|Against Frozen Mechanicals||Supporting Frozen Mechanicals|
|Songwriters Guild of America||National Music Publishers Association|
|Society of Composers and Lyricists||Nashville Songwriters Association International|
|Alliance for Women Film Composers|
|Songwriters Association of Canada|
|Screen Composers Guild of Canada|
|Music Creators North America|
|Alliance of Latin American Composers & Authors|
|Asia-Pacific Music Creators Alliance|
|European Composers and Songwriters Alliance|
|Pan African Composers and Songwriters Alliance|
|North Music Group|
Complete Music Update in the UK picked up the story on the songwriter coalition letters to the Copyright Royalty Board that we have previously posted on Trichordist so you can read them in full. Read it here: Songwriter groups urge US Copyright Royalty Board to open submissions on proposed new mechanical royalty rate on discs and downloads. CMU makes this important point:
While the publishers and songwriters are generally of one mind when it comes to the streaming mechanical rates, plenty of organisations representing songwriters in the US and beyond are not happy with what the NMPA and NSAI are proposing regarding the rate for discs and downloads.
That is right on because you don’t have to be against the streaming royalty to be against frozen mechanicals on physical and downloads. Why? What David said:
It also looks like the songwriters coalition and the beginnings of press may have done the trick! Today the NMPA filed their motion to ask the CRB to adopt the frozen mechanicals. Which raises the question of if a willing buyer and a willing seller are the same person, does that equal a free market?
Filing the motion isn’t the end of the story or even the end of the beginning because they failed miserably to take into account the dissatisfaction with the whole idea of a frozen mechanical. AND the motion contains this sentence:
Concurrent with the settlement, the Joint Record Company Participants and NMPA have separately entered into a memorandum of understanding addressing certain negotiated licensing processes and late fee waivers.
That sounds like there’s a separate deal on the actual money. The motion doesn’t attach either the settlement or the side deal (which may be where the money is) just the draft changes to the royalty regulations that freezes the mechanical for the rubes. That kind of defeats the purpose of having a motion for public comment on a deal that the public doesn’t see. (And maybe not even the judges.)
Billboard also covered the songwriter coalition letters to CRB in Songwriter Groups Want Their Voices Heard on CRB Royalty Rate ASAP.
Everyone should appreciate the coalition for apparently prompting the motion (which was expected to have been filed back on May 18 according to the CRB letter). It remains to be seen if the motion is worth commenting on or is just more secret sauce. Maybe the CRB can get the right information on file so that songwriters know what’s going on and know what they are getting bound to.
[Editor T says this is a letter from a coalition of US and international songwriter groups to the Copyright Royalty Board about the frozen mechanical issue. If you want to write your own comment to the Copyright Royalty Board about frozen mechanicals, send your comment to firstname.lastname@example.org]
May 17, 2021
Via Electronic Delivery
Chief Copyright Royalty Judge Jesse M. Feder
Copyright Royalty Judge David R. Strickler
Copyright Royalty Judge Steve Ruwe
US Copyright Royalty Board
101 Independence Ave SE / P.O. Box 70977
Washington, DC 20024-0977
To Your Honors:
As a US-led coalition representing hundreds of thousands of songwriters and composers from across the United States and around the world, we are writing today to express our deep concerns over the “Notice of Settlement in Principle” recently filed by parties to the proceedings before the Copyright Royalty Board concerning its Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV) (Docket No. 21–CRB–0001–PR<(2023–2027)). For reasons explained below, several highly conflicted parties to this proceeding have apparently agreed to propose a rolling forward to the year 2027 of the current US statutory mechanical royalty rate for the use of musical compositions in the manufacture and sale of physical phonorecords (such as CDs and vinyl records). This proposal (and related industry agreements yet to be disclosed by the parties— see, https://app.crb.gov/document/download/23825) should neither be acted upon nor accepted by the CRB without the opportunity for public comment, especially by members of the broad community of music creators for whom it is financially unfeasible to participate in these proceedings as interested parties. It is our livelihoods that are at stake, and we respectfully ask to be heard even though we lack the economic means to appear formally as parties. If procedures are already in place to accommodate this request, we look forward receiving the CRB’s instructions as to how to proceed.
The current U.S statutory mechanical rate for physical phonorecords is 9.1 cents per musical composition for each copy manufactured and distributed. That rate has been in effect since January 1, 2006. It represents the high-water mark for US mechanical royalty rates applicable to physical products, a rate first established in 1909 at 2 cents. That 2-cent royalty rate, in one of the most damaging and egregious acts in music industry history, remained unchanged for an astonishing period of sixty-nine years, until 1978. Nevertheless, the recording industry now seeks to repeat that history by freezing the 9.1 cent rate for an era that will have exceeded twenty years by the end of the Phonorecords IV statutory rate setting period.
Inflation has already devalued the 9.1 cent rate by approximately one third. By 2027, 9.1 cents may be worth less than half of what it was in 2006. How can the US music publishing industry’s trade association, and a single music creator organization (which represents at most only a tiny sliver of the music creator community) have agreed to such a proposal?
The answer to that question is an easy one to surmise. The three major record companies who negotiated the deal on one side of the table have the same corporate parents as the most powerful members of the music publishing community ostensibly sitting on the other side of the table. Songwriter, composer and independent music publisher interests in these “negotiations” were given little if any consideration, and the proposed settlement was clearly framed without any meaningful consultation with the wider independent music creator and music publishing communities, both domestically and internationally.
How on earth can these parties be relied upon to present a carefully reasoned, arms-length “Settlement in Principle” proposal to the CRB under such circumstances, fraught as they are with conflicts of interest, without at least an opportunity for public comment? Further, how can these parties be relied upon in the future to argue persuasively that mechanical royalty rates applicable to on-demand digital distribution need to be increased as a matter of economic fairness (which they most certainly should be), when they refuse to seriously conduct negotiations on rates applicable to the physical product the distribution of which is still controlled by record companies (who not so incidentally also receive the lion’s share of music industry revenue generated by digital distribution of music)?
The ugly precedent of frozen mechanical royalty rates on physical product has, in fact, already served as the basis for freezing permanent digital download royalty rates since 2006. Is this the transparency and level playing field the community of songwriters and composers have been promised by Congress through legislation enacted pursuant to Article I, Section 8 of the Constitution?
The trade association for the US music publishing industry is supported by the dues of its music publisher members, the costs of which are often in large part passed along to the music creators affiliated with such publishers. It is thus mainly the songwriter and composer community that pays for the activities of that publisher trade association, a reality that has existed since that organization’s inception. Still, the genuine voice of those songwriters and composers is neither being sought nor heard. Further in that regard, we wish to make it emphatically clear that regardless of how the music publishing industry and its affiliated trade associations may present themselves, they do not speak for the interests of music creators, and regularly adopt positions that are in conflict with the welfare of songwriters and composers. Their voice is not synonymous with ours.
Unfortunately, the music creator community lacks the independent financial resources –in the age of continuing undervaluation of rights, rampant digital piracy and pandemic-related losses–to rectify these inequities by expending millions more dollars to achieve full participation in CRB legal and rate-setting proceedings. Clearly, such an inequitable situation is antithetical to sound Governmental oversight in pursuit of honest and equitable policies and results.
In the interests of justice and fairness, we respectfully implore the CRB to adopt and publicize a period and opportunity for public comment on the record in these and other proceedings,especially in regard to so-called proposed “industry settlements” in which creators and other interested parties have had no opportunity to meaningfully participate prior to their presentation to the CRB for consideration, modification or rejection. In the present case, hundreds of millions of dollars of our future royalties remain at stake, even in a diminished market for traditional, mechanical uses of music. To preclude our ability to comment on proposals that ultimately impact our incomes, our careers, and our families, simply isn’t fair.
Finally, we request that this letter be made a part of the public record of the Phonorecords IV
proceedings. We extend our sincere thanks for your attention to this very difficult conundrum
for music creators, and further note that your consideration is very much appreciated.
President, Songwriters Guild of America
President, Society of Composers and Lyricists
Officer, Music Creators North America Co-Chair, Music Creators North America
List of Supporting Organizations
Songwriters Guild of America (SGA), https://www.songwritersguild.com/site/index.php
Society of Composers & Lyricists (SCL), https://thescl.com
Alliance for Women Film Composers (AWFC). https://theawfc.com
Songwriters Association of Canada (SAC), http://www.songwriters.ca
Screen Composers Guild of Canada (SCGC), https://screencomposers.ca
Music Creators North America (MCNA), https://www.musiccreatorsna.org
Music Answers (M.A.), https://www.musicanswers.org
Alliance of Latin American Composers & Authors (ALCAMusica), https://www.alcamusica.org
Asia-Pacific Music Creators Alliance (APMA), https://apmaciam.wixsite.com/home/news
European Composers and Songwriters Alliance (ECSA), https://composeralliance.org
Pan-African Composers and Songwriters Alliance (PACSA), http://www.pacsa.org
cc: Ms. Carla Hayden, US Librarian of Congress
Ms. Shira Perlmutter, US Register of Copyrights
Mr. Alfons Karabuda, President, International Music Council
Mr. Eddie Schwartz, President, MCNA and International Council of Music Creators (CIAM)
The MCNA Board of Directors
The Members of the US Senate and House Sub-Committees on Intellectual Property
Charles J. Sanders, Esq.
Who can forget how Taylor Swift stood up for songwriters, producers and artists against Apple’s bizarre decision to impose a royalty-free three month trial period on the launch of Apple Music. (Of course, songwriters, producers and artists weren’t the only ones involved, but that’s a story for another day.)
What is equally memorable is how fast Apple changed course and all the goodwill that came to Apple as a result. Faster than you can say “Arsenal”, Eddie Cue announced that Apple would scale it back. Lemonade out of lemons. Of course, the issue should have been obvious, but sometimes smart people miss the point like everyone does sometimes. (Rolling Stone has a good short post on the backstory.)
The point of the story is that when you make a mistake, it’s better to fix it quickly than let it fester. So it is with the “frozen mechanical” problem that has become all the rage in recent days. The good news is the problem can be solved with the payment of money. It won’t be easy, but as a great man once said, this is the business we’ve chosen.
The Copyright Royalty Board decides on the statutory rate that’s paid under compulsory content licenses in the United States. For mechanical royalties, the CRB makes that decision every five years which means that if there isn’t a CRB hearing going on at any given moment, wait a little while and there will be one. (Needless to say, the volume of CRB hearings varies directly with full employment for lawyers and lobbyists in Washington, DC.) The “frozen mechanical” issue dates back to 2006 (or 2009 depending on how you count it) when the CRB allowed the end of rising mechanical royalty rates on physical and permanent downloads (and a couple others). However, the sour memories of frozen mechanicals date to 1909–also a story for another day.
Instead, the CRB has allowed a private agreement among the biggest players to become the law. This has happened at least one other time and it appears that it is about to happen again according to public documents filed with the CRB on March 2, 2021 (read it here). Contrast that private agreement to the bitter struggle against the streaming services over streaming mechanicals that is still in the appeal process. Different people paying, same songwriters getting paid.
If you haven’t heard about the tentative settlement by private agreement at the CRB, it admittedly was not well socialized.
The inescapable problem is that any fixed or “frozen” rate determined at one point in time but paid over relatively long periods of time is at the mercy of inflation in the economy that may rise in that intervening time period. The Congress and the industry recognized this harsh truth in the 1976 revision to the Copyright Act and eventually indexed mechanical rates, meaning that they floated upward with the Consumer Price Index. (CPI has its own problems, but it’s a bogey that lots of people use so it’s easier than reinventing the wheel with a bespoke factor.)
Given what has been happening in the economy, it was inevitable that inflation was about to come back strong in the U.S. and global economy. Sure enough, the Department of Labor announced yesterday:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in April on a seasonally adjusted basis after rising 0.6 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.2 percent before seasonal adjustment. This is the largest 12-month increase since a 4.9-percent increase for the period ending September 2008.
Yes, the CPI ignored the Fed and increased like the pesky little devil it is. There’s no reason to think that this is going to stop any time soon. (If you were born after 1960 or so, you may not remember that inflation and stagflation resulted in the prime interest rate peaking at 21.5% in December of 1980. That drove mortgage rates to 13.41% in 1981 (often plus points). And then there were the credit cards. That’s where inflation can lead. Personally, my money is on stagflation in the form of high inflation and high unemployment due to what Secretary Yellen called the scarring effects of the pandemic which the music business is experiencing in spades.)
It just wouldn’t be prudent to enter into a long term contract at a fixed rate that does not take into account inflation. Yet that is exactly what the tentative settlement wants to do with the mechanical rate for physical, downloads, and a couple other categories. Yet, we must acknowledge that it is very difficult to herd the cats to get them to agree to anything. But having gotten everyone to agree to freezing mechanicals and having gotten the CRB to agree to adopt that agreement in the past, it may be the case that the parties can get the CRB to let them increase mechanicals going forward.
In other words, take a lesson from Taylor Swift and Eddie Cue and do a quick course correction before the final settlement gets announced on May 18.
So what would that look like? Precedent suggests that the CRB (and its predecessors) have accepted two principal methods of increasing the rate, which is phased in over time: fixed penny-rate increases and CPI indexing. My suggestion would be to employ both methods in a greater of formula (so popular with streaming).
If phased in over 5 years like other rates, it seems that there could be an immediate step up to compensate songwriters for a rate was frozen starting at the time that physical was still a very significant percentage of sales back in 2006. That stepped up rate could then gradually increase with a greater of a fixed penny increase or CPI. I wouldn’t presume to tell anyone what that step up should be, but if you apply the CPI index, it should probably be about 4¢, bringing the minimum rate to 13¢ from 9.1¢. Given that big–albeit entirely justified–jump, increases over the out years might be more modest.
Now that we know that there’s a strong possibility that inflation will be in our lives for the foreseeable future, the good news is there’s still time to do something about it. The CRB has shown us that they are willing to accept radical changes in the mechanical royalty rate by adopting private settlements, so there seems to be no impediment. I’m not aware of a rule that says the CRB only adopts rules that freeze songwriters in place, so it should work to the songwriters betterment and not just to their detriment.
We should ask, what would Taylor and Eddie do?
On April 26, 2021, the Copyright Alliance will once again celebrate World IP Day (WIPD). WIPD is recognized on the same day in April of each year to remind everyone of the critical role that intellectual property plays in encouraging creativity and innovation. And from April 26-30, the Copyright Alliance will celebrate WIPD by joining our members, partners, and countless creators and organizations around the world to mark the occasion by amplifying blogs and videos, hosting virtual events, and much more—all designed to celebrate the fact that IP helps the global arts scene to flourish and enables the innovation that drives human progress.
By Chris Castle
Here it is: Today is the day that the MLC is required to send out their first round of statements and payments. The deadline they gave themselves when their wrote their law.
The MLC is about to hear those beautiful words. They will hear it in English. They will hear it in Spanish. They will hear it in Bantu, French, Portuguese, Pashto, Russian, Hausa, Berber and Czech.
And songwriters will say it like they mean it. They won’t want to hear about “connect to collect” they won’t want to hear about “play your part” or the ontological definition of “match.”
They will say just one thing–show me. The MLC will hear it on the phone, in email, maybe even in person. And songwriters will want to hear everyone at MLC say those magic words. Loud. The family motto. A very personal and important thing. It should be said with conviction maybe even shouted from the rooftops.
No more hot potato. And while it may start with MLC it won’t end there. If the services think they are off the hook, there’s just one thing to say. Are you ready? You know what it is.
The money. They got it, we want it, now show it. Very simple.
But just in case it doesn’t all go swimmingly on April 15, it might be time to start thinking about drafting an affirmative obligation on your publisher to take care of any bad data in your publishing or administration agreements (or at least try–let me know how far you get). Most of what I’ve heard anecdotally about the quality of the MLC public database leads me to think that songwriters think the publisher is registering their songs correctly at the MLC. So why not put it in writing?
If you don’t, that hot potato will just keep on bouncing around if there’s not a clear place where the buck stops. The services will blame the MLC, the MLC will say you didn’t connect to collect to play your part, your publisher will blame the MLC, and round and round and round it goes.
You know what you tell them, right? The family motto.
By Chris Castle
We all breathed a bit easier when we heard that the $15 billion Save Our Stages legislation authored by Austin Rep. Roger Williams and Texas Senator John Cornyn had passed the Congress and was signed into law last December as part of the $2.3-trillion Consolidated Appropriations Act of 2021. SOS is administered by the Small Business Administration and allows live performance venues, movie theaters, and talent agencies to apply for relief grants if they’ve lost at least 25% of their revenue due to the pandemic up to a maximum of $10 million. Venues employing fewer than 50 full-time (also known as every music venue I know of) can apply for a share of a $2 billion of the fund to cover payroll, rent, utilities, and insurance.
The problem is that the Small Business Administration has failed to implement an application process so that venues can even apply–and months are going by. As states reopen, thriving venues are going to be a big part of the economic recover, particularly in a state like Texas. What’s even more bizarre than the SBA not having an application process in place (or bridge loans or something) is that the City of Austin has managed to distribute millions to the Austin music community while waiting for the legislation, which Rep. Williams and Senator Cornyn got through Congress in record time–which may be because Austin wants to keep the title of “Live Music Capitol of the World” when the live music business reopens.
It is very difficult to understand why the SBA is taking so long to distribute appropriated funds for federal legislation that was bipartisan and not controversial. It’s not just me–Governor Abbot’s Texas Music Office s leading the charge to light a fire under the SBA.
If you want to let you views be known, you can write to the SBA at email@example.com contact your local members of Congress or your state and city economic development offices.
Here’s a letter from Texas Music Office Director Brendon Anthony to the head of the SBA asking for her to expedite the applications:
February 25, 2021
Tami Perriello, Acting Administrator
U.S. Small Business Administration
409 3rd St SW
Washington, DC 20416
Dear Acting Secretary Perriello:
Thank you for all that you do in service of the SBA, on behalf of the American people. And thank you for your organization’s steadfast work assisting small businesses across the state of Texas, and beyond, during the pandemic. At the TMO, we hear firsthand from our constituents that the daily work of the regional SBA offices has provided an invaluable lifeline of resources and information, supporting the livelihoods of countless hardworking Texans.
As Director of the Texas Music Office (TMO), a division of the Office of the Governor’s Economic Development & Tourism Office, my team and I represent the more than 210,000 constituents and their permanent jobs within the Texas music industry. We implore you to accelerate opening the application window for the U.S. Small Business Administration’s (SBA’s) Shuttered Venue Operators Grant in order to help provide a bridge to saving one of the first industries impacted by Covid -19 mitigation,and ultimately one of the last industries that will be able to fully re-open.
As of February 2020, combined, the music industry and music education in Texas directly accounted for $4.4 billion in annual earnings, and just over $ I 0.8 billion in annual economic activity. The ripple effects associated with the direct injection related to music business and music education in Texas bring the total impact to $8.8 billion in earnings and $27.3 billion in annual economic activity.
Although most music fans around the world are familiar with our state’s largest music brands like Austin City Limits Festival and the SXSW Music Conference, it’s the small venues and historic dancehalls where Texas musicians cut their teeth which are currently impacted by closure. These hallowed venues are the testing grounds for our chart-topping artists like Beyonce, Selena, Willie Nelson, George Strait, Travis Scott, and so many more.
As each week passes, we lose more and more small music venues to permanent closure. The Shuttered Venue Operators Grant will be a crucial stopgap to helping our state’s music industry survive, providing the state’s music venues a bridge to help them weather this catastrophic event
On behalf of the Texas Music Office and its constituents from all across the state, please take the necessary steps to open applications for the Shuttered Venue Operators Grant so that the Texas music industry and the thousands of individuals employed by the state’s small venues – may live to see another day, as the permanent closure of these venues would be immeasurable to our state’s economy and culture.
Director, Texas Music
Office Office of the Governor
The venues really need our help to pry loose the money from the SBA that has already been appropriated by Congress. I don’t ask for this often, but the Trichordist audience is very effective at contacting their governments. Remember, that’s firstname.lastname@example.org
According to an MLC press release, the MLC has $424,384,787 from digital music services:
The Mechanical Licensing Collective (The MLC) announced today that it has received a total of $424,384,787 in accrued historical unmatched royalties from digital service providers (DSPs), together with corresponding data reports that identify the usage related to these royalties.
A total of 20 DSPs separately transferred accrued historical unmatched royalties to The MLC as required in order for them to seek the MMA’s limitation on liability for past infringement. In addition to the accrued unmatched royalties transferred to The MLC, the DSPs concerned also delivered more than 1,800 data files, which contain in excess of 1.3 terabytes and nine billion lines of data.
This is a lot of money, but you do have to ask if this is what they admit to, now much is really there? Time will tell. You also have to ask whether they would have paid the money at all if it weren’t for the lawsuit brought against Spotify and the Harry Fox Agency by Eminem publishers Eight Mile Style and Martin Affiliated. Once the services got it through their heads that moving the goalposts wasn’t going to get them off of the front pages of the class action lawyer magazines (with a map that said “X MARKS THE SPOT”), the money was forthcoming.
Here’s the list of services that the MLC says paid the headline number:
Note that the top five payments are from Apple, Spotify, Amazon, Google and Pandora. It is simply laughable that of this group, the two biggest offenders are Apple and Spotify for different reasons. Apple tries to position itself as a friend to artists and songwriters and is the worst offender. Spotify has literally no excuse as they have been sued multiple times and as we now see for good reason. Amazon and Google are two of the biggest technology companies in commercial history, but they can’t find songwriters.
The moral of the story is that you can’t find what you don’t look for. And of course the one sided drafting of the Music Modernization Act basically gives the services a pass on whether this payment was even accurate. You have to think that if the accounting was so sloppy that these paragons of technology missed the target by 100s of millions, there very easily could be 100s of millions more that we’ll never get. Do not let anyone tell you that this is some great victory by the lobbyists–this is a great victory by the lobbyists for Big Tech. They are paying us with our own money through a pig in a poke. If our lobbyists are going to celebrate anything, they need to celebrate when every penny is accounted for and paid to the right person. And there should be no cost-benefit analysis because as we were told many times, the services are paying for it. So they should pay for all of it, including the distribution to the long tail. In other words, our lobbyists should celebrate only if the market share distribution is zero. Surely they thought of this.
But now the hot potato is at the MLC which is financed by all these same offenders. We need to ask if the money reported by the MLC is the exact sum that they received from the participating DSPs or if there were any “fees” that disappeared from view before it was reported. We also need to ask if the monies received by the MLC is the exact same dollars that were paid by the DSPs and whether any “fees” disappeared before the money got to the MLC.
But all in all, a potentially good day provided that money immediately begins flowing to songwriters. There’s a long way between here and there, but keeping pressure on will keep attention on that juicy target.
Guest post by Chris Castle
Our sister site Artist Rights Watch fielded a Mechanical Licensing Collective Awareness Questionnaire during January targeting songwriters attending our MLC webinar. (MLC Awareness Questionnaire 1/31/21 n=120.) The purpose of the questionnaire was to give the panelists some idea of the awareness level of attendees about the issues we intended to discussed based on early responses to the survey. You can read the analysis of the responses here, but I’m going to discuss them briefly.
Of the 120 people who responded, responses suggest that approximately 70% of respondents personally handled the business and administration of their song catalogs, 50% were self-administered, and 50% administered song catalogs of 100 songs or fewer. In other words, the majority of respondents were exactly the kind of self-administered songwriters or administrators we sought to connect with and who are eligible to stand for the MLC board seats devoted to self-administered songwriters if the right insiders nominate them . We are still analyzing the geographic data, but about 16% were from California zip codes with the rest distributed across Texas, Georgia and other fly-over states predictably not represented on the MLC’s board of directors.
The basic questions about the MLC awareness we were trying to better understand were whether respondents even knew what we were asking about, and if so, how did they know. This will help understand the success of the information efforts to date by the MLC, the DLC, and the Copyright Office. We also wanted to know if respondents felt that they knew enough about the MLC to advocate for themselves with the MLC as an effectiveness metric for other educational efforts to date.
An encouraging 63% of respondents had heard of the MLC, but 22% had not. Less encouraging was 6.67% who had both heard of the MLC and successfully registered and 4.17% who had heard of it but had not been able to register.
When asked how they had heard of the MLC, respondents were asked to respond to a list of potential sources, including “other”. The largest source of information was “news media” at 27.35% and the next largest was “other”, which included a variety of sources including The Trichordist, Artist Rights Watch and MTP.
However, given the other answers, the education efforts of the MLC (including HFA), the DLC and the Copyright Office did not seem to be making much penetration into these respondents, although the Copyright Office led the pack, sometimes by a lot. This is curious because it’s not really the Copyright Office’s job and they are not being paid millions to do it.
As a measurement of the cumulative effectiveness of the educational outreach by the MLC, DLC and Copyright Office, we asked whether respondents felt they could advocate for themselves with the MLC. 60.83% answered “no” or that they “could use some help.” This was surprising, and I would have preferred to see that number down in the single digits.
Of those who tried to register with the MLC, 15.38% of respondents successfully registered, 12.5% were told to use HFA, but 32% were “not sure” what they were told to do by the MLC. I think that it’s safe to explore whether the data indicate that the educational outreach has resulted in an abysmally low registration rate.
For whatever reason, this language has appeared on the MLC’s website in recent days:
Prior to January 1, 2021, DSPs operating under a compulsory license were required by law to account to rightsholders on a monthly basis, within 20 days after the end of each month. Starting on January 1, 2021, DSPs operating under the new blanket license will have 45 days after the end of each month to send their usage reports and royalty payments to The MLC. The MLC will then take 30 days to perform its matching functions and calculate the royalties due to each of its Members. That means that The MLC will send out royalty payments and statements to Members roughly 75 days after the end of each monthly period. Because the total duration of the new distribution process will be longer than the old process, there will be a two month gap at the beginning of 2021 between the time rightsholders receive their last monthly statements and payments from DSPs under the old process and the time when they receive their first monthly statements and payments from The MLC under the new process.
12% of respondents said that they were paid monthly and 60% of respondents were paid quarterly or “other” than monthly or quarterly.
We will be studying the responses over the coming weeks, but I had a few thought on the responses and a couple recommendations.
- I’m going to ask if ARW can field the same questionnaire periodically to see how responses vary over time. UPDATE: ARW will be fielding a new survey with a few additional questions, you can participate at this link.
- It appears that of all the media the experts are using to get their messaging out, the one making the greatest penetration for mere awareness is news media. However, respondent’s lack of confidence in their ability to register with the MLC as well as the low level of successful registrations hasn’t yet supported a conclusion that the experts’ well-funded efforts are producing greater MLC registrations or a greater understanding of how to register, or, and most importantly, actual registrations.
- There seems to be considerable confusion for whatever reason about someone else doing the registration for songwriters, be it administrator or publisher. Outside of the survey, we have anecdotal evidence that songwriters are finding that their songs are not registered with the MLC after having been assured they would be by their publishers. Because of the announced songwriter payment gap that the MLC anticipates in the first few months of its operations, songwriters may only find out they are not registered when their payments stop.
Recommendation: One technique I observed with a SoundExchange information session was that artists were able to bring their laptops to a seminar where they were literally walked through the SoundExchange registration process step by step after the informational Q&A session concluded. Even during COVID this could be accomplished using screen share.
By using this technique, the MLC could make sure that the end result of their webinars, etc., was that songwriters or publishers registered works and learned how to do so for the remainder of their catalog. Plus they knew who to call if they had any problems or further questions. This takes time, but the whole process takes time and you’re only fooling yourself if you think otherwise, to be blunt. I would say that it matters less how these people managed to waste two years in which they could have been doing this than it does to fix the problem right here, right now. Do not let them tell you that the need only arose on the License Availability Date of 1/1/21 because that is just a CYA lie.
Recommendation: The experts should make a focus of their messaging a very clear statement that if you don’t register you will not get paid. That is the harsh reality. By hiding that ball, they do everyone a disservice. Maybe an unregistered songwriter will eventually be able to claw their royalty back from the black box at some point in the future, but in the time of COVID, that claw back comes with a mortality rate.
Recommendation: No accrued but unpaid royalties for the first two or three years of the MLC’s operations should be able to be placed in the black box. Not that they wait to pay out black box for 3 years, but they cannot use any of this money for black box–ever. Like state unclaimed property offices, they hold the money forever. The reason is that there is a greater than 50% chance that the reason funds are unmatched is because of the MLC’s startup missteps, not anything the songwriter did.
[Guest post by Chris Castle. This post first appeared on MusicTechPolicy. This is interesting because songwriters don’t often see shenanigans from Apple Music but it is probably due to the overpowering litigation magnet of the MMA. Put this in The MLC redesignation file]
Here’s an update on the bizarre saga of Apple Music and The MLC. Remember that HFA sent to its publishers this termination notice from Apple Music on Apple’s lyric and cloud services licenses (and assume for the moment it was also sent to other non-HFA publishers):
This is remarkable because the Music Modernization Act limits the kind of licenses that the MLC can administer because the blanket license only applies to a limited number of activities (on demand streaming, limited downloads and permanent downloads). It does not apply to lyric licenses or cloud services because the blanket license is not available for those rights. Those rights would still need to be licensed under the very type of agreements that Apple is terminating.
This question came up during a recent MLC webinar moderated by MLC executives Kris Ahrend (CEO) and Serona Elton (Head of Educational Partnerships). These two executives were asked the obvious question, how can The MLC do lyric licensing for Apple. An eagle eyed MTP reader sent this screen capture from the chat:
So you have to ask, if The MLC can’t license lyrics, why did Apple terminate their lyric licenses and transfer to The MLC? And what does “separately from us” mean? The answer is not really responsive to the question.
Separately from us could easily mean that while The MLC is not licensing lyrics, some other entity is. (Presumably the lyrics are from songs that are subject to the blanket license so the MLC would play a role.) Remember that the termination notice came from HFA. Could it be that “separately from us” means HFA would be issuing a side by side lyric license on behalf of its publishers?
And remember that the notice from Apple includes this language:
[W]e intend to move our licensing and royalty administration for Apple Music to the MLC starting from January 1, 2021.
Congress did not intend that The MLC offer licensing and royalty administration for DMPs like Apple. That would mean that The MLC would be paying itself for Apple’s blanket activities. That is what HFA does through a rather porous ethical wall (and for which they have been at the center of two class actions and numerous copyright infringement lawsuits and are currently a co-defendant with Spotify in another post-MMA lawsuit).
It has long been assumed that somehow some way The MLC intends to offer bundled licensing which is currently prohibited. Bundled licensing could take the form of performances, ex-US rights, sync, even general licensing.
It seems like that effort is quietly underway. What is an alternative explanation for Apple terminating a large number of agreements and transferring its licensing and royalty administration functions to The MLC? Is the plan that The MLC gets the business and HFA does the work that The MLC is prohibited by statute from performing (at least until they move the goalposts again)?
This does help to explain why there is no MLC database and all The MLC’s “data quality initiative” corrections and improvements are being performed on the HFA database (which HFA owns and will use for work not limited to the blanket license).
Curiouser and curiouser.