U published by the Secretary of Labor before December 1 of the preceding year. The Judges shall publish notice of the adjusted fees in the Federal Register at least 25 days before January 1. The adjusted fees shall be effective on January 1.

One must have the published CPI-U in order to make the COLA calculation.  The CPI is published by Bureau of Labor Statistics (technically “by the Secretary of Labor”) on a regularly published schedule.  If the regulations require that the relevant CPI-U must be published before December 1, that will be the CPI-U for October to be published next week on November 14 because the CPI-U for November won’t be published until December 12 (which of course is after December 1).

According to the Cleveland Federal Reserve, month over month inflation for November is projected to be pretty much the same as October.  So based on the Phonorecords IV Subpart B formula, the minimum statutory rate will likely increase from 12¢ to approximately 12.41¢ starting January 1.

Keep an eye out for the October CPI-U next week when it is announced by BLS at 8:30am ET on November 14.  The Copyright Royalty Board is to publish the new COLA-adjusted mechanical rate in the Federal Register, on or about December 8.  And remember that the same calculation with then-current CPI-U will apply in December 2024, 2025, 2026 and 2027.

Remember, this COLA rate increase only applies to physical and permanent download configurations, not to streaming.  This is because the services refused to engage on the topic.  There’s really no good explanation for why the streaming services refused to give a COLA.  A COLA really should be mandatory given that the government essentially takes away the songwriters’ ability to bargain for their inflation expectations during a five year rate period.

by thetrichordist

Fakery Abounds: DLC Lawyer Caught

Read up on MusicTechPolicy. Remember the “DLC” is the Digital Licensee Coordinator who represents the services against songwriters and pays for the MLC. Talk about your interlocking boards!

by thetrichordist

@modernistwitch on @songtradr’s Bandcamp Layoff Tragedy

by thetrichordist

BMI’s Happy Talk Campaign Has Failed

By Chris Castle

According to Billboard, Complete Music Update, and the awesome MusicAlly, nobody appears to be buying what they’re selling over to the BMI. For what seems like the second time in less than 30 days, Artist Rights Alliance, Black Music Action Coalition, Music Artists Coalition, SAG-AFTRA and Songwriters of North America rejected the hummina, hummina, hummina happy talk from BMI’s comms shop which comes out to trickle down mixed with a rising tide.

It’s really a shame because it would have been so easy to provide concrete answers if for no other reason than SAG-AFTRA is on a war footing already and is likely not going to back down. And with SAG-AFTRA comes the AFL-CIO which for BMI’s benefit are unions, see, unions that have been down this path before and are…oh, yes…on strike right now. How close are we to signs like this showing up outside of BMI HQ in New York? It’s OK, Larry and Sergey didn’t think they’d get one, either. Thank goodness we have the smart people to guide us. But BMI should look closely at this picture of a Google labor action and think about what they’d do if it happened to them.

When the CEO is trying to sell the company, in a very real sense they are auditioning for continued employment. Do you think this helps or hurts? Friends don’t let friends become a closing condition.

[This post first appeared on MusicTechPolicy]

by thetrichordist