Results and Recommendations of the Artist Rights Watch MLC Awareness Survey

Guest post by Chris Castle

Our sister site Artist Rights Watch fielded a Mechanical Licensing Collective Awareness Questionnaire during January targeting songwriters attending our MLC webinar.  (MLC Awareness Questionnaire 1/31/21 n=120.)  The purpose of the questionnaire was to give the panelists some idea of the awareness level of attendees about the issues we intended to discussed based on early responses to the survey.  You can read the analysis of the responses here, but I’m going to discuss them briefly.

Of the 120 people who responded, responses suggest that approximately 70% of respondents personally handled the business and administration of their song catalogs, 50% were self-administered, and 50% administered song catalogs of 100 songs or fewer.  In other words, the majority of respondents were exactly the kind of self-administered songwriters or administrators we sought to connect with and who are eligible to stand for the MLC board seats devoted to self-administered songwriters if the right insiders nominate them .  We are still analyzing the geographic data, but about 16% were from California zip codes with the rest distributed across Texas, Georgia and other fly-over states predictably not represented on the MLC’s board of directors.

The basic questions about the MLC awareness we were trying to better understand were whether respondents even knew what we were asking about, and if so, how did they know.  This will help understand the success of the information efforts to date by the MLC, the DLC, and the Copyright Office.  We also wanted to know if respondents felt that they knew enough about the MLC to advocate for themselves with the MLC as an effectiveness metric for other educational efforts to date.

An encouraging 63% of respondents had heard of the MLC, but 22% had not.  Less encouraging was 6.67% who had both heard of the MLC and successfully registered and 4.17% who had heard of it but had not been able to register.

When asked how they had heard of the MLC, respondents were asked to respond to a list of potential sources, including “other”.  The largest source of information was “news media” at 27.35% and the next largest was “other”, which included a variety of sources including The Trichordist, Artist Rights Watch and MTP.  

However, given the other answers, the education efforts of the MLC (including HFA), the DLC and the Copyright Office did not seem to be making much penetration into these respondents, although the Copyright Office led the pack, sometimes by a lot.  This is curious because it’s not really the Copyright Office’s job and they are not being paid millions to do it.

MLC Quesion Source

As a measurement of the cumulative effectiveness of the educational outreach by the MLC, DLC and Copyright Office, we asked whether respondents felt they could advocate for themselves with the MLC.  60.83% answered “no” or that they “could use some help.”  This was surprising, and I would have preferred to see that number down in the single digits.

Of those who tried to register with the MLC, 15.38% of respondents successfully registered, 12.5% were told to use HFA, but 32% were “not sure” what they were told to do by the MLC.  I think that it’s safe to explore whether the data indicate that the educational outreach has resulted in an abysmally low registration rate.

For whatever reason, this language has appeared on the MLC’s website in recent days:

Prior to January 1, 2021, DSPs operating under a compulsory license were required by law to account to rightsholders on a monthly basis, within 20 days after the end of each month. Starting on January 1, 2021, DSPs operating under the new blanket license will have 45 days after the end of each month to send their usage reports and royalty payments to The MLC. The MLC will then take 30 days to perform its matching functions and calculate the royalties due to each of its Members. That means that The MLC will send out royalty payments and statements to Members roughly 75 days after the end of each monthly period. Because the total duration of the new distribution process will be longer than the old process, there will be a two month gap at the beginning of 2021 between the time rightsholders receive their last monthly statements and payments from DSPs under the old process and the time when they receive their first monthly statements and payments from The MLC under the new process. 

12% of respondents said that they were paid monthly and 60% of respondents were paid quarterly or “other” than monthly or quarterly.

We will be studying the responses over the coming weeks, but I had a few thought on the responses and a couple recommendations.  

  1. I’m going to ask if ARW can field the same questionnaire periodically to see how responses vary over time. UPDATE: ARW will be fielding a new survey with a few additional questions, you can participate at this link.
  2. It appears that of all the media the experts are using to get their messaging out, the one making the greatest penetration for mere awareness is news media.  However, respondent’s lack of confidence in their ability to register with the MLC as well as the low level of successful registrations hasn’t yet supported a conclusion that the experts’ well-funded efforts are producing greater MLC registrations or a greater understanding of how to register, or, and most importantly, actual registrations.
  3. There seems to be considerable confusion for whatever reason about someone else doing the registration for songwriters, be it administrator or publisher.  Outside of the survey, we have anecdotal evidence that songwriters are finding that their songs are not registered with the MLC after having been assured they would be by their publishers.  Because of the announced songwriter payment gap that the MLC anticipates in the first few months of its operations, songwriters may only find out they are not registered when their payments stop.

    Recommendation:  One technique I observed with a  SoundExchange information session was that artists were able to bring their laptops to a seminar where they were literally walked through the SoundExchange registration process step by step after the informational Q&A session concluded.  Even during COVID this could be accomplished using screen share.  

    By using this technique, the MLC could make sure that the end result of their webinars, etc., was that songwriters or publishers registered works and learned how to do so for the remainder of their catalog.  Plus they knew who to call if they had any problems or further questions.  This takes time, but the whole process takes time and you’re only fooling yourself if you think otherwise, to be blunt. I would say that it matters less how these people managed to waste two years in which they could have been doing this than it does to fix the problem right here, right now.  Do not let them tell you that the need only arose on the License Availability Date of 1/1/21 because that is just a CYA lie.

    Recommendation:  The experts should make a focus of their messaging a very clear statement that if you don’t register you will not get paid.  That is the harsh reality.  By hiding that ball, they do everyone a disservice.  Maybe an unregistered songwriter will eventually be able to claw their royalty back from the black box at some point in the future, but in the time of COVID, that claw back comes with a mortality rate.

    Recommendation:  No accrued but unpaid royalties for the first two or three years of the MLC’s operations should be able to be placed in the black box.  Not that they wait to pay out black box for 3 years, but they cannot use any of this money for black box–ever.  Like state unclaimed property offices, they hold the money forever.  The reason is that there is a greater than 50% chance that the reason funds are unmatched is because of the MLC’s startup missteps, not anything the songwriter did.  

How Spotify (and others) Could Have Avoided Songwriter Lawsuits, Ask The Labels.

This is simply a story about intent. Daniel Ek is the co-founder of Spotify, he was also the CEO of u-torrent, the worlds most successful bit-torrent client. As far we know u-torrent has never secured music licenses or paid any royalties to any artists, ever.

Spotify could have completely avoided it’s legal issues around paying songwriters.  The company could have sought to obtain the most recent information about the publishing and songwriters for every track at the service.  The record labels providing the master recordings to Spotify are required to have this information. All Spotify (and others) had to do, was ask for it.

Here’s how it works.

For decades publishers and songwriters have been paid their share of record sales (known as “mechanicals”) by the record labels in the United States. This is a system whereby the labels collect the money from retailers and pay the publishers/songwriters their share. It has worked pretty well for decades and has not required a industry wide, central master database (public or private) to administer these licenses or make the appropriate payments.

This system has worked because each label is responsible for paying the publishers and songwriters attached to the master recordings the label is monetizing. The labels are responsible for making sure all of the publishers and writers are paid. If you are a writer or publisher and you haven’t been paid, you know where the money is – it is at the record label.

Streaming services pay the “mechanicals” at source which are determined by different formulas and rules based upon the use. For example non-interactive streaming and web radio (simulcasts and Pandora) are calculated and paid via the appropriate performing rights society like ASCAP or BMI. These publishing royalties are treated more like radio royalties.

The “mechanicals” for album sales from interactive streaming services are calculated in a different way. It is the responsibility of the streaming services to pay these royalties. CDBaby explains the system here and here. Don’t mind that these explanations are an attempt to sell musicians more CDBaby services, just focus on the information provided for a better understanding of this issue.

Every physical album and transactional download (itunes and the like) pays the “mechanical” publishing to the record label directly, who then pays the publishers and writers.  This publishing information exists as labels providing the master recordings to Spotify have this information. All Spotify (and others) have to do, is ask for it.

Record labels have collectively and effectively “crowd sourced” licensing and payments to publishers and songwriters for decades. Why can’t Spotify simply require this information from labels, when the labels deliver their masters? It’s just that simple. Period.

The simple, easy, and transparent solution to Spotify’s licensing crisis is to require record labels to provide the mechanical license information on every song delivered to Spotify. The labels already have this information.

The simple solution is for Spotify to withdraw any and all songs from the service until the label who has delivered the master recording also delivers the corresponding publisher and writer information for proper licensing and payments. Problem solved!

No need for additional databases or imagined licensing problems. Every master recording on Spotify is delivered by a record label. Every record label is required by law to pay the publishers and songwriters. This is known and readily available information by the people who are delivering the recordings to Spotify!

There is no missing information, and no unknown licenses. Why is this so F’ing hard?

This system would mean that the record labels would have to provide this information. It’s also possible that some of that information is not accurate. Labels would probably fight against any mechanism that would make them have to make any claims about the accuracy of their data, which is fine. If it’s the most update information it’s a great place to start.

Of course, we know that both sides (both labels and streamers) will reject any mechanism that introduces friction into the delivery of masters. However, with the simple intent of requiring publisher and songwriter info for every song master delivered there will no longer be a problem at the scale that currently exists.

To be completely fair to Spotify they did work to make deals with the largest organizations representing publishers and songwriters (NMPA and HFA). However those two organizations leave out a lot of participants. So back to square one. If publishing information is required upon the delivery of masters, the problem is largely solved. Invoking a variation on Occam’s Razor, the best solution is usually the most simple one.

You’d think that in the times before computers this would have been harder than it is now, but like all things Spotify you have to question the motivations of a company whose founder created the most successful bittorrent client of all time, u-torrent.

Oh, and of this writing Spotify is now claiming they have no responsibility to pay any “mechanicals” at all. Can’t make this up.