More Bizarre Goings On At the Copyright Royalty Board, this time with additional Google, fava beans and a fine Chianti

[This post first appeared on MusicTechPolicy]

by Chris Castle

One of the main beefs I’ve had with the Copyright Royalty Board is the secrecy in plain sight. Very few people follow what’s going on there, yet every time you move a rock, another toad hops out. Now that we are turning our attention to the streaming mechanical proceeding–which as we were told ad nauseam is the important one, don’t you know–the first thing we find is the shameful antics of Google on full display.

Remember–the Copyright Royalty Board split the rate proceedings in two. One was for the physical and download mechanical (paid by record companies) and one for the streaming mechanical (paid by digital music services), all under the compulsory license which was adopted for the huge benefit of each music user. And of course if it’s compulsory it takes (there’s that word again) away the rights of songwriters to bargain and set their own price without government intervention. (There are alternative ways to do this such as the Nordic model of extended collective licensing that David Lowery discussed in an important blog post a few years ago.)

The Copyright Royalty Judges are given the unenviable task of divining what a willing buyer would pay a willing seller in the open market. Of course that willing/willing rate is a complete legal fiction because in the novella of statutory rates there hasn’t been an open market for over 100 years which for rate setting purposes means there has never been an open market for songwriters. Why? Not sure, really, but there must have been an original sin, the novella tells us so. We can only assume that when that writer room door closes, those pesky songwriters just naturally start colluding, unlike Facebook, Amazon, Apple, Spotify and especially Google. Google who have never been prosecuted for violating the Controlled Substances Act for which they paid a $500,000,000 fine and who we let take over our children like they were a trustworthy television network or something.

So since there’s never been an open market because the government took the songwriters’ rights back in 1909 in this case (and 1941 in the case of the ASCAP consent decree), you can well imagine that a cottage industry of executives, lawyers and lobbyists have grown up to service the bizarre rate setting process that has totally lost their way in my view. It’s hard to believe when we read the shenanigans going on in front of the Judges that this is all designed to determine the value of songs. There are 38 lawyers billing time in the streaming proceeding which will raise the transaction cost of the proceeding to an absurd and Kafka-esque level, but it does help you understand why the lobbyists think that proceeding is so important–it’s definitely more important to them.

Which leads us to the extremely Googley discovery request that Google has filed and the Judges appear to have approved. In a nutshell, Google has said that they only way that the rates can be set is if the Judges force the National Music Publishers Association and the Nashville Songwriters Association International to turn over all to Google of your accounting statements and licenses so Google can determine if the past earnings back up the NMPA and NSAI royalty claims made by their many Lecterian lawyers.

But don’t feel bad–it’s not like they will be turning over the data to the public, just to Google. What a relief, right?

Here’s what the order actually says:

That’s right–Google wants “Music Publishers” to produce all the royalty statements for the most successful songwriters in the world to “test” whether songwriters are struggling financially. Given that this will involve many, many statements which probably have to have personally identifiable information redacted, it’s going to take many hours which is great for those who get paid by the hour but not so great for those who get paid by the song.

Is there no other way to determine whether mechanical royalties have declined to subsistence levels? Surely there must be, and you know what else? There’s also a way to test whether mechanical royalties have declined to below subsistence levels which is really the point here, right?

Yes, I got your test right here, soulless Google lawyers.

But wait, there’s more. Google also wants to raise transaction costs on songwriters by forcing the production of all “free market” licenses. (“Free market” benchmarks are themselves a laughable concept in a hugely distorted market that still suffers from the governments negligent wage and price control of a 2¢ rate from 1909 to 1978).

And given the parameters of the Copyright Royalty Board, the Judges seem to have granted Google’s request in part for the statements and entirely for the licenses.

You do have to ask whether there’s anything songwriters can do to keep their confidential royalty statements and license agreements out of the hands of the Leviathan of Mountain View. It does seem that there could be a process to intervene in the Phonorecords IV case to stop this from happening. Just because Google is trying to prove that songwriter income has not been decimated when we all know it has been does not seem to require the humiliation of having your royalty statements put on display. This is definitely something to speak about to your lawyer and your publisher.

This entire exchange is exceptionally bizarre because the “Copyright Owners” are the NMPA and NSAI, neither of whom own copyrights, send statements or enter licenses. And yet there seems to be an assumption that some group of publishers are bound by the order. I can only assume that the publishers who are on the receiving end of this order are the music publisher affiliates of the CRB participants at the group level of Sony, Universal and Warner, although the order doesn’t really demonstrate that connective tissue because…well, it doesn’t. Publisher affiliates are not participating and if the principle and policy is that every stand alone affiliate of a corporate parent is participating and subject to discovery because the corporate parent is…well, that’s an interesting proposition.

Before you heave a sigh of relieve that only the songwriters signed to a major will have their privacy invaded by the greatest privacy invader of all time, that would be Google hands down, just realize the cost of what can happen if you were to have the temerity to think you could participate in the Copyright Royalty Board. 

You can have one of the biggest corporations in commercial history that rips you off every minute of every day and essentially prints money in the public market that they use to destroy your rights and creations sick their army of soul-crushing lawyers on you to prove that songwriters are dying penniless because of Google’s income transfer. And still pay you a number that starts many decimal places to the right and laugh about it over steaks at The Palm with fava beans and a fine Chianti.

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. 

Please take our physical and download mechanical royalty rates survey and help decide the new rates!

We are participating in a survey being conducted by a number of songwriter groups around the world to ask our readers what you think the new un-frozen mechanical royalty rate should be since the Copyright Royalty Judges rejected the settlement that would have extended the 9.1¢ freeze. Trichordist readers have heard a lot about the frozen mechanicals but after the Judges rejected extending the freeze we have moved on now to a new phase–if the rate isn’t 9.1¢ anymore, what should it be?

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!

Is @UMG coming to the party on unfrozen mechanicals?

By Chris Castle

[This post first appeared on MusicTechPolicy]

I have it on good authority from someone close to the talks not authorized to speak on the record that Universal is taking the lead on solving the now un-frozen mechanicals crisis. This obviously needs to be confirmed and may not be final, but I think it’s well worth posting about.

Recall that the crisis pertains to the so-called “Subpart B” mechanical royalties paid by record companies for permanent downloads, vinyl and compact discs. The mechanical rate has been frozen at 9.1¢ since 2008 and the Copyright Royalty Judges recently rejected a settlement among the NMPA, NSAI, Sony, Universal and Warner to extend the freeze in the Phonorecords IV proceeding. Having rejected the proposed settlement, the next step could be knock down, drop dead, drag out litigation that would, in my view, be totally unnecessary. Or the next step could be the labels and publishers submitting a new proposed settlement and asking for the Judges’ approval. 

Also recall that the Judges hinted at a potential deal they would like to see in their rejection of the proposed settlement that would essentially uplift the current 9.1¢ rate by an inflation factor since the rate was set in 2008, bringing the minimum statutory rate for all “Subpart B” configurations to 12¢ that would be further uplifted by an annual cost of living adjustment based on the Consumer Price Index (CPI-U in this case).

We’ve written about this topic so much that you’re probably sick of hearing about it–but if this source turns out to be correct, it’s a real step in the right direction by Universal taking a leadership role that will no doubt be controversial.

As I understand it, Universal may propose a minimum statutory rate of 10¢ for permanent downloads and 12¢ for both vinyl and CD configurations. All three rates would be adjusted annually by the Consumer Price Index (in a similar way that the Judges just indexed the webcasting royalty in Webcasting V applicable to sound recordings). This rate would apply to all songs–not just to George Johnson–as one would expect.

There’s no way to know at this point today whether all the participants in the Phonorecords IV proceeding will accept these terms, including George Johnson who has held out for a much higher minimum statutory rate. Some may scratch their head over why the download rate is less, but my suspicion is that it’s because Apple and Amazon have been inflexible on increasing the wholesale price and I could understand why a label would give themselves some headroom on downloads going into what will surely be highly inflationary times but at the same time agreeing a cost of living adjustment. (When the dust settles, it may be worth a discussion in the artist rights community about whether to campaign against Apple and Amazon.)

I do think it’s commendable if Universal is taking the first step toward bringing fairness to a process that has been unfair for many years. We’ll see what happens, but it looks like it could be light at the end of the tunnel. Watch this space.

What’s Next for Unfrozen Mechanicals? One proposal.

It was a big week for songwriters last week! The Copyright Royalty Judges rejected the frozen mechanicals settlement put forward by the majors in the current rate-setting proceeding at the Copyright Royalty Board thanks in part to the best audience in the world–that would be you! All that hammering on the issue paid off.

We also acknowledge the hard work of all the commenters who spoke straight from the heart and of course songwriter George Johnson who has been fighting the good fight in the Copyright Royalty Board all by himself for years now. We’re also very grateful to the Judges for a well-thought out ruling and a thorough vetting of the issues, George’s many filings and the songwriter public comments.

The question we’ve heard a lot in recent days is where do we go from here? Clearly the answer is “Up” but how far up is the question. We need to be mindful of the economic impact that increased rates will have on independent labels in particular, but at the same time acknowledge that all record companies have gotten the benefit of frozen rates for 16 years and that songwriters have taken it in the shorts for a long, long time.

The Judges seem to be hinting at a deal in their ruling (remembering this is the rate for physical and downloads only (called “Subpart B rates”) and not for Spotify-type streaming which is not affected by these rate changes). Here’s the relevant quote from the ruling:

Commenters advocated application of an inflation adjustment beginning, at a minimum, in 2006. See, e.g. [Songwriters Guild of America] Comments at 4; [Monica] Corton Comments at 4; [Kevin] Casini Comments at 4. According to the proponents of a cost of living adjustment (COLA) applied to the 2006 rates, that adjustment would yield a 2021 royalty rate of $ 0.12 (an upward 31.9% inflation adjustment over the sixteen-year period). See, e.g., SGA Comments at 4. SGA conceded that the COLA extrapolation cannot be considered dispositive on the issue of new rate-setting, but they contended that it does “starkly demonstrate the outrageous unfairness that has been imposed on the music creator community over a period of more than an entire century.”

Step one, then, could be to increase the minimum statutory rate to 12¢ (or 13¢ depending on how you do the math) with customary adjustments for the “long song” formula for songs over 5 minutes.

That increase in the rate would be significant and probably the biggest rate increase ever on a percentage basis for the statutory rate. Will that satisfy everyone? Probably not, but it’s a step forward.

But–and this is a big but–that’s not the end of the story. We do not want to be right back in the same position in a few years time. One way to avoid this is to increase the new rate for inflation every 12 months (called “indexing”) the same way that the webcasting rates are indexed for sound recordings.

The Judges also hint at indexing as a potential solution to avoid just another rate freeze:

[George Johnson] has long advocated inclusion of an inflation index in royalty rates set by the Judges, including the…rates at issue here. In support of his advocacy, GEO has filed 27 pleadings, including motions seeking imposition of an inflation index on section 115 rates and periodic notices of U.S. inflation rates. His plea is bolstered by the many commenters who, almost unanimously, included this suggestion.

So the way this would work is that starting in 2023, the current 9.1¢ rate would be increased to 12¢. After 12 months, the rate would be increased by the Consumer Price Index (the CPI-U rate) for each 12 month period until 2027 when new rates would get decided by the CRB in the next rate proceeding (Phonorecords V). Example: If the CPI is 10%, then the minimum statutory rate would increase to 13.2¢ for the next 12 months. If the CPI in the second year was also 10%, then the 13.2¢ rate would be increased to 14.52¢ and so on until the last year of the period (2027). (Of course we can’t tell today what the CPI will be in 2023.)

Given the Judge’s rejection of the frozen rates, it is very doubtful that there will ever be another freeze, but we have to stay alert and vocal. When the new rates come up, we all have to pay attention.

It’s important to remember that “indexing” to inflation just preserves buying power. Meaning that 12¢ today is what 9.1¢ was worth in 2006. Would it be the fair thing to index all the way back to 1909? Sure, but while the Judges hint at going back further (the “at a minimum” reference), the Judges may not be inclined to go further back than 2006 when the current freeze started, but we’ll see what happens.

We’d be very interested in hearing from you with any questions you have or other ideas for solutions. Obviously, this post is just sharing ideas with our audience and isn’t a formal statement by any particular person or group. There may be a number of proposals coming out and we’ll of course post them on Trichordist.

It must also be said that George Johnson has yet to weigh in on the situation and may very well have a different idea. There’s also some twists and turns to sort out, such as the black box “MOU” (the fourth of its name) but especially the controlled compositions rates that the Judges discussed in some detail (as Judge Barnett said, “The disparity between the static rate and the dynamic market is even more stark when considering the “controlled composition clause.””).

In any event, feel free to comment and we welcome the discussion.

Frozen Mechanicals Crisis: 2nd Comment of @helienne @davidclowery @theblakemorgan Opposing Conflict of Interest in Frozen Mechanicals–‘Let the future have a vote’

SECOND REOPENING PERIOD COMMENTS OF HELIENNE LINDVALL, DAVID LOWERY AND BLAKE MORGAN 

            Helienne Lindvall, David Lowery and Blake Morgan (collectively, the “Writers”) thank the Judges for the opportunity and respectfully submit the following comments responding to the Copyright Royalty Judges’ notice (“Second Notice”) soliciting comments on additional materials (“Reply”) received by the Judges[1] from the National Music Publishers Association, Nashville Songwriters Association International, Sony Music Entertainment, UMG Recordings, Inc. and Warner Music Group Corp. (collectively, the “Majors”)[2] regarding the so-called [frozen] “Subpart B” statutory rates and terms[3] relating to the making and distribution of physical or digital phonorecords of nondramatic musical works in the docket referenced above (“Proceeding”). 

The Writers previously submitted comments[4] (“Prior Comment”) responding to the Judges’ notice[5] (“First Notice”) soliciting comments on the Major’s proposed purported settlement (the “Proposed Settlement”)[6] of the Subpart B rates.  The Writers along with attorney Gwendolyn Seale[7] attempted to submit additional comments in response to the Majors’ filing but were not able to timely file that response.[8]  The Writers appreciate the Judges’ decision to reopen the comment period in order to afford the public, and those that would be bound by the rates and terms set by the Proposed Settlement,[9] an opportunity to comment on those additional materials filed by the Majors and to further participate in the rulemaking.[10]

I.  SUMMARY
            As a general comment on the record to date in Phonorecords IV, the Writers are mystified by the histrionics that have become associated with this Proceeding both on the record and in the press. A voluntary negotiation is just a deal, often made by people who are paid to always be closing. The Writers believe that Congress intended that voluntary negotiation produce a fair result on a reasonable timetable.  

 While not directly at issue in the reopened comment period, what is clearly the case is that the settlement of the Subpart B rates has unnecessarily become a major gating item for the streaming side of this Proceeding, geese and ganders being what they are.  Despite the extensive voluntary negotiation period for the Subpart B rates by the Majors, the Judges—and, frankly, songwriters around the world–are presented instead with a cornucopia of chaos across the board; the cherry on top is the frozen mechanicals crisis.  However, in this season of hope the Writers are confident that the Judges will lead us all out of this daunting situation.

The Writers are not interested in the personalities, the arm-waving or the finger-pointing.  They are interested in the results, particularly because neither they nor anyone they authorized had input into the negotiation that produced either the Proposed Settlement or the impasse.

There is at least one easy way to fix this and recognize the intrinsic value of songs:  Raise the statutory rate proposal for Subpart B configurations in at least some relation to the streaming rate increase.  A song is no less valuable because of the medium in which it is exploited.[11] 

As the Writers will argue, just like the voluntary agreement on Subpart B that led to this impasse was reached by the Majors, those same parties can go back to the drawing board to reach an appropriate conclusion with a higher Subpart B rate.  

Neither the public nor the songwriters are well served (and frankly neither are the Judges) by thrashing about and waiving arms. This may serve well the people who are paid by the hour but it hasn’t served people who are paid by the song.  At all.  “Victory” without winning may pass for success in Washington, but it does not in the writer room or at a songwriter’s kitchen table.

            The Proposed Settlement is a crystallization of everything that is wrong with the licensing and payment practices that have arisen under the compulsory license regime where no is yes, more is less and the Kool-Aid whispers “Drink Me.”  

While the Writers will focus in this comment on the frozen mechanicals issue that has become emblematic of the current crisis, it must be said that the decade-plus MOU [black box] agreements are a backward looking and inequitable insider arrangement that permits a mindset of sloppiness and a “kick the can down the road” mentality that debilitates the entire music publishing business.[12]  It’s no accident that the Mechanical Licensing Collective—run by largely the same cast of characters under a jaw-dropping Congressional governance mandate—has been sitting on $424,000,000 of other peoples’ money for nine months during a pandemic with no visible compliance with another Congressional mandate of paying songwriters correctly in Title I of the Music Modernization Act.[13]  

            The MLC and the sequence of MOUs are both descended from the same ancestors a generation ago.  Each have essentially the same business model and each are somehow inexplicably viewed as a “win” for the songwriters.  The irony of splicing the genetic code of the ancien régime MOU [black box insider settlements] to the future is not lost on anyone.  If the failure to match money and songs in the MOU process is still a problem after fifteen years as well as the much-trumpeted Title I of the Music Modernization Act, it’s not the horse’s fault.  It’s the rider’s.

            It would be a real pity for the CRB to perpetuate this unfairness by adopting the Proposed Settlement.  With respect, it is bad law, bad policy, and a failure to even try to bend the arc of the moral universe.  Conversely, rejecting the Proposed Settlement would provide the kind of steely oversight tragically lacking in the current regime.  Please let the future have a vote, just once.

            The Writers object to the Proposed Settlement for the following reasons and respectfully suggest constructive alternatives.  The gravamen of our objection is that (1) the Subpart B rates have already been frozen since 2006 and extending the freeze another five years is unjust; (2) no evidence has been publicly produced in the Proceeding that justifies or even explains extending the proposed freeze aside from the connection to the memorandum of understanding in the MOU4 late fee waiver (“MOU”), a document that the Majors only recently disclosed in their Reply; (3) very large numbers of songwriters and copyright owners of various domiciles around the world and national origins are unlikely to even know this Proceeding is happening and there still is no evidence that the unrepresented have appointed any of the participants to act on their behalf or were asked to consent to the purported settlement before the fact even if they were members of these organizations aside from the respective board of directors; (4) physical sales are still a vital part of songwriter revenue (which the Writers documented in the Prior Comment[14]); and (5) there are many just alternatives available to the Judges without applying an unjust settlement to the world’s songwriters who are strangers to the Proposed Settlement and in particular the MOU component (as the MOU will likely require membership in the NMPA to benefit consistent with prior MOUs).

[Read the full-length original filing here.]


[1] 86 FR 58626.

            [2] NMPA, NSAI, Sony Music Entertainment, UMG Recordings, Inc. and Warner Music Group Comments in Further Support of the Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations, Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV), Copyright Royalty Board (Aug. 10, 2021).

            [3] 37 C.F.R. §385.11(a).

            [4] Comments of Helienne Lindvall, David Lowery and Blake Morgan, Determination of Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV) (July 26, 2021) available at https://app.crb.gov/document/download/25533.

[5] 86 FR 33601.

            [6] Motion To Adopt Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations, Docket No. 21-CRB-0001-PR (2023-2027).

            [7]  Ms. Seale does not otherwise join in this comment.  We understand she is filing a separate comment regarding the additional materials.

            [8] The Writers’ reply was posted on The Trichordist website available at https://thetrichordist.com/2021/08/16/frozenmechanicals-crisis-unfiled-supplemental-comments-of-helienne-lindvall-davidclowery-theblakemorgan-and-sealeinthedeal/.  Parts of that unfiled comment are included in this comment.

[9] See 17 USC 801(b)(7)(a)(i).

                  [10]  As with the Writers prior submission in response to the First Notice, the Writers focus in this comment almost entirely on the Subpart B rates applicable to physical carriers under 37 C.F.R. §385.11(a).  

            [11] The Judges no doubt will be told many stories about how Subpart B configurations are not meaningful sales compared to streaming so rates deserve to be frozen.  This is a novel copyright argument without a statutory basis.  The theory is also not based on accurate facts as the Writers discuss extensively in the Prior Comment at paragraph 5 and will not repeat here.

            [12] There is a growing backlash to decades of delaying definitive action on song metadata and songwriter payments such as Credits Due campaign of the Ivors Academy and Abba’s Björn Ulvaeus.  See generally Chris Cooke, PPL Backs Björn Ulvaeus’s Credits Due Campaign, Complete Music Update (Oct. 4, 2021) available at https://completemusicupdate.com/article/ppl-backs-bjorn-ulvaeuss-credits-due-campaign/

            [13] See, e.g., H. Rep. 115-651 (115th Cong. 2nd Sess. April 25, 2018) at 5; S. Rep. 115-339 (115th Cong. 2nd Sess. Sept. 17, 2018) at 5 (“The Committee welcomes the creation of a new musical works database that is mandated by the legislation….Music metadata has more often been seen as a competitive advantage for the party that controls the database, rather than as a resource for building an industry on.” (emphasis added)).

            [14] See Prior Comment at 16.

#FrozenMechanicals Take 2: @sealeinthedeal Finds Some Facts on the NMPA Tax Return and MOU FAQ

[A little context: The public comments on the majors’ proposed settlement at the Copyright Royalty Board that freezes mechanical royalties on vinyl and CDs are again attracting first rate reporting and arguments. Public comments are designed to help the Copyright Royalty Judges focus on important nuances before they tell us all what’s fair.

Enter the connection between extending the fifteen year-old frozen mechanical rate for another five years in return for what may well be hundreds of millions under the unmatched “late fee waiver” settlement (total settlement value still undisclosed). It’s become obvious after the majors’ 11th hour reply comment in “#FrozenMechanicals Take One” that the majors have tied a settlement on what is essentially the late fee on black box mechanicals at the participating labels to getting a freeze on mechanicals. You can ask yourself how much of a risk it is that major publishers will sue their major label affiliates and what kind of a settlement avoiding that risk might drive.

NMPA 2018 Tax Return
NMPA 2019 Tax Return

Fair enough, right? Well, maybe not. Thanks to excellent open-source research by Austin music lawyer Gwendolyn Seale in her new frozen mechanicals comment, it turns out that there are a couple of loose ends. First, the National Music Publishers Association’s tax returns for 2018 and 2019 suggest that the organization received several million dollars from the late fee waiver program over two years.

Where that money finally came to rest is unclear but something about the size of that sum sounds like “employee year-end performance bonus” to me although that’s just a guess. (Not the first time the unmatched issue has come up–remember the New York Attorney General back in 2004 who dropped the hammer on labels and at least one publisher who had egregious cases of unpaid royalties to people like David Bowie, John Mellencamp, David Matthews, Dolly Parton and Sean Combs.)

Gwen also did a deep dive on past late fee waiver settlements (commonly called “MOUs”) dating back to 2009 or so. These also had similar connective tissue between past mechanical royalty freezes and the late fee settlement dating back many years. (It would not be a shock if some of the more cold-blooded publishers preferred taking the late fee than the black box royalties because a late fee is an interest payment that may not have to be shared with their writers…just sayin’. Let’s not forget who works for whom.)

Not only is the CRB being asked to repeat the sins of the past with the justification that they accepted it before, Gwen discovered yet another wrinkle in the open-source rules of the prior MOUs–you have to join the NMPA and pay dues in order to get paid with what is ostensibly your own money. See what they did there? That’s probably old news to those who also read the establishment press, but worth mentioning in case you missed it.]

Gwendolyn Seale, Esq.

Chief Copyright Royalty Judge Suzanne Barnett

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

SENT VIA ELECTRONIC DELIVERY

IN RE DETERMINATION OF ROYALTY RATES AND TERMS FOR MAKING AND DISTRIBUTING PHONORECORDS (Phonorecords IV)

Honorable Judges,

I am a music lawyer in Austin, Texas, and represent songwriters throughout the state of Texas. I appreciate the judges reopening the comment period with respect to the proposed settlement (“Proposed Settlement”) submitted by the three major labels, the National Music Publishers Association (“NMPA”) and the Nashville Songwriters Association International (“NSAI”) which, if adopted by the Judges, would freeze the statutory mechanical royalty rate at 9.1 cents for physical products and permanent digital downloads through 2027. For reference, my prior comment regarding the Proposed Settlement can be found in the footnote below,[1] and the purpose of this supplemental comment is to highlight the relevance of the Memorandum of Understanding 4 (“MOU4”) between the three major labels and the RIAA on the one hand and the NMPA and a select group of music publishers on the other hand (collectively “MOU Parties”) in the Judges’ consideration of the Proposed Settlement. As the Judges will see below, MOU4 appears to be additional consideration for the Proposed Settlement — consideration which is only able to be enjoyed by NMPA members. Binding the world’s songwriters to this Proposed Settlement when the overwhelming majority of songwriters cannot even reap the benefits of the additional consideration demonstrates there is no reasonable basis to adopt the rates and terms of the Proposed Settlement industrywide, and further, doing so would be patently unjust.

Please note that the views I am expressing here are not made on behalf of any client or the State Bar of Texas.

  1. THE PLAIN LANGUAGE OF MOU4 MORE THAN SUGGESTS IT IS ADDITIONAL CONSIDERATION FOR THE PROPOSED SETTLEMENT

When the three major labels, the NMPA and NSAI submitted their motion to adopt the Proposed Settlement to the CRB, included was the following language that raised concerns during the first round of comments:  

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.[2]

In my prior comment, I posed the question, “[if] this Memorandum of Understanding is irrelevant to the proposed settlement, why would it be referenced in the motion to adopt the settlement?” At the time of drafting the prior comment, I will honestly say I was not too familiar with the previous MOUs and associated NMPA Late Fee Programs (“Late Fee Programs”). Subsequently, I began perusing through the sparse number of media articles concerning the MOU stemming from Phonorecords I (“MOU1”), along with information listed on the Late Fee Program website, and the text of each MOU to date (MOU1, MOU2 and MOU3). Examining the text of the MOUs was eye-opening; it became readily apparent that each, and their associated Late Fee Programs, would never have come into existence if the MOU Parties had not submitted settlement proposals to the Judges in connection with mechanical rates for physical product and permanent downloads (i.e., the mechanical royalties paid by record companies). In other words, there is no Proposed Settlement without MOU4 and there is no MOU4 without the Proposed Settlement – the two are inextricably intertwined.  The longstanding history of this practice is first exhibited in the language from Section 1.0 of MOU2:

This MOU 2 shall not go into effect unless a proposed settlement of the 2013-2017 Proceeding is submitted to the Copyright Royalty Judges for approval, which the Parties anticipate happening promptly after this MOU 2 has been entered into by all Parties[3].

The key word to examine here is “unless.” MOU2 would not go into effect unless a proposed settlement was submitted to the CRB in Phonorecords II (2013-2017). If the MOU Parties had not presented the proposed settlement in Phonorecords II to the CRB, MOU2 would have never gone into effect and thus, no Late Fee Program for that time period.  A close review of the plain language of MOU2 is critical as it more than suggests MOU2 served as additional consideration for the proposed settlement in Phonorecords II, which extended the 9.1 cent mechanical rate freeze for physical products and permanent downloads that commenced in 2006.

Fast-forward to the language in Section 2 of MOU3, where the same condition is visible:

This MOU 3 is a separate, conditional agreement that shall not go into effect until NMPA and SME submit a motion to adopt a proposed settlement of the 2018-2022 Proceeding as to rates and terms presently addressed in 37 C.F.R. Part 385 Subpart A to the Copyright Royalty Judges, which the Parties anticipate happening promptly after this MOU 3 has been signed by all of the Parties. It is understood that SME, UMG, WMG, RIAA and NMPA will sign this MOU 3 at the outset, and that NMPA will use its best efforts to obtain the signatures of all the music publishers represented on its Board of Directors as additional Parties to this MOU 3 by October 28, 2016. The term of this MOU 3 shall commence on the date when a motion to adopt such a settlement is submitted to the Copyright Royalty Judges (the “Effective Date”), and continue until the End Date…[4]

Despite the removal of the word, “unless,” exhibited in MOU2, and the replacement with the word, “until,” the analysis remains the same. MOU3 appears to have been additional consideration for the proposed settlement in Phonorecords III, which furthermore extended the 9.1 cent mechanical rate freeze for physical products and permanent downloads.[5]

Finally, the same condition is found in MOU4’s language:

This MOU4 is a separate, conditional agreement that shall not go into effect until NMPA, SME, WMG’s affiliate Warner Music Group Corp., and UMG submit a motion to adopt a proposed settlement of the Phonorecords IV Proceeding as to statutory royalty rates and terms for physical phonorecords, permanent downloads, ringtones and music bundles presently addressed in 37 C.F.R. Part 385 Subpart B (the “Subpart B Configurations”), together with (1) certain definitions applicable to Subpart B Configurations presently addressed in 37 C.F.R. § 385.2 and (2) late payment fees under Section 115 for Subpart B Configurations presently addressed in 37 C.F.R. § 385.3, together with certain definitions applicable to such late payment fees presently addressed in 37 C.F.R. § 385.2, for the rate period covered by the Phonorecords IV Proceeding, which the Parties anticipate happening promptly after this MOU4 has been signed by SME, UMG, WMG, RIAA, NMPA, Sony Music Publishing, Universal Music Publishing Group, and Warner Chappell Music, Inc. (the “Initial Signatories”)…

The plain text of MOU4 and likewise, the plain text of MOU2 and MOU3 demonstrates MOU4 serves as additional consideration for the Proposed Settlement. If this is the case, the Proposed Settlement does not provide a reasonable basis for establishing Subpart B rates and terms because MOU4 is consideration which can only be enjoyed by select participants in Phonorecords IV, while songwriters worldwide are bound to rates and terms they do not approve and for which they receive no benefit of the MOU4 bargain. Further, in a stunning display of pretzel logic, if a self-published songwriter even wants to reap the benefits of MOU4, such songwriter would have to join the NMPA as a publisher to participate in Late Fee Program – which would entail paying to join an organization that has agreed multiple times to freeze the mechanical royalty rate for physical and download formats.[6]

Songwriters, including those who have submitted comments in this proceeding, have made it abundantly clear that they do not support extending a mechanical royalty rate freeze. So, the question becomes whether the Judges believe it is just and reasonable to subject songwriters to a rate freeze that they oppose, understanding that they will either never benefit from the additional consideration for the freeze or will have to pay dues to a party proposing the freeze they oppose to benefit from the additional consideration. Therefore, I ask the Judges to please determine whether MOU4 is additional consideration for the Proposed Settlement.

2. IF ALL SONGWRITERS ARE TO BE BOUND TO THE PROPOSED SETTLEMENT, ADDITIONAL TRANSPARANCY IS WARRANTED

The MOU Parties stated in their “Comments in Further Support of the Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations” (“Reply Comment”) that they did not present MOU4 to the Judges as they regarded it to be routine and irrelevant to the Judges’ determination of the Proposed Settlement.[7] The MOU Parties further stated the payments under the previous MOU processes have resulted in hundreds of millions being properly paid to publishers and songwriters and enabled more successful identifications of musical works.[8] Additionally, the MOU Parties contended the history of the MOUs is no secret, pointing to a couple of articles from 2009-2010 and the NMPA Late Fee Settlement website.[9]

While the MOU Parties can generally state MOU4 and prior MOUs are no secret, the MOU process to date has hardly been transparent. While some media outlets published information about MOU1 in 2009-2010, over the last decade there has been virtually no reporting on the MOU program, encompassing MOU2 and MOU3. With respect to MOU1, outlets reported approximately $275 million was paid out from the labels and distributed to publishers via marketshare methodology.[10] Amounts paid out pursuant to MOU2 and MOU3 have not been publicly disclosed – and should be if MOU2 and MOU3 were additional consideration which continued the mechanical rate freeze to the present day.

The MOU Parties further state, “[c]ontrary to the conspiracy theories of others, there is no secret payoff to major publishers or to any other MOU participant.”[11] It is not conspiratorial to simply point out that the public is unaware of the amounts payable to publishers under these MOUs; it is further obvious the major publishers benefit from a settlement system which distributes funds to publishers in accordance with major label and HFA data via marketshare methodology. Additionally, according to the NMPA’s 2018 and 2019 IRS 990 filings, “Royalty Late Fee Program” was listed as an income line-item, reflecting $2,908,988.00 and $768,368.00, respectively, as revenue for the organization. If in fact this line item pertains to commissions taken by the NMPA on prior Late Fee Programs established by the MOUs, there is absolutely a payoff to a MOU participant, albeit, not secret.

Note that I have no issue with the notion of these MOUs and the Late Fee Programs, or which sums are paid out to whom, provided that the MOUs and associated Late Fee Programs are truly irrelevant deals that do not serve as additional consideration for settlements to freeze the statutory mechanical rate for physical and download configurations industrywide.  

3. IF THE PROPOSED SETTLEMENT IS NOT WITHDRAWN, THE JUDGES SHOULD APPLY DIFFERENT RATES AND TERMS TO PUBLISHERS AND SELF-PUBLISHED SONGWRITERS WHO DO NOT OPT INTO MOU4 AND THE LATE FEE PROGRAM

Notwithstanding the repeated practice of the CRB adopting settlements freezing the mechanical rate for physical products and permanent downloads proposed by parties who wield the most power in the music business, the current situation is different and should be treated as such. Many songwriters oppose the Proposed Settlement but cannot afford to participate in this proceeding. Songwriters and other key songwriter advocacy organizations oppose this Proposed Settlement, proffering comments that the Proposed Settlement is unreasonable because songwriters do not wish this revenue stream to be frozen for yet another five years during a vinyl resurgence amid a worldwide pandemic that continues to ravage the world’s economy. While there has been considerably more public outcry with respect to this proceeding than those prior, luckily, there are solutions available which will reverse this course and are entirely within the control of the MOU Parties and the Judges.

First, the MOU Parties can withdraw the Proposed Settlement and voluntarily agree to a rate increase for Subpart B configurations – and continue to proceed with their Late Fee Program. This act will not only bring the entire songwriter and music publisher communities together, but also it will serve to extinguish one of the streaming services’ key benchmarks in their testimony (since every streaming service participant in Phonorecords IV is using this Proposed Settlement to justify their abysmal streaming rate proposals).

Alternatively, if the foregoing is not an option, the terms of the Proposed Settlement should apply only to the MOU Parties and the NMPA publishers that subsequently opt-into the Late Fee Program, while the Judges determine different rates to be applied to everyone else. To be clear, again, I have no issue with the concept of MOU4 or the Late Fee Program, rather it is inequitable for songwriters to be bound to the terms of a settlement which they do not support, particularly when they do not receive any benefit from the consideration attached to the settlement. 

CONCLUSION:

Prior to this Phonorecords IV proceeding, it appears the only person who publicly opposed any settlement to freeze the statutory mechanical rate for physical and download configurations was George Johnson, a pro se self-published songwriter participant. While the Judges’ determination of rates and terms for physical and download configurations in Phonorecords III is final, I believe it is worth briefly revisiting an excerpt from the Judges’ determination which addressed Mr. Johnson’s opposition to the Phonorecords III settlement:

But, Mr. Johnson has not even hinted at evidence to support his argument that the representative negotiators are engaged in anti-competitive price-fixing at below-market rates. The very definition of a market value is one that is reached by negotiations between a willing buyer and a willing seller, with neither party being under any compulsion to bargain.[12]

While Mr. Johnson may not have articulated his opposition to the Phonorecords III proposed settlement in a lawyer-like manner, he clearly understood years ago that there was something awry with respect to these proposed settlements. It is evident that the “something awry” happens to be these MOUs, which I never would have realized had the Judges not reopened the comment period to specifically address MOU4. The representative negotiators in these settlements represent “willing buyers” and “willing sellers” who are effectively the same parties at the corporate level. The “willing sellers” (i.e., the major publishers/ NMPA) are under compulsion to bargain so they can enjoy the compensation associated with the Late Fee Program. When such a settlement is adopted and applied industrywide, we are posed with an end result of “unwilling sellers” (i.e., songwriters worldwide) tethered to below-market rates who will not enjoy the benefits of the additional consideration – MOU4 and the associated Late Fee Program. 

The Judges have a duty to all songwriters – from the millions who are unaware the CRB exists, to the millions who do not have the financial resources to participate in CRB proceedings, to the millions who do not speak English (in this country and abroad) and cannot follow this proceeding if they wanted to– to determine whether this MOU4, a side agreement which benefits a select few, is in fact additional consideration for the Proposed Settlement which would freeze statutory mechanical royalty rate for physical products and permanent downloads through 2027. And if the Judges determine this is true and the MOU Parties are unable to withdraw the Proposed Settlement, the Judges should establish different rates and terms to be applied to all other songwriters and publishers.

Thank you for re-opening the public comment period and for your consideration.

Gwendolyn Seale

November 22, 2021


[1]Prior Comment, available at https://app.crb.gov/document/download/25534.

[2] Motion to Adopt Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations, Docket No. 21–CRB– 0001–PR (2023–2027) (May 25, 2021) (Proposed Settlement).

[3] Memorandum of Understanding 2 at 1.

[4] Memorandum of Understanding 3 at 2-3.

[5] This analysis is further exhibited by the content in this article, which provides a recap of the 99th NMPA annual meeting: https://www.musicweek.com/publishing/read/us-publishers-push-for-music-industry-unity-at-nmpa-agm/065029.

[6] FAQ 8, available at http://www.nmpalatefeesettlement.com/mou3/faq.php; FAQ 3, available at https://www.nmpa.org/boardmembers/faqs/.

[7] Comments in Further Support of the Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations,  Docket No. 21–CRB– 0001–PR (2023–2027) (August 10, 2021).

[8] Id.

[9] Id. 

[10]Publishing Briefs: NMPA Late Fee Site, Melvin Brown, Peermusic, BILLBOARD (Jan. 8, 2010), available at https://www.billboard.com/music/music-news/publishing-briefs-nmpa-late-fee-site-melvin-brown-peermusic-1213394/

[11] See supra note 6.

[12] 37 CFR Part 385 [Docket No. 16–CRB–0003–PR] Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords III); Subpart A Configurations of the Mechanical License.

Don’t Forget: CRB Comments Due Monday on Frozen Mechanicals

If you were wondering why your mechanical royalty is still 9.1¢ on vinyl and downloads, it’s because the rate was set by the government through an agency called the Copyright Royalty Board.  As it turns out, the Copyright Royalty Board is currently deciding what your mechanical royalty should be for 2023-2027 on physical and downloads. 

You probably noticed that your mechanical hasn’t increased since 2006–nearly a generation of songwriters have grown up with that frozen rate. (For more background on this, read Chris’s post on frozen mechanicals and controlled compositions.) 

The NMPA, NSAI and the major labels are trying to get the Copyright Royalty Board to extend the freeze another five years with not even an inflation increase. (For more background on frozen mechanicals, The Trichordist has a bunch of posts about it.)

The public does get to comment on these rates. The frozen rates are so bad that the comments were all opposed to the proposed settlement. The comments were so negative that the Copyright Royalty Board took the unprecedented step of re-opening the public comments.

That reopened comment period ends on Monday, November 22. You still have time to comment so make sure you set up your commenter account with the Copyright Royalty Board.  Chris has a good post on MusicTech.Solutions that explains how to get your account.

Your comments matter! The Copyright Royalty Board has to take into account the public’s participation in the rules they make and nobody has ever objected to the frozen mechanical rate before (mostly because nobody knew it was happening back in Washington, DC). And here we are 15 years later.

#FrozenMechanicals Crisis: Unfiled Supplemental Comments of @helienne Lindvall, @davidclowery, @theblakemorgan and @sealeinthedeal

[Chris Castle says: Here’s the context of this post. As it turns out, the CRB extended the filing deadline for comments due to what they said was a technical difficulty, although we have yet to meet anyone who couldn’t file their comment on time. This extension seems contrary to the CRB’s February revised rules for filings by participants. The CRB procedures presciently have an email filing procedure in the case of technical problems arising out of their “eCRB” document filing system. It will not surprise you to know that the NMPA, NSAI, and major labels filed what is essentially a reply comment after the close of business on the last day of the extension, after at least our if not all commenter accounts were disabled, the practical effect of which was that no one could respond to their comments through the eCRB, i.e., on the record.

We tried, and drafted a reply to the most important points raised in the majors’ comment. We emailed our comment to the CRB during business hours on the next day in line with the CRB’s own “Procedural Regulations of the Copyright Royalty Board Regarding Electronic Filing System” (see 37 CFR §303.5(m)) or so we thought. But not so fast–we were told by an email from a nameless person at the CRB that we would need to file a motion in order to get approval to file the comment less than 24 hours late for good cause–which of course, we are not able to do since we are not “participants” in the proceeding. See how that works? According to this person’s email, we’d also need to contact CRB technical support to get our accounts reopened which would make the comment later still even if we were able to file a motion. Instead, we decided to just post our reply comment on the Internet. A wider audience. Unfortunately not part of the record, but we’ll see what happens.]

SUPPLEMENTAL COMMENTS OF HELIENNE LINDVALL, DAVID LOWERY, BLAKE MORGAN  AND GWENDOLYN SEALE OBJECTING TO PROPOSED SETTLEMENT OF SUBPART B RATES

            This comment is in reply to the comment[1] filed by the Copyright Owners and the Joint Record Company Participants (the “Majors”) time-stamped after the close of business on August 10, 2021 and made available on the CRB docket the morning of August 11, 2021, i.e., after the deadline established by the Judges in the Proposed Rule published at 86 FR 33601 that would codify the Proposed Settlement.[2] 

            We ask the Judges’ leniency in permitting our late-filed supplemental comment to be made a part of the record in hopes that our responsive discussion will be helpful to the Copyright Royalty Board in resolving the frozen mechanicals crisis.

            This comment is filed on behalf of Helienne Lindvall, David Lowery and Blake Morgan who timely filed their comment on July 26, 2021[3] in accordance with the proposed rule.  This comment is also filed by Gwendolyn Seale who timely filed her own comment[4] in accordance with the proposed rule.  Their respective biographical information may be found in their previously filed comments.

            We will briefly discuss what we think are the essential points the Judges should consider that the Majors have raised in their comment.

I. Discussion

            A.  Authority:  As multiple commenters have stated, it is unclear whether the NMPA and NSAI have been authorized by their respective memberships of over 300 music publishers and over 4,000 songwriters to propose and/or accept a settlement freezing the statutory rate for Subpart B configurations through 2027. Thus, we ask the Judges to seek out evidence demonstrating that self-published songwriters and independent publishers have authorized the NSAI and NMPA to accept this Proposed Settlement.  We do not question the integrity of the Majors, but we do have questions about the negotiation process that have yet to be answered. 

            References to a broad “consensus” must be questioned because there is both a lack of evidence of consensus and also evidence in the record that at least 12 international songwriter groups object to the Proposed Settlement.  Independent songwriters, including Ms. Lindvall, Mr. Lowery and Mr. Morgan, also object.  It seems simple enough for the Judges to require some evidence of consent to the Proposed Settlement given the awesome power of the government that the Judges are essentially asked by Congress to delegate to the Majors through a voluntary negotiation.  This seems to us to be good cause for further verification of authority to make the deal in the first place.

            B.  The Judges Predicted the Current Opposition in their Phonorecords III Determination

The Majors rely on a citation that both demonstrates the foresight of the CRB and on balance tends to support our position that the NMPA and the NSAI likely lack the requisite authority to negotiate on behalf of all the world’s songwriters.  The Majors invite the Judges to participate in a thought experiment[5] that actually serves quite well to highlight the issues we have raised in the respective comments regarding both the authority of the NMPA and NSAI and the implied below-statutory rates bootstrapped indirectly by means of the freeze:

As the Judges have noted, “NMPA and NSAI represent individual songwriters and publishers,” and would not “engage[] in anti-competitive price-fixing at below-market rates,” since they must “act[] in the interest of their constituents” lest their constituents “seek representation elsewhere.” [Phonorecords III] at 15298.[6]

Respectfully, the problem is way beyond seeking representation elsewhere—the problem is that there was likely no “representation” in the first place if you take “representation” in the legal sense (such as that of a common agent) which we gather is how the Judges intended the use of the word.  Likewise, there is a difference between an agent’s principal and a “constituent”, i.e., a difference between one who expressly authorizes an agent to represent them in certain circumstances and one who is allowed to vote on who that representative is to be.  Neither is the case for many songwriters who have commented in the record for the current proceeding.  We will leave their record to speak for themselves as to why they have sought “representation elsewhere” but it appears that it is for the same reason that they are not participants in the proceeding—they can’t afford the justice and this is why they ask the Judges to give special weight to their comments in the CRB’s deliberations.

            But the Major’s thought experiment and speculation continues in an interesting coda regarding below statutory licensing (generally not permitted as a matter of contract in likely tens of thousands of co-publishing and administration agreements):

And certainly it would not be in the interest of any major publisher to agree to extend a below-market mechanical royalty rate to the competitors of its sister record company.[7]

While the thought experiment and speculation sound innocuous, consider what is being said here.  First, the Majors identify their interest as that of “major publishers”; not all publishers, not all songwriters, but “major publishers.”  Then the Majors go on to say that it would not be in the interest of the major publishers to give a “below market” rate to their sister record company’s competitors

            Of course, there is no market rate in the U.S. and essentially never has been; the Judges have the unenviable task of divining a market rate to be made statutory.  We would therefore modify the thought experiment to include “below statutory”.  Now we are left with the assertion that major publishers use the statutory rate to protect their record company affiliates from competition—not that they fulfill their role as true blue fiduciaries for their songwriters by refusing to grant below-statutory rates (either directly or indirectly), but rather being hard on the competitors of their affiliates.   And they are using their market power to impose a rate on the world that they seem to say protects their affiliates.  Extending the frozen mechanical rate certainly doesn’t protect their songwriters—the Judges have ample evidence that many songwriters object to the extension.  But in the Majors’ own words we now know cui bono, and the benefit goes back to Phonorecords III and likely earlier.

            But let us extend the thought experiment a little bit further.  Who is an unrelated “competitor” of the three major labels and all their distributed labels, DIY operations like The Orchard, joint ventures and so on and on and on?  That must be a pretty small group of true independents who have cobbled together a distribution network for the Subpart B configurations to deal with the logistics of manufacturing, warehousing, shipments, returns, and the like—branch distribution is what makes a major label a major.  Perhaps the Majors could provide some examples of these “competitors”?  Clearly though, the citation demonstrates that the Judges sensed many years ago the very situation now unfolding on the record in the frozen mechanicals crisis.

            C.  Comparisons to Largely Unopposed Prior Rulemakings Compare Apples to Oranges:  We understand that the Majors claim to have proposed a similar settlement in Phonorecords III resulting in a freeze of the statutory rate for Subpart B configurations, and that the Judges then-adopted that settlement.  We also understand that there was little if any formal objection to that freeze in Phonorecords III at least by comparison to the number of objecting commenters in Phonorecords IV.  The Judges are now presented with a significant number of objectors who entirely reject the application of the Proposed Settlement to the world in a kind of bootstrapping move.  Respectfully, comparing the field in Phonorecords III to Phonorecords IV is comparing apples to oranges and creating a pomegranate.

            We also acknowledge the millions of dollars that the NMPA asserts that it spent litigating these rates some fifteen years ago, but this assertion perhaps proves too much.  The cost of participating in any of these proceedings is exactly the reason why objecting songwriters understandably rely entirely on the Judges to seek fairness and justice.  They cannot afford to participate in these proceedings themselves and trust the Judges to balance all the facts not just the arguments of rich people and corporations. 

Not only do the Majors gloss over the songwriters’ objections, but their reasoning is actually fallacious. Because both proceedings are called “Phonorecords” does not make them similar in regard to the frozen mechanicals crisis.  The facts on the ground are wildly different between III and IV.  Moreover, we hear a subtext in the Major’s argument that if a configuration experiences declining sales, that is a reason for the government to reduce the royalty rate.  Aside from a lack of statutory authority, this is also fallacious reasoning because the Majors have produced no evidence that the per-unit price for Subpart B configurations has declined, and if anything, we are informed that the dealer price has increased in the case of vinyl.[8] 

We respectfully ask that the Judges consider these flaws in the Majors’ positions and give them their due weight. 

            D.  The Elusive MOU:  The Majors tell the Judges that: 

The MOU entered into contemporaneously with the Settlement is irrelevant to the Judges’ consideration of the Settlement, and does not call into question the reasonableness of the Settlement.[9]

            Respectfully, if the MOU is “irrelevant” to the settlement, why did they bring it up at all?  Recall that we previously asked the Judges to question whether the MOU was additional consideration for extending the frozen mechanical rates.  While others may have, we did not concern ourselves with whether the MOU was a “sweetheart deal” as we knew nothing about it.  Rather our issue was whether the MOU was a quid pro quo of additional consideration for the frozen rates that was enjoyed by a limited group of participants in the settlement but was not enjoyed by strangers to the deal who were still subject to the frozen rate.  Indeed, it appears that this is exactly the case.  While we appreciate that the Majors have now disclosed the MOU as part of their Reply, nothing in the Majors’ comment ameliorates this fundamental concern.

            A significant reason why the concern still exists is language in the now-disclosed MOU that certainly has the ring of a quid pro quo directly related to extending the frozen Subpart B rates in Phonorecords IV:

This MOU4 is a separate, conditional agreement [the quid] that shall not go into effect until [the quo] NMPA, SME, WMG’s affiliate Warner Music Group Corp., and UMG submit a motion to adopt a proposed settlement of the Phonorecords IV Proceeding as to statutory royalty rates and terms for physical phonorecords, permanent downloads, ringtones and music bundles presently addressed in 37 C.F.R. Part 385 Subpart B (the “Subpart B Configurations”), together with (1) certain definitions applicable to Subpart B Configurations presently addressed in 37 C.F.R. § 385.2 and (2) late payment fees under Section 115 for Subpart B Configurations presently addressed in 37 C.F.R. § 385.3, together with certain definitions applicable to such late payment fees presently addressed in 37 C.F.R. § 385.2, for the rate period covered by the Phonorecords IV Proceeding, which the Parties anticipate happening promptly after this MOU4 has been signed by SME, UMG, WMG, RIAA, NMPA, Sony Music Publishing, Universal Music Publishing Group, and Warner Chappell Music, Inc. (the “Initial Signatories”).[10]

            To the contrary, a fair reading of the MOU suggests, and may even require, that the consideration for the MOU is tied directly to extending the frozen rates in the Proposed Settlement.

            Moreover, we can revisit the authority issue raised above given language in the MOU.  Consider the following post-closing condition imposed on the NMPA by the plain terms of the MOU:

It is understood that only the Initial Signatories will sign this MOU4 at the outset, and that NMPA shall use its best efforts to obtain the signatures to this MOU4 by all of the remaining Parties within two (2) weeks thereafter.[11]

            If the NMPA had the authority to bind these many publisher “Parties” to the MOU, why would there be a need to impose such a post-closing condition on the NMPA?  There may be an explanation for this structure, but it is not obvious to us.

            We also find it somewhat unusual that neither the Reply of the Majors nor the now-disclosed MOU reference a dollar figure that is changing hands as far as we can tell.  This could be a lot of cash.  In the 2009 Billboard article cited by the Majors, the MOU that was the subject of that reporting was valued at “up to $264 million.” [12] However “routine” the MOU process is, a $264 million payment in a “pennies business” is not routine.  We would appreciate a further disclosure of the amount at issue in the current MOU.  As they say, it is evidently not a secret.

            Respectfully, it does not appear that one can completely exclude the relevance of the MOU as consideration for extending the freeze on Subpart B royalties at least on the face of the documents provided.  As strangers to the deal do not have the opportunity to subject these assertions to the crucible of cross-examination, we hope the Judges can welcome the reliance on them of those who cannot afford to participate in this proceeding.

II.  Conclusion

            In conclusion, we respectfully ask the Judges to consider the foregoing comments along with the many heartfelt and well-reasoned comments by others in Phonorecords IV.  Unfortunately, as is too often the case in the music business, we think that the sum and substance of the Majors’ argument is that “we are the wealthy and therefore we win.”

            We do not have to remind the Judges that this is the antithesis of our Constitutional system of government.

                                                                         Respectfully submitted.

Christian L. Castle

Gwendolyn Seale


[1] Comments in Further Support of the Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations,  Docket No. 21–CRB– 0001–PR (2023–2027) (August 10, 2021)(Reply).

[2] Motion to Adopt Settlement of Statutory Royalty Rates and Terms for Subpart B Configurations, Docket No. 21–CRB– 0001–PR (2023–2027) (May 25, 2021) (Proposed Settlement).

[3] Comment of Helienne Lindvall, David Lowery and Blake Morgan, Docket No. 21–CRB– 0001–PR (2023–2027) (July 26, 2021) available at https://app.crb.gov/document/download/25533

[4] Comment of Gwendolyn Seale, Docket No. 21–CRB– 0001–PR (2023–2027) (July 26, 2021) available at https://app.crb.gov/document/download/25534

[5] Reply at 5.

[6] Id. (emphasis added).

[7] Id.

[8] See, e.g., Samantha Handler, Copyright Panel Rethinking Song Royalties Streamers Pay, Bloomberg Law (Aug. 12, 2021) (“Royalties from downloads and CDs haven’t increased since 2006, but still make up a significant portion of income for independent songwriters.”) available at https://news.bloomberglaw.com/ip-law/copyright-panel-rethinking-song-royalties-streamers-pay

[9] Reply at 6 (emphasis added).

[10] Reply at 19, MOU-4 at 2 (emphasis added).

[11] Id. at 20, MOU-4 at 3.

[12] Ed Christman, NMPA, Major Labels Sign Terms of Agreement, Billboard (Oct. 7, 2009) available at https://www.billboard.com/articles/business/1264471/nmpa-major-%20labels-sign-on-terms-of-agreement.

#FrozenMechanicals Crisis: Comments of @helienne Lindvall, @DavidCLowery and @TheBlakeMorgan to the Copyright Royalty Board

Before the

United States Copyright Royalty Judges
Copyright Royalty Board

Library of Congress

Docket No. 21–CRB–0001–PR
               (2023–2027)

COMMENTS OF HELIENNE LINDVALL, DAVID LOWERY AND BLAKE MORGAN

            Helienne Lindvall, David Lowery and Blake Morgan submit these comments responding to the Copyright Royalty Judges’ notice soliciting comments on whether the Judges should adopt the regulations proposed by the National Music Publishers Association, Nashville Songwriters Association International, Sony Music Entertainment, UMG Recordings, Inc. and Warner Music Group Corp. as the so-called “Subpart B” statutory rates and terms relating to the making and distribution of physical or digital phonorecords of nondramatic musical works that, if adopted by the Judges, would apply to every songwriter in the world whose works are exploited under the U.S. compulsory mechanical license (86 FR 33601).[1]

            We object to the proposed rates and terms for the following reasons and respectfully suggest constructive alternatives.  The gravamen of our objection is that (1) the Subpart B rates have already been frozen since 2006; (2) no evidence has been publicly produced in the Proceeding that justifies or even explains extending the proposed freeze; (3) very large numbers of songwriters of various domiciles around the world do not even know this proceeding is happening and have not appointed any of the parties to act on their behalf or been asked to consent to the purported settlement; (4) physical sales are still a vital part of songwriter revenue; and (5) there are many just alternatives available to the Judges without applying an unjust settlement to the world’s songwriters.

 A.  Statement of Interests.

By way of background, following are short summaries of the commenters’ respective biographies demonstrating their respective significant interests in the subject matter of this proceeding.

            Helienne Lindvall:  Ms. Lindvall is an award-winning professional songwriter, musician and columnist based in London, England. She is Chair of the Songwriter Committee & Board Director, Ivors Academy of Music Creators (formerly British Academy of Songwriters, Composers & Authors BASCA) and chairs the esteemed Ivor Novello Awards. She also is the writer behind  the Guardian music industry columns Behind the Music and Plugged In and has contributed to a variety of publications and broadcasts discussing songwriters’ rights, copyright, and other music industry issues.

            David Lowery:  Mr. Lowery is the founder of the musical groups Cracker and Camper Van Beethoven and a lecturer at the University of Georgia Terry College of Business and is based in Athens, Georgia.  He has testified before Congress on the topic of fair use policy[2]  and is a frequent commentator on copyright policy and artist rights in a variety of outlets, including his blog at TheTrichordist.com.   He has been a class representative in two successful class actions by songwriters against music streaming services.

            Blake Morgan:  Mr. Morgan is a New York-based artist, songwriter, label owner, music publisher, and the leader of the #IRespectMusic campaign[3] which focuses on supporting fair payment for creators across all mediums and platforms including supporting the American Music Fairness Act sponsored by Representatives Deutch and Issa.[4]  Mr. Morgan also lectures on artists’ rights at music, business, and law schools across the United States. 

Helienne Lindvall, David Lowery and Blake Morgan (collectively, the “Writers”) are independent songwriters who own the copyrights to many of their songs. They previously were amici in Google v. Oracle[5] together with the Songwriters Guild of America.  In some instances, they have written songs whose copyrights they have transferred in limited parts and in some cases for limited periods of time to major music publishers.  In other cases, their songs are not owned by major music publishers but are administered by one or more of them, in many cases also for limited periods of time.  In some instances, these transfers were in perpetuity subject to certain statutory or contractual termination rights.  They also have retained the copyrights to many of their songs and are self-administered songwriters with respect to those nondramatic musical works. 

            We thank the Copyright Royalty Judges for inviting the public to comment on the proposed regulations in the docket referenced above (“Proceeding”) and the purported “settlement”[6] that in large part resulted in the Copyright Royalty Board’s proposed regulations.

B.  Objections, Discussion and Solutions

            We appreciate this opportunity to make our views known and hope that our suggestions are helpful to the Judges in trying to solve the frozen mechanicals crisis.  We also appreciate that the Judges seek to do justice and find a fair result given their appointed role of administering the awesome power of the government to compel songwriters to accept all rates and terms of the statutory license.

1.  Lack of Authority to Negotiate for Non-Participants

            As a threshold matter, we think it is important to clarify the source of authority for the purported settlement as set forth in the Motion.  Some play a bit fast and loose with who represents whom in a parade of glittering generalities and hasty generalizations.  The Writers are not members of the Nashville Songwriters Association International and have not authorized NSAI to negotiate any agreement on their behalf, nor would the Writers ever authorize any lobby shop to do so. 

            Neither are the Writers members of the National Music Publishers Association, nor have Writers authorized the NMPA to negotiate any agreement on their behalf.  The NMPA has many members but we seriously doubt that the NMPA has expressly obtained authority from any of its members to negotiate the purported settlement on their behalf, outside of its board of directors.  That authority may give the NMPA employees cover, but is pretty weak sauce as authority for the negotiation of frozen rates to be applied to all the songwriters in the world. 

            We doubt that any other songwriter (outside of the insiders) or that any copyright owner gave consent either, aside from members of the NMPA Board of Directors authorizing employees of the NMPA to accept (or perhaps even propose) frozen rates on behalf of the board.  Neither do we see any evidence that the NMPA or NSAI were appointed a “common agent” by copyright owners to set prices and otherwise negotiate and agree upon the terms and rates under Subpart B.[7]  Therefore, we encourage the Judges to inquire further to determine if an appointment was a necessary condition for settlement or if the majority are claiming a kind of misconstrued authority, perhaps with the best of intentions.  One person’s negotiation strategy is another’s catastrophe.

            We anticipate that the Judges will take that position that the Writers will be “bound” by the purported “settlement” in the Motion among the NMPA (which owns no copyrights), the NSAI (which owns no copyrights), and the major labels (which in theory own no musical work copyrights).  We find it astonishing that entities that do not appear to represent, or to have been appointed a common agent of, all the persons to be bound by the settlement, are still able to use the Copyright Royalty Board to bind nonparties to a settlement.  This seems at best contrary to American constitutional jurisprudence requiring the consent of the governed and at worst destructive of the ends of government. 

            If anyone contests our position that the parties to the settlement had no authority to bind strangers to the deal, let them come forward with a common agent appointment, board minutes, board votes, membership votes, court ruling or other evidence of due process to disclose how this purported settlement described in the Motion was actually approved and which copyright owners authorized the NMPA and NSAI to conclude the agreement on their behalf (and, therefore, which did not). 

            We think that what such disclosure will demonstrate at most is that the respective boards of directors of the two organizations[8] authorized the settlement.  Since neither the organizations nor their respective boards were likely authorized to accept a frozen rate by strangers to that deal, the board members may have merely indicated their own company’s intention to be bound by the settlement.  They likely had no actual authority to do more. 

Even this seems odd.  Each NMPA board member who represents a publisher presumably would be agreeing on their own behalf.  It is unclear what the NSAI board actually approved, since NSAI owns no copyrights and at least some of the songwriter board members are likely signed to publishers, perhaps some or all of the same publishers who were voting on the NMPA board.[9]  Murkiness abounds.  So, if anyone says that their board approval resulted in some kind of “consensus” binding on strangers, that may be something of a misdirection that does not consider the obvious and customary limitations of a board’s authority.  We respectfully ask the Judges to get to the bottom of exactly how this happened by asking for supplemental briefs or such other means as the Judges deem appropriate.

The Writers are in two different groups that fairly are not represented in the Proceeding.  First, Writers are in the very large and global group of songwriters and copyright owners who cannot afford to participate in the Proceeding.  As the Judges are likely aware, yours is very rarified air where only the very rich drive the process but all songwriters must bear the burden of the result.  Songwriters and copyright owners living outside the United States (and even those living outside of Washington, DC)  are essentially prevented from participating at hearings in a far-away capitol although the Judges’ rulings directly affect their works when exploited in America.  This is how process becomes punishment.[10]

            Second, the Writers are in another bucket with some songs still co-published or administered by publishers that may be represented by the NMPA in the settlement—we do not know because individual publishers did not sign the Motion in their own names.  None of those publishers have consulted with the Writers about freezing the statutory royalty rates for yet another five years and essentially granting a reduced rate license without our permission.  Many co-publishing or administration agreements include a restriction on the publisher that prohibits them from granting licenses at less than the statutory rates—songwriters did not consider negotiating an additional restriction that would prohibit the publisher from lobbying to indirectly reduce the rate through freezing the statutory rate and then bootstrapping that agreement to apply to the world through the CRB. Perhaps the CRB will give songwriters a reason to start negotiating a “no frozen rate lobbying” marketing restriction in future deals.

            Respectfully, the Judges should not enable these publishers to do indirectly that which they cannot do directly.  We would ask the Judges to inquire further and opine as to whether such marketing restrictions are at work in the purported settlement as to songwriters or publishers administered by any of the settling publishers.  Since those publishers are not individually parties to the settlement, we have no way of confirming who is in and who is not.

            Regardless, Writers did not authorize anyone to negotiate the frozen rates on their behalf and never would.  If the Judges adopt the proposed settlement without a mechanism to obtain consent of those they govern, such a ruling seems to us to fly in the face of all the fundamental building blocks of democracy and in particular American Constitutional democracy.  Accordingly, Writers reserve the right to challenge any such decision to freeze mechanicals on a number of grounds[11] including due process, equal protection and 5th Amendment takings.

            The parties to the purported settlement would have the Judges believe that because they claim that ‘‘the settlement represents the consensus of buyers and sellers representing the vast majority of the market for ‘mechanical’ rights for Subpart B Configurations”[12] and seem to ask the CRB to accept without question the lack of evidence of the authority to negotiate the settlement in the first place which belies the unelected “consensus.”  It must be said that on the one hand, songwriters are not polled to determine what they want in the way of rates, but on the other hand their number or the number of their works are used to justify frozen rates to argue for a “majority” view (when songwriters were never asked if they want the freeze).  Such “consensus” is chimerical and is, frankly, an equivocation that defies a common definition[13] of the word “consensus” that we find inapt given the current facts and is closer to Kings X.

            The settling parties (presumably the NMPA in this case) would have the Judges apply their private deal to all songwriters throughout the world.  It’s easy to get a faux consensus from “the majority” if you do not invite—and even attack or threaten[14]–those with opposing views.  It illustrates the “tyranny of the majority” that every American high school civics class discusses in the context of governance[15]–even assuming there was a vote of the affected songwriters which there apparently was not.[16] 

Therefore, from the outset the proposed rule is simply not a reasonable basis for setting statutory rates or terms for those not party to the voluntary agreement set forth in the Motion.

            But on a more practical note, we think songwriters will ask what can be done to try to fix the mess the parties have created?  We offer several concrete solutions.

2.  Limit the Settlement to Named Parties to the Agreement or Let Sunlight Shine on the Settlement if Settlement Applies to All Songwriters in the World: 

            We call the Judges’ attention to the record company parties to the settlement.  Note that each of the major labels signed in their own organization names, yet for some reason the publishers did not.  Had they signed in their own names, the symmetry between the two might be obvious due to common ownership at the group level.[17]

The Judges could require that the voluntary settlement apply only to those parties who actually agreed it, rather than trade associations that own no copyrights and likely have limited agency at best.  The Judges could cabin the rates and terms to those parties who are actually signatories to the settlement, directly or indirectly.  The publishers involved could be ordered to step forward for the rationally related purpose of determining who the settlement rate should apply to.  This approach would treat the purported settlement more in the nature of a voluntary license among the parties as is permitted under the Copyright Act.  This cabined approach seems to be consistent with the Act and the proper role of regulatory agencies like the CRB, not to mention the Constitution. 

            If the Judges do not wish to take this approach, the Judges may wish to assure that all songwriters who are affected by their ruling are provided with the full picture of what the deal was that induced the purported settlement.  This approach recognizes that the proposed regulations do nothing to disclose all consideration that was paid in connection with the settlement.  This question has been raised by many interested persons, including Representative Lloyd Doggett in a July 13, 2021 letter[18] to the Librarian of Congress and the Register of Copyrights regarding CRB procedures.

            The settlement expressly refers to undisclosed terms that sound very much like other consideration exchanged and also expressly refers[19] to a side deal or “MOU” between the NMPA and the major labels.[20]  How can the Judges determine, or expect anyone outside the insider group to agree, that the rates and terms set forth in the proposed regulations are fair and reasonable without knowing the full extent of the consideration exchanged?  Therefore, the proposed rule as drafted is simply not a reasonable basis for setting statutory terms or rates for those not party to the voluntary agreement as set forth in the Motion and who are not “in the know” regarding its terms including the terms of the MOU.

3.  Opt In for Independents and Co-Published Songwriters

            We perceive the obvious lack of authority to bind non-parties is a fatal flaw of the proposed settlement.  If true, lack of authority is likely sufficient good cause for the Judges to reject the settlement without even addressing whether the rates and terms meet the willing buyer-willing seller standard required by Congress. 

            We recognize that the Judges may wish to avoid an outright rejection of the purported settlement.  An agreement among the parties is consistent with the goals of a voluntary negotiation.  One remedy might be for the Judges to require the parties to construct an opt-in structure that would only apply to those who affirmatively agree to accept the frozen rate.  There clearly are precedents for implementing an opt-in structure that would allow songwriters and copyright owners to accept the settlement or reject it and negotiate their own arms-length rate as true and unrelated willing sellers to a willing buyer.[21]  If there really is a “consensus,” an opt-in process would simply confirm it in a legally cognizable manner.

            For example, if copyright owner A was party to a co-publishing agreement with publisher X who is represented on the NMPA board, it would be a simple thing to require publisher X to proffer an authorization document permitting the negotiation of the settlement on behalf of copyright owner A.  Failing that proffer, publisher X could put the settlement out for opt-in consent by copyright owner A and those in the same class as copyright owner A.  An opt-in process seems efficient.  Common questions would predominate, the publishers concerned would not be prohibitively numerous, the copyright owners could easily be located based on the billing relationship between them and publisher X and an opt-in structure would no doubt be preferable and less costly than other remedies.

            Alternatively, songwriters or copyright owners could be allowed to opt-out of the settlement by a simple notice by their publisher to them requesting an opt-in, or from them to their publisher opting in or out.  The Judges would, of course, do well to specify the rules for this process and supervise the administration.

            Absent this or similar evidence of authority, there will always be an open question of whether the purported settlement provides a reasonable basis for setting statutory terms or rates which may be answered later down the line in the CRB or other fora.

4.  When the Willing Buyer and Willing Seller Are Effectively the Same Legal Person

            It must be said that we sympathize with the position that the Judges are in of trying to divine a free market rate in America where songwriters have not been free in over 100 years.  In fact, songwriters in America have not been free for so long we could safely say they have never been free in stark contrast to the U.S. economy generally.  Generations of songwriters are held guilty of some long-forgotten and Kafka-esque original sin requiring a degree of government regulation as though songs were hazardous materials.  Regulation that protects monopolists like Google and iHeartMedia from the supposed anticompetitive urges of songwriters who we are asked to believe seek out the closed door of the writer room for one reason–collusion.

            While this willing buyer-willing seller standard makes good sense in the case of webcasting rates[22] or streaming mechanicals where the parties typically are not and are not likely to be related, it is extraordinarily difficult for the Writers to swallow in the case of the parties to the purported settlement—an ancient conflict of interest that was easily predictable on the face of the “Music Modernization Act.”[23]  There is nothing modern about this unitary buyer/seller problem. 

            The major publishers are, of course, owned at the group level by the same companies that own the major labels.  That’s what makes them “major” but that is also what makes them unitary.  Assuming arguendo that the major publishers have obtained the consent of their co-publishers or their administration principals, they would be free to enter into any permitted settlement even with their affiliated record company music users.  But the Motion is hardly a willing buyer-willing seller scenario—the two are essentially the same legal person, or are “unitary.”  Congressman Doggett raised a question about this very issue in his Letter, and we raise it here to the CRB.  We think it deserves a detailed reply from the CRB and will be a key legal precedent going forward under the “new” MMA standard.[24]  All the more reason why the settlement is more suited to a voluntary license among the parties than a rule that applies to all the world.

            The Judges may find the recent report[25] by the UK Parliament’s Digital Culture Media and Sport Committee to be helpful on this point; Ms. Lindvall and the Ivors Academy campaigned for the DCMS Committee’s inquiry. 

            The DCMS Committee called upon the Government to have the UK’s Competition and Markets Authority investigate competition in the recorded music market, particularly the tied song and sound recording markets,[26]  noting that: 

 “With [independent] music publishers…unanimously calling for the value of the song to have parity with the value of the recording [citation omitted], it is conspicuous that the MPA [the UK counterpart to the NMPA] refused to give a definitive perspective on the debate, particularly given that the publishing arms of the three major music groups are counted amongst their members….Whilst the major music groups dominate music publishing, there is little incentive for their music publishing interests to redress the devaluation of the song relative to the recording.[27]

            Accordingly, we do not believe, as discussed more fully below, that the purported settlement agreement in any way approximates fair or reasonable royalty rates and terms, or rates and terms that would have been negotiated in the marketplace between an arms-length willing buyer and a willing seller, i.e., a non-unitary buyer/seller.  Given the position expressed by the DCMS Committee, it’s entirely possible that at least the UK Parliament may wish to resolve the issue in another forum. 

We are open to being persuaded otherwise by the Judges, but it appears that the unitary willing buyer-willing seller will establish a critical precedent going forward.  Therefore, the proposed rule is simply not a reasonable basis in this great moment for setting statutory terms or rates until the application of this standard to related parties is clearly spelled out by the CRB and reviewed.

5.  Vinyl Is a Booming Business

            We ask that the Judges take notice of the multitude of news reports on vinyl sales.[28]  Contrary to the vague assertions by NSAI members outside of the Proceeding about unnamed and undisclosed “industry revenue analysis” when defending their decision to “accept” a frozen rate because they believe that physical is a declining configuration,[29] vinyl sales are, if anything, understated due to the severe inability of supply to keep up with demand.  (Why a rational commercial actor would allow that mismatch to continue to such an egregious extent and to the detriment of artists and songwriters is a whole other question.[30]

            These supply chain problems started well before the pandemic,[31] so please do not allow yourselves to be “gaslighted” into the belief that the problems are caused by the pandemic.  Since the whole point of capitalism is for supply to meet demand, we must assume that this situation will be remedied eventually considering the incredibly strong and nearly vertical demand for vinyl, yet that remedy is slow in coming. 

            While the 2008 coming of Spotify is taken by the press (and Spotify itself) as some sort of celestial arrival of a savior straight out of the Book of Revelation,[32] the data tell a different story about vinyl sales.  For whatever reason of consumer taste, the coming of Spotify was also roughly the beginning of the vinyl boom.  Respectfully, it does not take an economist to read the newspaper—stories of vinyl’s resilience to cannibalization by streaming abound. 

            This upward sales trend is reflected in new survey data as well.  According to a small survey conducted by Artist Rights Watch[33] of self-selected songwriters during the period June-July 2021, approximately 26% of respondents said that, roughly speaking, their songwriting income from physical sales had increased over the last two years, and 32% said they expect their income from physical sales to increase over the next two years.[34]

           

These survey results are consistent with the views expressed by Jeff Gold[35], a music industry veteran, historian and author who has operated the Record Mecca collectibles site for many years.  Rolling Stone profiled Mr. Gold as one of the five “top collectors of high-end music memorabilia.” Mr. Gold told us in an interview[36]:

            “I think the vinyl boom is being driven by a number of factors. First, nostalgia: people like me love the experience of looking at an album cover, putting a vinyl record on the turntable, and traveling back in time. The Record Collector world I live in has expanded as well, with highly collectible records [selling] for much more than ever.

            Second, for younger people I think there is a collectible factor – – they are trying something from a different era, it’s trendy to have a turntable and play vinyl records, and they think maybe this is something they can buy that’ll be worth more later. And that is often the case.

Also, there’s the Record Store Day[37] phenomenon, under pressing records to make instant collectibles.  And to some [vinyl records] are merch[andise] for fans of artists who want to own everything connected to that act.

The market for vinyl has dramatically expanded, and the rare vinyl I sell is more desirable than ever. If I had to guess I would think that the collectible record world will continue to expand, but at some point the fad vinyl buying will begin to ebb. Though I’ve been saying that for a long time and there’s no sign of it.”

            The Artist Rights Watch small survey and recent commentary[38] supports a phenomenon that we respectfully suggest the Judges should explore further before accepting the alleged “consensus” for the purported settlement as fact—a significant number of songwriters appear to find mechanical royalty income from physical sales to be important to them and likely would not accept the terms of the voluntary agreement.  Again, we are not trying to dictate rates and terms to those who find the voluntary agreement to suit their needs; they should have their rates and terms.  But we respectfully ask the Judges not to impose those frozen rates on everyone else without their participation and consent as well as evidence.  What is good for the goose may be anathema to the gander.

            Even if every single one of the current vinyl trends are wrong, even if vinyl stops being a resurgent business and abruptly crashes and burns at some point in the next five years due to supply chain problems or reversals in consumption patterns not currently measurable, even if the NSAI songwriters’ undisclosed sources turn out to be 100% correct, what remains even in the industry-wide and world-wide 1% of revenue projected by the NSAI songwriters is still a significant revenue stream to a large portion of songwriters[39] and even music users.  We will believe the users do not care about physical and digital downloads when the first record company president comes forward and declines 15% of annual billing.

            These assertions and speculations about the future are a fine example of a judgement based on conditional probabilities that does not consider the effect of prior probabilities.  If this sudden crash theory really is part of the majority’s thinking, it does seem that the least they could do is provide the Judges and the public with supporting evidence on the record for their projection (or their guesswork) that so far is entirely absent from the record.

            We do not make an emotional appeal, however.  Sales levels do not change the fact that songs have value that deserves greater economic analysis and justification than a finger in the wind.  As the DCMS Committee observed in their referral to the UK’s competition authorities, there are some unusual forces at work here.  The Motion may well provide greater evidence for such a review albeit inadvertently.

            In the absence of an economic case put on by any party to the voluntary agreement regarding freezing Subpart B rates, we ask that the Judges take notice of the overwhelming amount of public information available to document the importance of vinyl and the error of the fundamental assumptions of the NSAI songwriters which we assume gave voice to certain NMPA members.  We have provided the Judges with a handful of representative articles above.
            While the CRB may have other reasons for continuing to impose the existing frozen mechanical rate on the world’s songwriters for another five years, relying on an unnamed “industry revenue analysis” of imaginary dwindling physical sales without inquiring further when there is ample public evidence to the contrary seems to be an unreasonable and arbitrary basis for setting statutory terms or rates.  In fact, putting your finger in the air and guessing that vinyl sales will reverse course into a nose-dive in the face of overwhelming facts and data to the contrary seems the very definition of arbitrary.

6.  Disclosure Should be Mandatory

            Respectfully, we believe there is a compelling need for the Judges to require the disclosure of both the settlement agreement that established the frozen rates as well as the MOU referenced in the Motion.[40]  It appears from the Motion that there was additional consideration beyond putting a finger in the air and deciding to freeze the rates another five years; yet, that additional consideration is described but not disclosed.  It seems that no copyright owner (other than insiders) can rationally evaluate the purported settlement without knowing all the facts.

            We respectfully call the Judges’ attention to analogous facts in Pandora’s ASCAP and BMI rate court proceedings from 2007.  While dated, the story is good background for understanding the problems that can be unleashed from bootstrapping secret deals into law—in the Pandora case, one could say that it led directly to the Music Modernization Act’s provisions requiring random assignment of rate court judges.  This quote from Billboard[41] is a succinct description of the problem:

Back in 2007-2010, when ASCAP and BMI rate court judges were involved in litigation between DMX and performance rights societies, the judges examined the direct licensing deals DMX cut with publishers. During that process, judges did not review the advances or any of the other aspects of the deal, and only looked at the reduced per-store royalty rate. Consequently, in the case of BMI, this resulted in the per-store negotiated rate falling from $36.36 to a per-location fee of $18.91, much to the chagrin of the publishers, who stayed a part of the PROs’ blanket licenses. The ASCAP rate court returned a similar finding.

             Congressman Doggett also correctly raised this question in his Letter and it is entirely understandable—without disclosure of all consideration, strangers to the settlement are being asked to buy a pig in a poke.

            Accordingly, we ask that you compel the disclosure of all documents, payments and other consideration that changed hands or were promised to change hands in the purported settlement.  This would include any payments outside the four corners of the Motion but related to the purported settlement. In the absence of that disclosure or binding certification that it does not exist, the proposed rule is simply not a reasonable basis for setting statutory terms or rates until the full terms of the purported settlement are disclosed or the settlement is cabined as a voluntary license among the parties. 

7.  Raising the Rates

                 First and foremost, the problem with the CRB adopting the purported settlement as the law of the land is the appearance of the bootstrapping of a private deal among apparently related parties and the controlled opposition into rates and terms that apply to all songwriters in the world.  As Congressman Doggett says in his Letter, these are rates and terms that apply to all songs ever written or that ever may be written.  We know you will agree that the rule making authority of the CRB is a serious and solemn example of the awesome power of the government over unrepresented songwriters. 

                 The potential for this bootstrapping is particularly offensive to songwriters who live outside the United States as evidenced by opposition to the frozen mechanicals from a host of international songwriter groups. 

                 We wish to express our desire for a separate and higher rate from the frozen rate accepted by the parties to the purported settlement.  We recognize the corner that the CRB has been backed into regarding raising the rates that have been frozen for so long that they have been substantially eroded by inflation without even considering the value of songs to the booming vinyl business.  According to the Bureau of Labor Statistics CPI-U calculator[42] (the same index used by the Judges in the recent Web V rate determination), a 9.1¢ rate set in 2006 would be indexed to 12¢ today. We therefore estimate that 9.1¢ in 2006 would have the buying power today of approximately 6¢, less than the 1992 mechanical rate established 29 years ago.[43]   

                 However justified, we are sure that raising the 9.1¢ rate across the board would be met by a great howling and rending of garments by at least some of the parties to the purported settlement.  The easy answer to this issue is one raised by Congressman Doggett in his Letter–limiting the settlement rate to the settling parties and setting a higher rate for non-settling parties, i.e., the inverse of the trick referenced above that was played by DMX on the entire industry and the rate courts.

                 The new minimum statutory rate applied to the non-settling parties could be as simple as a headline rate between a bounded range greater than 9.1¢ and up to 12¢ with the appropriate adjustment for the long-song formula.  That headline rate could then be adjusted for inflation and indexed to the CPI-U for the out-years in a similar manner as the Judges applied in Web V.  Even these rates are excruciatingly low and demonstrate the deep hole that the government imposed on songwriters between 1909 and 1978 when the rate for generations of songwriters was frozen at 2¢ through two World Wars, the Great Depression, a global pandemic, two post-war booms and a moon walk.  Songwriters have been digging out ever since, both in the US and abroad due to America’s long commercial shadow.  The Writers fear that a similar freeze has developed with the Subpart B rates and without meaningful consultation.[44]  While we cannot reasonably ask the CRB to solve all the world’s mistakes, we can ask that the Judges not repeat them.  As Congressman Doggett says, we are concerned that we not misstep.

           Alternatively, the CRB could, after consultation with representative parties opposing the frozen rates such as the Songwriters Guild of America, Ivors Academy, ATX Musicians, the Society of Composers and Lyricists, MusicAnswers, the Screen Composers Guild of Canada, Alliance of Latin American Composers & Authors, Asia-Pacific Music Creators Alliance, Pan-African Composers and Songwriters Alliance, Music Creators North America, the Alliance for Women Film Composers and ECSA appoint a representative for independent songwriters to negotiate with both the major labels and the independent labels on rates applicable to and higher than the rates in the settlement.  Such a consultation in this or another forum would go a long way toward clearing up the due process and equal protection Constitutional issues hanging like a cloud over the current Proceeding.  Obviously, the cost of such negotiation should not be borne by the songwriters or recouped from their royalties.

           Therefore, absent such a ruling by the Judges, the proposed rule is simply not a fair or reasonable basis for setting statutory terms or rates until there are truly representative bodies negotiating on behalf of songwriters and independent copyright owners. 

              Thank you again for this opportunity to express our views on the proposed rule.  We respectfully hope that our comment has provided the Judges with some additional insight into how the proposed rule affects independent songwriters and publishers both in America and around the world, particularly since none of us can afford to participate in the rate setting proceeding itself.  We greatly appreciate the Judges’ willingness to avoid process becoming punishment.

                                                                  Respectfully submitted.

                                                                 Christian L. Castle
                                                                
                                                                 Christian L. Castle, Attorneys
                                                                 9600 Great Hills Trail, Suite 150W
                                                                 Austin, Texas 78759

                                                                 July 26, 2021


                  [1]  We focus in this comment almost entirely on the Subpart B rates applicable to physical carriers under 37 C.F.R. §385.11(a).  We note, however, that there is some apprehension among songwriters that the “music bundle” rate in 37 C.F.R. § 385.11(c) could be twisted in a way to drag Non-Fungible Tokens into the frozen rates.  We doubt that Congress intended to include NFTs in the statutory rates since they did not exist even at the time of the Title I amendment to Section 115.  It would certainly add insult to injury for large sums to change hands for NFTs but songwriters be reduced to their usual meagre gruel in compensation while everyone else enriches themselves from the songs. Clarity on this point would be appreciated.

                  [2] See The Scope of Fair Use: Hearing before the Subcomm. on the Courts, Intellectual Property and the Internet of the H. Comm. on the Judiciary, 113th Cong. (Jan. 28, 2014) (statement of David Lowery)

                  [3] See #IRespectMusic campaign, available at https://www.irespectmusic.org.

                  [4] See Reps. Issa, Deutch Introduce Bill to Ensure Artists Receive Fair Pay for FM/AM Radio Airplay (June 21, 2021) available at https://issa.house.gov/media/press-releases/reps-issa-deutch-introduce-bill-ensure-artists-receive-fair-pay-fmam-radio.

                  [5] Google LLC v. Oracle America, Inc., 593 U.S. ___ (2021), Brief of Amici Curiae Helienne Lindvall, David Lowery, Blake Morgan and the Songwriters Guild of America in support of Respondent (2021) available at https://www.supremecourt.gov/DocketPDF/18/18-956/133298/20200218155210566_18-956%20bsac%20Helienne%20Lindvall%20et%20al–PDFA.pdf.

                  [6] Motion To Adopt Settlement Of Statutory Royalty Rates and Terms For Subpart B Configurations, Docket No. 21-CRB-0001-PR (2023-2027) hereafter the “Motion.”

                  [7] See, e.g., 17 U.S.C. §115(c)(1)(D).

                  [8] We invite the Judges to take notice of the relationships at the board level between the NMPA and the NSAI which is beyond the scope of the comment, but we think the Judges may find very relevant for discussions of negotiating authority and the scope of designation of a common agent.

                  [9] It must be noted that the NMPA board and the NSAI board share members from time to time.

                  [10] We are mindful of the result of the WTO arbitration over the Fairness in Music Licensing Act that found the United States liable for damages in violating the TRIPS Agreement. See WT/DS160/12 (Jan. 15, 2001) available at https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=(@Symbol=%20wt/ds160/*)%20and%20(@Title=%20((arbitration%20under%20article%2021.3)%20and%20((award%20of%20the%20arbitrator)%20or%20(report%20of%20the%20arbitrator))))&Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true#,

                  [11] See, e.g., United States v. Arthrex, Inc., 594 U.S. ____ (2021).

                  [12] Motion at 4.

                  [13]  The Cambridge English Dictionary defines “consensus” as either a “generally accepted opinion” or a “wide agreement,” neither of which apply to frozen mechanicals.

                  [14] Paul Resnikoff, AMLC Board Member Accuses NMPA President David Israelite of Tortious Business Interference and Collusion, Digital Music News (Nov. 28, 2018) available at https://www.digitalmusicnews.com/2018/11/28/amlc-nmpa-president-david-israelite-collusion/

                  [15] Thomas Jefferson, First Inaugural Address (1801) (“All too will bear in mind this sacred principle, that though the will of the majority is in all cases to prevail, that will, to be rightful, must be reasonable; that the minority possess their equal rights, which equal laws must protect, and to violate would be oppression.”)(emphasis added); James Madison, Federalist Papers 10 and 51.  John Locke, Second Treatise of Government (1689) at par. 95 (“[N]o one can be put out of [his property], and subjected to the political power of another, without his own consent.”)

            [16] The tradition of concern with the familiar “tyranny of the majority” sounds in discussions of representative government, the concern being that the majority that gives a representative quorum in a body also could lead to disastrous consequences for the minority.  This is particularly true when the governed have rules imposed on them that they had no part in crafting by persons they had no part in electing.  Washington expressed it well and highlights the very point before this Court today:  “To be fearful of vesting Congress, constituted as that body is, with ample authorities for national purposes, appears to me the very climax of popular absurdity and madness. Could Congress exert them for the detriment of the public without injuring themselves in an equal or greater proportion? Are not their interests inseparably connected with those of their constituents? By the rotation of appointment must they not mingle frequently with the mass of citizens? Is it not rather to be apprehended, if they were possessed of the power before described, that the individual members would be induced to use them, on many occasions, very timidly and inefficaciously for fear of losing their popularity and future election?”  George Washington, “To John Jay,” August 15, 1786, The Papers of George Washington, “Confederation Series,” Vol. 4 (1976) at 212–13 (emphasis added).  If the truth is as we apprehend it, that a dedicated group of essentially unelected likeminded people known for extracting vengeance from anyone who dares question them got in a private room at a private meeting and decided the fate of the world’s songwriters was their unelected remit, then this is not even a vote fulfilling the tyranny of the majority because there was no vote and there was no majority—just tyranny.  de Tocqueville admonishes that “[t]he despotism of faction is not less to be dreaded than the despotism of an individual.”  Alexis de Tocqueville, Democracy in America, Vol. 2, Ch. XIV (1840) at 289.

                  [17] This is particularly relevant in the case of a songwriter who has entered one of the various publishing, co-publishing or administration agreements commonly in use in the music business.  If publisher X intends to be bound by the settlement, yet does not act under its own name in the settlement, songwriters “signed” to publisher X have no way of knowing if they are to be bound.  While certain relationships can be inferred, it seems that there should be clarity regarding the parties to such a watershed agreement.

                  [18] Letter from Hon. Lloyd Doggett to Librarian of Congress Dr. Carla Hayden and Register of Copyrights Shira Perlmutter (July 13, 2021), available at https://thetrichordist.files.wordpress.com/2021/07/letter-library-of-congress-register-of-copyrights-7.13.21.pdf hereafter “Letter”.

                  [19] “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.” Motion at 3.

            [20] The “MOU” description and “late fee waiver” reference brings to mind another late fee “MOU” being the NMPA Late Fee Program available at http://www.nmpalatefeesettlement.com/mou2/index.php.  If this MOU is a version of that MOU, it could be a substantial sum.  (“The Record Companies have represented there is approximately $275 million in “pending and unmatched” accrued royalties (the “P&U Royalties”) that have not been distributed to the music publishers. In exchange for waivers of certain late fees through 2012, the Record Companies must comply with the provisions of the MOU, including paying participating music publishers and foreign societies their respective market share of accrued P&U Royalties.”  Available at http://www.nmpalatefeesettlement.com/group_1/summary.pdf)

                  [21] For example, see the Songclaims.com portal used to implement the Spotify class action settlement.

                  [22] 17 U.S.C. §§ 112, 114(d)(2).

                 [23] 17 U.S.C. §§ 115(b)(1) and (3).

                  [24] It is worth noting that we have been unable to find any reference to the unitary buyer/seller in any of the public comments or legislative history regarding the Music Modernization Act.  In fact, the NMPA’s “pitch sheet” entitled Music Modernization Act (MMA): Bringing Songwriters into the Digital Age (Dec. 28, 2017) states that the new MMA rate standard establishes “[r]ates based on what a willing buyer and a willing seller would agree to reflect market negotiations” in contrast to the 801(b) standard that resulted in “below-market rates.”

                  [25] Digital Culture Media and Sport Committee, Economics of Music Streaming (Second Report of Session 2021-22), UK Parliament (July 15, 2021) available at https://committees.parliament.uk/publications/6739/documents/71977/default/.

                  [26] Id. at 3 and 105.

                  [27] Id. at 71 (emphasis added).

                  [28] Tina Benitez-Eves, Vinyl Record Sales up 108.2% in First Half of 2021, American Songwriter (July 16, 2021) (“For the past 15 years, vinyl record sales have seen consecutive growth, despite the continued uptick of digital consumption in the U.S. and drop in sales and backup in production due to the pandemic.”)  available at https://americansongwriter.com/vinyl-record-sales-up-108-2-in-first-half-of-2021/;  Sarah Whitten, Music Fans Pushed Sales of Vinyl Albums Higher, Outpacing CDs, Even As Pandemic Sidelined Stadium Tours, CNBC (July 14, 2021) (“Music consumption in the first half of the year has remained robust even without the sold-out stadium tours, according to a new report. While on-demand audio streaming is up 15%, consumers are also looking to own more tangible collectibles like vinyl albums, which continue to surpass CD sales. In the first six months of 2021, 19.2 million vinyl albums were sold, outpacing CD volume of 18.9 million, according to MRC Data, an analytics firm that specializes in collecting data from the entertainment and music industries.”) available at https://www.msn.com/en-us/entertainment/news/music-fans-pushed-sales-of-vinyl-albums-higher-outpacing-cds-even-as-pandemic-sidelined-stadium-tours/ar-AAM6S31; Ed Christman, Audio Streams Up 15%, Vinyl Sales Double in First Half of 2021, Billboard (July 15, 2021) (“Vinyl sales, which have grown for the past decade, more than doubled between January and June, up 108.2% to 19.2 million from 9.2 million in the first six months of last year. Even CD sales, which have been steadily and precipitously declining, posted a modest 2.2% gain, to 18.9 million units. The only serious loss was in digital sales: Album downloads fell 26.8%, to 12.92 million, while track sales dropped 20.3%, to 101.8 million. But physical sales rose so much that, for the first time in years, total album sales rose, by 12.6% to 51.26 million.”) available at https://www.msn.com/en-us/music/news/audio-streams-up-15-vinyl-sales-double-in-first-half-of-2021/ar-AAM9Sk7); Sam Willings, Sainsbury’s Supermarket Will Stop Selling CDs, Sale of Vinyl Records Will Continue (July 13, 2021) (“A spokesperson for the British Phonographic Industry (BPI) told the BBC that “The CD has proved exceptionally successful for nearly 40 years and remains a format of choice for many music fans who value sound quality, convenience and collectability.”  They continued: “Although demand has been following a long-term trend as consumers increasingly transition to streaming, resilient demand is likely to continue for many years, enhanced by special editions and other collectable releases.”) available at https://www.musictech.net/news/sainsburys-supermarket-will-stop-selling-cds-sale-of-vinyl-records-to-continue/; Andre Paine, Record Store Day set to deliver another summer boost for vinyl sales, Music Week (July 15, 2021)(“ Participating shops will be expecting queues from the early hours as fans and record collectors seek out rare and exclusive vinyl titles being released especially for the day.”) available at https://www.musicweek.com/labels/read/record-store-day-set-to-deliver-another-summer-boost-for-vinyl-sales/083710; Sage Anderson, Barnes & Noble ‘Vinyl Weekend’ Launches With Grateful Dead, Fleetwood Mac Exclusives, Rolling Stone (July 15, 2021)(“Barnes & Noble may be known for their cozy bookstores and massive collective of great reads across all genres, but the retailer has also just announced the return of their fan-favorite “Vinyl Weekend,” which offers dozens of limited-edition records and exclusive in-store and online specials.”) available at https://www.rollingstone.com/product-recommendations/lifestyle/barnes-and-noble-vinyl-turntable-sale-1197904/. 

                  [29] L.B. Cantrell, NSAI Songwriters Respond to Criticism of Decision not to Challenge Physical Mechanical Rates, Music Row (June 2, 2021)(“Based on industry revenue analysis, it is anticipated that physical mechanical royalties will amount to less than 1% of the total mechanical royalty revenue in the United States during 2023-2028, the rate period this CRB proceeding covers.”) available at https://musicrow.com/2021/06/nsai-songwriters-respond-to-criticism-of-decision-not-to-challenge-physical-royalty-rates/.

                  [30] Erin Osman, “It’s a Total Nightmare”: Problems at Direct Shot Distributing Has Made New Vinyl and CDs Scarce, Billboard (Dec. 18, 2019) (“Since April, record stores and labels have been plagued by a distribution bottleneck that began when Warner Music Group moved its physical product to Direct Shot Distributing (DSD). The change made DSD, which also has contracts with Universal and Sony, one of the largest distributors of physical music in the country. The problem became apparent on April 13 — Record Store Day, the busiest and most profitable day of the year for many retailers — when some stores didn’t receive the exclusive releases they had ordered. Since then, the problem has gotten worse.”), available at https://www.billboard.com/articles/business/8546794/direct-shot-distributing-problems-vinyl-cds-physical-product.

                  [31] Allison Hussey, A Major Music Distributor Has Stifled Vinyl Sales for Record Stores and Indie Distributors, Sources Say, Pitchfork (Dec. 19, 2019) available at https://pitchfork.com/thepitch/a-major-music-distributor-has-stifled-vinyl-sales-for-record-stores-and-indie-labels-sources-say/.

                  [32] David Rowan, Daniel Ek: Europe’s Greatest Digital Influencer Tops Wired 100, Wired (May 16, 2014) available at https://www.wired.co.uk/article/wired-100-daniel-ek.

                  [33] “Thriving on scorn from the establishment since 2015”, http://www.artistrightswatch.com               

[34] Artist Rights Watch, Songwriter Mechanical Royalty Income Questionnaire June-July 2021 to be made available at http://www.artistrightswatch.com and results available from the commenters (N=54).

                  [35] https://recordmecca.com/about/

                  [36] Available from the authors.

                  [37] See, e.g., https://recordstoreday.com

                  [38] See, e.g., Artist Rights Watch Podcast Episode 1 “Frozen Mechanicals” available at https://podcasts.apple.com/us/podcast/the-artist-rights-watch/id1574250584; The Trichordist.com “frozen mechanicals” category https://thetrichordist.com/category/frozen-mechanicals/

                  [39] We are likewise unaware of any provision of the Copyright Act or regulations promulgated there under that provides for a sales-based determination of any particular rate.  Such an argument appears to be exactly what underlies the NMPA and NSAI acquiescence to frozen rates but it simply is not the law that the fewer phonorecords sold the lower the royalty rate that the CRB may set.

                  [40] There may be other side agreements that are not disclosed in the Motion.

                  [41] Ed Christman, Less Could Be More:  Why Merlin’s Deal with Pandora May Pay Off, Billboard (Dec. 11, 2014) (emphasis added).

                  [42] U.S. Bureau of Labor Statistics, CPI Inflation Calculator available at https://www.bls.gov/data/inflation_calculator.htm.

                  [43] The minimum statutory royalty rate in effect during the 1992-93 period was 6.25¢.  U.S. Copyright Office, Mechanical License Royalty Rates (Sept. 2018) available at https://www.copyright.gov/licensing/m200a.pdf.

                  [44] Respectfully, the Congress missed an opportunity to strike a blow for fairness in the Copyright Act of 1976 when it failed to index the 2¢ rate retroactively and instead treated a 70-year wage and price control as thought there were nothing to see here.  Had Congress indexed the rate retroactively and then increased the rate prospectively based on value and indexed to inflation, songwriters would be exponentially better off.  When songwriters complain to the CRB that they struggle to make a living, it is this decades long dark hole of the 2¢ rate freeze that is a major contributing factor and apparently punishment for some long-forgotten original sin.  While the CRB is not tasked to fix all the songwriters’ financial woes, an argument could be made that it is at least partly responsible for fixing the ones cause by the government or at least not making it any worse by taking actions such as freezing mechanical royalty rates for twenty years.