The Copyright Office is soliciting 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 in the “Initial Comments” at the Copyright Office. As there will be an opportunity to comment again, including to comment on the comments, we will be posting selected Initial Comments to call to your attention. You can read all the comments at this link. If you are hearing about this for the first time, you have until June 28 to file a “reply comment” with the Copyright Office at this link.

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 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. Perhaps this conditional aspect will be refined in the Reply Comments.

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.

Today’s featured comment is from A2IM, the American Association of Independent Music. You can read the entire comment here. A2IM raises some good points including suggesting that the redesignation be conditioned on The MLC, Inc. meeting beneficial targets. We have emphasized parts of the quote for impact but that emphasis is not in the original.

Distribution of Unmatched Royalties
A2IM is deeply concerned with the processes around the so-called royalty “black box” and finds the present searchability of unmatched royalty data to be insufficient. The Copyright Office should consider conditioning MLC redesignation on further delay in the distribution of these funds, presently estimated at over $300 million, until the MLC fully implements improvements to the system that result from this periodic review.

Under the Act and subsequent regulation, if the MLC is unable to locate the rightful copyright owner of a particular work, the MLC will deposit accrued but undistributed royalties in the black box, and after three years, the funds may be released to music publishers based on market share. A2IM strongly supports all efforts to fully distribute digital audio mechanical royalties to rights holders, and commends the MLC for seeking to improve the enormous amounts of unmatched royalties present at the time of the Act because the DSPs were not able to match and pay to the respective copyright owners.

The distribution of unmatched royalties, however, currently follows a dubious formula. This policy clearly benefits the major music publishers and penalizes smaller songwriters/publishers. Failure to match occurs for numerous reasons, but many are related to scale. Lesser-known songs from genres with less broad commercial appeal, songs with titles in foreign languages, and songs tied to digital files with less robust data all can lead to unmatched royalties, and all these factors are more likely to occur with musical works from the independent sector, and from publishers with smaller market share. At present, there remain too few options and too many hurdles for matching and claiming works, meaning that barriers to entry in freeing royalties from the black box pool persist to an unacceptable extent.

Furthermore, the current matching tool is not versatile enough to effectively match many titles, leaving a significant number of songs unmatched and contributing royalties to the black box. The present system fails to account well for partially matched songs, meaning instances of works authored by multiple songwriters represented by multiple publishers matched to one or more entities with royalty rights, but not to all such creators. The MLC often cites numbers of matched royalties without specifying the percentage of titles that are fully matched versus partially matched. It is crucial for the MLC to provide clear statistics on fully matched, partially matched, and unmatched titles to ensure transparency and build trust among rights holders.

There are also many instances of royalties being mismatched, and there is no easy recourse for rights holders to resolve these issues. The MLC must acknowledge this problem and establish a straightforward process for rights holders to report and correct mismatches. Moreso, the MLC must invest in improving the matching tool to enhance its accuracy, efficiency, and ease of use so that those most impacted (predominantly independent artists and writers) can claim their royalties.

Addressing unmatched royalties requires an all-hands-on-deck approach. Many legacy songwriters suffer because their publishers do not prioritize entering or updating relevant data. One easy improvement would be for the MLC to create a mechanism providing songwriters with recourse in this situation.