Black Box Hunting: The Songwriters Guild/Society of Composers & Lyricists/Music Creators North America’s Ex Parte Letter Stands Up for Transparency

[Editor T says: Remember when songwriters were promised that the Music Modernization Act was going to solve all your problems—AND give you a set of steak knives? Remember? Never needs ironing? And doubles on sax? One big feature was digital music services paying up to the Mechanical Licensing Collective for matching the entire black box from “inception” meaning all the money a service ever held that their data vendors couldn’t match and weren’t paid to try very hard, especially Spotify aka “defendant”. Who was that data vendor who couldn’t match? HFA. And who is the MLC’s data vendor? HFA. So the last couple weeks the insiders have been back-tracking behind closed doors at the Copyright Office on how–or if–that black box will be paid to songwriters. The only way you’d ever know this was happening is if you were paying very close attention to the Copyright Office “ex parte” letters. (sign up for email alerts there.) The Songwriters Guild/SCL/MCNA group is the songwriter’s junkyard dog with their teeth sunk in the tuchus of the insiders. We’ll be posting a selection of these recent “ex parte” letters which publicly document private conferences held by the Copyright Office with “stakeholders”. “Everyone’s a winner, bargains galore….the large print giveth and the small print taketh away” as Tom Waits said.]

EX PARTE MEETING SUMMARY WITH

THE UNITED STATES COPYIGHT OFFICE

Docket Number 2020-12

November 18, 2020

Re: Summary of the November 13, 2020 Ex-Parte Meeting Between the United States Copyright Office on behalf of the following independent, US-based music creator organizations: the Songwriters Guild of America, Inc. (SGA), the Society of Composers & Lyricists (SCL), and Music Creators North America, Inc. (MCNA)

On Friday, November 13, 2020, an ex-parte video-conference meeting was conducted by the United States Copyright Office (USCO) with multiple interested parties concerning rulemakings in connection with Doc. No. 2020-12. This summary is submitted on behalf of SGA, SCL and MCNA (together, the “Independent Music Creator Organizations” or “IMCOs”), all of which were represented at the meeting. Attending for SGA were President Rick Carnes, outside counsel Charles Sanders, and outside legislative consultant Marla Grossman of the American Continental Group (ACG). Attending for SCL was President Ashley Irwin. Attending for MCNA was President Eddie Schwartz. The meeting was chaired on behalf of the USCO delegation by its General Counsel, Regan Smith.

Individuals representing the IMCOs began by respectfully stressing, as they had in their ex parte tele-conference with the USCO on September 11, 2020, the bedrock principle that independent music creators speak for themselves on all issues related to their rights and interests, and that no other music community groups have the right or authority to claim otherwise. Specifically, the IMCOs rejected the assertion by some music publisher representatives (backed by at least one of their affiliated songwriter groups) that the USCO’s oversight and rulemaking authority concerning matters related to 2020-12 should be viewed as being narrowly limited.

The IMCOs have stressed on multiple occasions through their USCO Comments a strong belief that Congress, by its very construction of the Music Modernization Act (MMA), intends the Office to have broad and expansive authority to oversee and guide the implementation of the MMA by the Mechanical Licensing Collective (MLC). That is especially so in regard to ensuring transparency, reliability and fairness regarding the safeguarding of music creator rights, the class of persons for whom the MMA was most clearly enacted to protect pursuant to Article I Section 8 of the US Constitution.

The main issue of concern addressed at the November 13, 2020 meeting was the oversight and disposition of accrued, unmatched royalties collected and held by Digital Music Providers and subsequently distributed pursuant to private negotiated agreements with music publishers. It is believed by the IMCOs that as regards those agreements and royalties, some or all of the parties thereto were very likely aware at the time of negotiation and execution, that (i) such confidential agreements and payments concerned royalties accrued from the unauthorized reproduction or distribution of musical works owned by unrelated third parties; (ii) little to no effort had been made to properly identify rightful ownership, and (iii) such accruals might soon be subject to payment rules under the MMA that would require strictly delineated sharing of such “permanently” unmatched royalties with music creators by music publishers (including a minimum floor of 50%) after the conducting by the MLC of bona fide searches for rightful owners.

Further assertions were made by the IMCOs at the meeting that after three years of discussions, still no informed estimate had yet been made by Digital Music Providers of the aggregate amounts of unmatched royalties both still being held and already distributed. Thereafter, one knowledgeable representative of Digital Music Providers estimated that while there remain hundreds of millions of dollars in accrued, unmatched royalties in the possession of the Digital Music Providers, tens of millions of dollars in accrued unmatched royalties were indeed turned over directly to music publishers pursuant to the terms of the confidential, private negotiated agreements.

As was also made clear during the meeting, the IMCOs have no direct information as to the content of such private negotiated agreements, and no direct information as to what became of the unmatched royalties such music publishers received.

Several music publishers have claimed in ex parte letters to the USCO that they indeed shared such unmatched royalties with their affiliated music creators, but no specific information has been provided as to the methodology and details of such sharing, including whether the principles and and guarantees eventually set forth in the MMA as enacted were applied.1 Moreover as the IMCOs reported at the meeting, an informal and ongoing process of canvassing creators currently being conducted by each MCNA member organization have yet to confirm a single instance in which a songwriter or composer received a royalty statement indicating that portions of such accrued, unmatched royalties were included (though they may have been) and on what basis.

As the IMCOs asserted at the meeting, were such unmatched royalties paid to songwriters and composers by music publishers on terms resembling the MMA rules concerning music creator protections (as either drafted or eventually enacted), it seems counter-intuitive that that no line item would appear anywhere in accounting statements indicating the source of such payments, not only as a matter of sound accounting practice, but of earned good will. No other music creator groups present at the meeting challenged or contradicted these ongoing findings or assertions. In any event, as noted, it seems that the burden of demonstrating the details of such payments is more properly placed on the music publishers who claim to have made them, which could be as simple as each publisher disclosing a properly predicated and binding assertion that the payments were made, how many were made, what was the aggregate payment, and how was each songwriter’s share determined.2

Under such circumstances as they currently exist, as SGA President Rick Carnes pointed out at the meeting, asking interested parties to render opinions on the minutiae of proposed rules concerning the disposition of accrued unmatched royalties –with only some parties having an understanding of how the private agreements operated, who got paid, who didn’t, and why– is a difficult position in which to place the IMCOs and other parties with important, related interests.

As Mr. Carnes pointed out, the issues of (i) how to protect the rights of those music creators and copyright owners who did not participate in the privately negotiated agreements by ensuring that there is an opportunity to actually match those already-distributed royalties to their proper owners and to effect the prompt payment of such sums, (ii) how to balance accounts once such proper identifications have been made, while also ensuring that affiliated music creators have been properly paid by their music publishers concerning royalties collected under the private negotiated agreements that otherwise would have flowed through the MLC and been explicitly subject to MMA distribution requirements, (iii) how to address demands of Digital Music Providers that they not be made to pay twice for the same unmatched uses, and (iv) how to ensure that such private negotiated agreements are not utilized in the future in attempts to override the provisions of the MMA, all need to be addressed prior to a proper analysis of how most effectively to move forward.3

Thus, as was stated at the meeting, while the IMCOs agree the MMA makes clear that ALL accrued unmatched royalties for unauthorized reproductions and distributions dating back to inception must be turned over to the MLC by Digital Music Providers, and that the term “generally accepted accounting principles” used in the Act in no way provides an exception to that unambiguous provision, the crucial questions enumerated above also need to be immediately addressed as matters of fairness and transparency mandated by the Act.

As to the very important issue of retroactive effect of the MMA provisions concerning guaranteed music creator participation in the distribution of permanently unmatched royalties at or above the fifty percent level, the IMCOs adamantly believe, as stated at the meeting, that it is wholly illogical for any interested party to argue that Congress intended as it did to require that all accrued, unmatched royalties be rendered to the MLC by Digital Music Providers back to each service’s date of inception, but that the songwriter, composer, transparency and good faith protections guaranteed by the Act would not otherwise be applicable in the event of premature disgorgement of unmatched royalties by Digital Music Providers to music publishers pursuant to prior agreements. This is an issue that certainly requires further attention, and calls for more comprehensive discussion than for which there was time at the meeting.

As was noted several times by various speakers, the Chair of the Senate Judiciary has warned that absent a fair and transparent resolution of these complex issues, the MMA may become a magnet for litigation, the very opposite effect that it was intended to achieve. The IMCOs wholeheartedly agree, and stand ready to assist the USCO in taking all reasonable measures to achieve the transparency, fairness and robust oversight that the legislation demands in order to avoid that undesirable result.

To reiterate in closing, as the IMCOs tried to make clear at the meeting, voluntary disclosure of the specific details of the privately negotiated agreements, redacted to protect legitimate privacy and antitrust concerns, is an important prerequisite to achieving those goals. The IMCOs further repeat their stated beliefs that the USCO has the singular ability if not to compel, at least to facilitate such disclosures in a timely manner, and respectfully urge it to do so.

Further comments of SGA, SCL and MCNA will be forthcoming in regard to the proposed rulemaking by next week’s deadline. As stated at the conclusion of the meeting, however, the IMCOs believe that all parties would benefit by a brief extension for the submissions of such comments until the Monday after the Thanksgiving holiday in order to allow for further discussions among the parties. The IMCOs acknowledge a certain lack of unified support for this suggestion at the meeting, and active opposition by at least one music publisher representative, but continue to believe it to be an advisable accommodation. Those parties wishing to abide by the original deadline would always be free to do so, as was explicitly pointed out.

The IMCOs thank the USCO for scheduling the ex parte discussion, and look forward to continuing this constructive dialog.

Respectfully submitted,

Charles J. Sanders
Outside Counsel
Songwriters Guild of America, Inc.

cc: Regan Smith, General Counsel, The United States Copyright Office
Rick Carnes, SGA President
Ashley Irwin, SCL President
Eddie Schwartz, MCNA President

  1. At least one publisher has indicated an alleged willingness to share details of such payments with any writer who makes inquiry as to his or her own works, an unlikely scenario considering that a huge percentage of writers have no knowledge of the private negotiated agreements in the first place, and –to the knowledge of the IMCOs based on informal canvassing– have not been directly informed about them by their publishers. See, e.g., Ex Parte letter from Sony/ATV dated October 28, 2020: “It has been SATV’s practice to explain to our writers who inquire how these royalties are distributed and reflected on their statements.”

2. Likewise, it seems that the burden of demonstrating how much each Digital Music Provider paid to music publishers is more properly placed on the services who claim to have made the payments, which in turn could be as simple as disclosing a properly predicated and binding assertion that the payments were made, how many were made, what was the aggregate payment, and how was each publisher’s share determined. It is anticipated that such details may be forthcoming from Digital Music Providers in their reporting under the MMA, but that remains uncertain.

3 That is especially so in light of the apparent assertions of one or more Digital Music Providers that they may forego the limited safe harbor provisions provided by the MMA by not turning over to the MLC the full amount of accrued, unmatched royalties dating back to inception of use, probably under the assumption that the potential running of applicable statutes of limitations will provide the same protections as the safe harbor without payment of the royalties due. The IMCO raised this statute of limitations issue at the meeting, and was gratified that at least one Digital Music Provider representative felt that this was an issue worthy of further discussion, hopefully with the important input of the USCO. See also, related comment of DLC that “…a DMP could make the rational choice to forego the payment of accrued royalties entirely, and save that money to use in defending itself against any infringement suits.” Comments Of Digital Licensee Coordinator, Inc. In Response To Notice Of Proposed Rulemaking , Docket 2020-12, Document COLC 2020-0011-0008 (Aug. 17, 2020) at 4.

Songwriters Guild and Society of Composers & Lyricists Copyright Office Comments on Database Ownership and Songwriter Credit in Public Database

[The Songwriters Guild of America and the Society of Composers & Lyricists filed a joint comment with the Copyright Office on proposed rules implementing the public database that The MLC, Inc. is charged with stewarding. They raise a host of issues, but also focus on the ownership issue raised by the Alliance of Recorded Music and the songwriter credit issue raised by Kerry Muzzey.]

Ownership of the Musical Works Database

As to the issue of “ownership” of the Musical Works Database, SGA and SCL were gratified by the USCO’s clear statement quoting the MMA that:
[w]hile the mechanical licensing collective must ‘establish and maintain a database containing information relating to musical works,’ the statute and legislative history emphasize that the database is meant to benefit the music industry overall and is not ‘owned’ by the collective itself. Under the statute, if the Copyright Office designates a new entity to be the mechanical licensing collective, the Office must ‘adopt regulations to govern the transfer of licenses, funds, records, data, and administrative responsibilities from the existing mechanical licensing collective to the public, either for free or at marginal cost, pursuant to the MMA.’

Nevertheless, we feel compelled to repeat once again the admonitions voiced by attorney Christian Castle in his recent submission to the USCO concerning practical issues, problems and anomalies that have arisen even prior to the commencement date of MLC public operations concerning the construction of the Musical Works Database:

I believe that The MLC is encouraging songwriters to correct their song data in the HFA database and that no data from HFA has been transferred to The MLC as yet, and may never be. If The MLC is having data corrected and filled out in the HFA database, then the rules applicable to vendor access to the database may not apply because the Congress’s musical works database is not actually being created at The MLC, it’s being created at HFA. Time will tell if I am correct about this, but it does seem that if I am correct, then The MLC and HFA are working together to exploit an imagined loophole in Title I that violates Congressional intent and certainly the spirit of MMA. Respectfully, the Office should find out what is going on.3

SGA and SCL believe that these are important questions of fact that require answers to ensure that data ownership issues are as clearly defined as possible in advance of any conflicts that may arise. Clarifying that (i) all data and corrections made through HFA will be mirrored in the Musical Works Database in real time, and (ii) that being compelled to provide data to HFA under color of authority from Title I does not constitute a license to HFA for any other purpose, will be important steps forward.

As we have also previously stated, the contractual role and authority of HFA (or any other vendor) should be subject to transparent scrutiny by all interested parties, includingthe music creators whose works are the subject of all information that resides in the database. That includes examination of the contractual rights of the vendor in regard to the data flowing through its own systems and/or those of the MLC, the ancillary vendor use rights (if any) of such data during both the pendency and post-expiration/termination periods of such contract(s), and the clarity of rights ownership of data by the MLC and successor iterations of the MLC (including as regards the Musical Works Database). We respectfully call on the USCO to address more robustly these important issues of transparency and data ownership, and ignore unsupported assertions that transparency and scrutiny of vendor relationships will invite inefficiencies as opposed to clarity and competition.

Songwriter and Composer Names in the Public Musical Works Database

As the USCO is aware and has recognized, SGA and SCL have been consistently outspoken concerning the fact that out of all pertinent identifiers for musical compositions, the names of the music creators of a work are among the only constant and unique data points. In all but the rarest of circumstances, such information is never subject to change, and therefore one of the most important and reliable elements necessary for accurate identification and matching of works.

Moreover, the extension of proper credit to human creators as part of this crucially important Musical Works Database –rather than simply limiting identifiers to the names of corporate assignees of rights which are frequently subject to change and termination– is both appropriate and essential to the fulfillment of the ideals and underpinnings of the MMA set forth in Article I, Section 8 of the US Constitution. As that section makes clear, copyright protections are first and foremost meant to serve the interests of the creators and the public, not the corporate entities that serve in an instrumental but secondary role as rights administrators.

We have therefore remained completely at a loss to understand why this crucial category of information was omitted from the MMA as a specifically required identifier (and why the music publishing community for some reason failed to support our efforts to correct that oversight), and are especially thankful that the USCO has put forth a proposed rule

that requires the MLC to include songwriter and composer information in the database. SGA and SCL continue to remain disquieted, however, with the additional qualifier added by the USCO concerning the standard to be applied by the MLC in seeking music creator data: “to the extent reasonably available to the collective.” Such a limited standard serves to diminish the requisite and explicit value of songwriter/composer identifying information.

We respectfully believe that music creator information should be more clearly defined as a mandatory data point required to be pursued for inclusion in the database by the MLC with vigor, and suggest once again that the rulemaking more specifically reflect the imperative nature of this duty. A more appropriate standard would be, in our view: “to the extent available to the collective through its best efforts to secure such data.” The avoidance of creating loopholes that may permit music publishers to omit music creator information from the data they voluntarily provide to the MLC is essential, and the independent community of songwriters and composers continues to seek the assistance of the USCO in this regard.

In respect to the foregoing, we desire to make clear that SGA and SCL also continue to support the rights of those music creators who may wish not to be publicly associated with certain musical works. That is and must continue to be right of any songwriter or composer. We therefore support the proposed rule put forth by the USCO that grants the MLC discretion to allow music creators the option of having songwriter/composer information listed anonymously or pseudonymously. We would, however, prefer that such a regulation be extended into a mandatory direction to the MLC to accept such direction from a music creator.

Read the whole comment here.

Press Release: @SGAWrites Welcomes Appointment of Shira Perlmutter as New Head of the Copyright Office

 

[The Trichordist sez this is really great news!]

The Songwriters Guild of America applauds the selection of
Shira Perlmutter as the next Register of Copyrights.  Ms. Perlmutter has dedicated her entire professional career to serious study of the importance of strong copyright protections to maintaining a healthy democracy and a vibrant economy, and to acting on her knowledge to ensure that the voice of the creator is always heard.  Her love and respect for the creative arts is well known throughout the community of songwriters and composers, and there will likely be unanimous music creator approval of this excellent choice by the Librarian of Congress Dr. Carla Hayden. 

Thanks are due to her staff, and the entire staff of the US Copyright Office, including general counsel Regan Smith and especially acting Register Maria Strong, who is to be thanked and congratulated for an interim job superbly done.  Congratulations to Ms. Perlmutter, with whom we look forward to working for many years to come in the advancement and protection of the rights of authors and creators.

 –SGA President Rick Carnes

@SGAWrites Suggestions to Copyright Office on MLC Operations Part 3

The US Copyright Office solicited comments from the public about the operations of the Mechanical Licensing Collective.  Those first round of those comments (called “initial comments”) were due in November and the second round of those comments (which are called “reply comments” because they essentially comment on the initial comments) were due December 20.

The Songwriters Guild of America filed initial comments and also filed reply comments.  We’re going to post SGA’s reply comments in three parts and then we’ll post other commenters who we think made really good points (like CISAC and BIEM among others).  This is Part 3 and you can read Part 1 here and Part 2 here.  Note that SGA’s comment includes a post by Chris Castle, but we are going to link to that post rather than reproduce it as you may have already read it.

All the comments focus on some central themes that seem to be on everyone’s mind which can be boiled down to oversight, oversight and more oversight.  While the DLC controls the MLC’s purse strings, the MLC has been given largely uncontrolled power over songwriters that needs to be checked by the government on behalf of the governed.  SGA’s comment can be boiled down to its motto:  Protect Songwriters.

Reply Comments of the Songwriters Guild of America, Inc.
Re: Notice of Inquiry Issued by the United States Copyright Office Concerning the Orrin
G. Hatch-Bob Goodlatte Music Modernization Act of 2018 Titled “Blanket License
Implementation Regulations”

III. The Imperative of the Librarian of Congress Acting Quickly to Appoint A New and Experienced Register of Copyrights

SGA was disappointed by the news on December 9, 2019 that Register of Copyrights Karyn Temple had made the decision to step down from her position as head of the USCO, effective immediately. However, the SGA was pleased that Dr. Hayden acted quickly and appointed Maria Strong as Acting Register. Given Ms. Strong’s breadth of experience in the Copyright Office and knowledge of copyright law, the SGA firmly believes she will adeptly lead the Copyright Office through this transition. Both Dr. Hayden and Karyn Temple shared this confidence in Ms. Strong’s ability in the press release announcing her appointment as Acting Register of Copyrights.

The Copyright Office sits at a crucial time in the MLC oversight and MMA implementation process. It is therefore imperative that the Office act quickly and appoint a permanent register.

The SGA was gratified when Senators Tillis and Coons, the chair and ranking member of the Senate Intellectual Property subcommittee, wrote to Dr. Hayden urging her to promptly appoint the next permanent register and offered to assist the Librarian of Congress in selecting an appropriate replacement for Ms. Temple. (See Attachment F).
In light of the many sensitive issues outlined in its Initial and Reply comments, however, SGA would like to take this opportunity to respectfully urge that any candidates selected as permanent Register be especially knowledgeable about and sympathetic to the needs and Constitutionally based rights of the creator and author community. Such person should also, quite naturally, be without conflicts of interest in regard to prior service on behalf of digital distributors, big tech, and/or corporate copyright owners, and all of their respective trade associations. We are confident that Dr. Hayden and her Library of Congress staff, in coordination with Congress, will be enabled to find a number of qualified candidates who satisfy these criteria, and who will lead the USCO forward into a future in which the implementation of the MMA will prove a resounding positive for all US and global music creators.

IV. Conclusion

SGA thanks the US Copyright Office and the Librarian of Congress for their careful concern regarding protection of the rights and interests of songwriters and composers under the MMA, and for the opportunity to respectfully submit these Reply Comments. SGA further looks forward to providing more of its insights and suggestions in its future submissions, and will gladly respond to any further questions regarding MMA implementation and proceedings.

Respectfully submitted,

Rick Carnes
President, Songwriters Guild of America

@SGAWrites Suggestions to @CopyrightOffice on MLC Operations Part 2

The US Copyright Office solicited comments from the public about the operations of the Mechanical Licensing Collective.  Those first round of those comments (called “initial comments”) were due in November and the second round of those comments (which are called “reply comments” because they essentially comment on the initial comments) were due December 20.

The Songwriters Guild of America filed initial comments and also filed reply comments.  We’re going to post SGA’s reply comments in three parts and then we’ll post other commenters who we think made really good points (like CISAC and BIEM among others).  This is Part 2 and you can read Part 1 here.  Note that SGA’s comment includes a post by Chris Castle, but we are going to link to that post rather than reproduce it as you may have already read it.

All the comments focus on some central themes that seem to be on everyone’s mind which can be boiled down to oversight, oversight and more oversight.  While the DLC controls the MLC’s purse strings, the MLC has been given largely uncontrolled power over songwriters that needs to be checked by the government on behalf of the governed.  SGA’s comment can be boiled down to its motto:  Protect Songwriters.

Reply Comments of the Songwriters Guild of America, Inc.
Re: Notice of Inquiry Issued by the United States Copyright Office Concerning the Orrin
G. Hatch-Bob Goodlatte Music Modernization Act of 2018 Titled “Blanket License
Implementation Regulations”

B. Copyright Office Review and Oversight of Controversial Activities By the MLC As
Denoted By David Lowery and Others

It is well beyond the scope of these comments to delve into the details and individual
administrative issues with which the MLC must deal, such as formulating contractual
arrangements with outside vendors in order to effectively accomplish its statutory duties.

Nevertheless, as noted above, according to independent press reports recently published by sources including former MLC Committee Member David Lowery (“MLC Selects As Digital Services Provider the Company That Sent Fraudulent License Notices to Songwriters”), certain activities of the MLC have aroused legitimate concerns in the independent music creator community that conflicts of interest are already influencing MLC decision-making (see article citations below). As SGA has urged in prior submissions, the USCO and the Librarian of Congress have been empowered under the MMA to monitor, oversee and review MLC activities, and should utilize such authority at the very least to question on an ongoing basis whether the MLC is being managed by its board members in ways consistent with such members’ fiduciary and other duties and responsibilities.

In that regard, SGA believes it is imperative to include for the record citations to three such recent publications concerning MLC activities, in order to call specific attention to the need for robust USCO oversight of issues that rise to the level of potential conflicts of interest such as self-dealing. It is, of course, up to the USCO and the Librarian of Congress to determine the criteria for its active intervention in such potentially problematic MLC matters, consistent with the statutory authority assigned to them under the law. Again, however, SGA urges that strict scrutiny of such issues, once brought to their attention by interested and informed members of the press and public, should at the very least be carefully reviewed and if necessary, investigated and acted upon. Moreover, as some commentators have suggested, the mandating of adoption by the MLC of conflict of interest policies in coordination with the USCO and the Librarian of Congress would likewise be a wise and welcome development.

The three recent, independent articles electronically appended to these Reply Comments for the review and records of the USCO and the Librarian of Congress are as follows (see Attachments C-E):

https://thetrichordist.com/2019/11/27/mlc-selects-as-digital-services-provider-thecompany-that-sent-fraudulent-license-notices-to-songwriters/

https://www.digitalmusicnews.com/2019/11/27/hfa-mechanical-licensing-collectivecontract/

https://www.hypebot.com/hypebot/2019/12/copyright-office-should-establishconflict-
of-interest-policy-for-the-mma-musical-works-database-op-ed.html

C. Failure to Disclose Amounts of Unmatched Royalties Being Held By Digital Distributors

On December 6, 2019, the USCO held a full day MMA symposium in Washington, DC billed as the “Unclaimed Royalties Study Kickoff.” The event was attended by several dozen copyright experts and other interested parties, some of whom represented the MLC and the DLC, and many of whom participated on one or more of several organized discussion panels. At the end of the event, a representative of SGA took the opportunity to note from the podium that in the approximately seven hours of discussion, not one panelist or participant had raised a single question concerning the aggregate size of the unmatched royalty pool being held by the major digital distributors of music (the very subject of the event). The answer to that question, SGA noted, is certainly a key factor in determining the best practices for scoping the size of the problem, and for identifying and distributing such monies to their proper owners. Or it is concerning why this question was not proactively addressed during any of the day’s panels, otherwise asked, SGA asserted, let alone not answered.

SGA has time and again over the past several years posed this same question to representatives of both digital distributors and music publishers (including in private discussions that took place at the Kickoff event), and even to the USCO. Not once has the question of aggregate unmatched amounts been answered, generally because the information appears to be either willfully undetermined or is purposely being withheld by the digital distributors. Estimates have ranged from several hundred million dollars (based upon extrapolations derived from the past experiences of organizations such as SoundExchange) to a high of $1.6 billion discussed at an Austin, Texas SXSW panel in 2017 that featured representatives of NMPA and a legal representative of one of its affiliated creator groups, who appeared to quote that number.

As the MLC and DLC are well aware, the MMA requires demonstrative actions by each that will “ensure that the policies and practices of the collective are transparent and accountable.” See, Section 102(d)(3)(D)(ix)(I)(aa). SGA suggests that consistent with this requirement, the time has come to at last address the issue of how much money in unmatched royalties is being held by the digital distributors, so that the scope of this daunting problem is publicly disclosed and can be fully and effectively addressed. The community of songwriters and composers has the right to know this information, and a USCO regulation requiring its public disclosure by a date certain in the very near future is clearly warranted. SGA respectfully requests that the USCO issue such a regulation as soon as possible concerning this most basic issue of transparency and accountability as required under the MMA, regarding disclosure of unmatched withholdings both now and in the future.

D. Budgetary Earmarks in Support of Bona Fide Efforts to Identify Unmatched Royalties by the MLC

In its Initial Comments, SGA described in some detail its experience as a participant before the United States Copyright Royalty Judges of the Library of Congress’ Copyright Royalty Board (“CRB”) regarding the Determination and Allocation of Initial Administrative Assessment to Fund Mechanical Licensing Collective, CRB Docket No. 19-CRB-0009–AA. Following both SGA’s withdrawal as a participant in those proceedings, and its subsequent submission of its Initial Comments to the USCO, on December 12, 2019 the CRB issued an order (“Order”) approving the settlement negotiated between the MLC and the DLC concerning the issue of Administrative Assessments.

In that Order, the CRB judges interestingly took note of their receipt and rejection of several comments concerning the proceedings submitted by non-parties:

The Judges have been advised by their staff that some members of the public sent emails to the Copyright Royalty Board seeking to comment on the proposed settlement agreement. Neither the Copyright Act, nor the regulations adopted thereunder, provide for submission or consideration of comments on a proposed settlement by nonparticipants in an administrative assessment proceeding. Consequently, as a matter of law, the Judges could not, and did not, consider these ex parte communications in deciding whether to approve the proposed settlement. Additionally, the Judges’ non-consideration of these exparte communications does not: (i) imply any opinion by the Judges as to the substantive merits of any statements contained in such communications; or (ii) reflect any inability of the Judges to question, sua sponte, whether good cause exists to adopt a settlement and to then utilize all express or reasonably implied statutory authority granted to them to make a determination as to the existence, vel non, of good cause.

The above CRB statement omits, quite unfortunately, the fact that while still a participant in the proceeding, SGA (despite its withdrawal) did indeed file a motion with the CRB that included specific comments applicable to any proposed settlement negotiated between the MLC and the DLC. The September 12, 2019, SGA filing included the following clear statement by SGA on behalf of US and global independent music creators, concerning their desire to ensure justice in the eventual distribution of currently unmatched royalties:

[E]ven as it seeks to withdraw its Petition to Participate in this Proceeding, SGA respectfully implores the Judges…to make the proper funding for MLC activities specifically designed to identify the proper owners of unmatched musical compositions [and royalties] wherever they may reside in the world… one of the highest priorities of these Proceedings…. It further, respectfully requests that the Judges undertake whenever appropriate, to emphasize their intention and expectation that certain resources have been specifically provided for and must therefore be devoted to use in identifying the proper owners of such unmatched compositions and royalties by the MLC…. The clear articulation of such judicial intent, if the Judges deem it appropriate, will be enormously helpful in ensuring transparency, fairness and hopefully success in the carrying out by the MLC of its duties, a result that will be appreciated by every music creator not only in the United States, but throughout the world.” Motion to Withdraw Petition to Participate filed by SGA with CRB, September 12, 2019, Docket No. 19-CRB-0009–AA.

The decision by the CRB judges to put aside SGA’s requests, presumably on the grounds that SGA’s withdrawal (the reasons for which are explained in SGA’s Initial Comments) negated the ability of the CRB to consider such comments, is disappointing at best. SGA, however, is appreciative for being enabled to make the same requests of the USCO, for the same reasons articulated in its motion to the CRB and in its Initial Comments. As SGA stated:

[I]n a situation in which those who control the MLC will likely benefit from not identifying the proper owners of unmatched works (by reason of the fact that potentially hundreds of millions of dollars in royalties pertaining to ‘permanently’ unmatched works will eventually be distributed on a market share basis), every effort must be made to ensure that the search process for those rightful owners be a bona fide and sufficiently financed global effort. (emphasis added)…. Moreover, despite contrary assertions by the MLC, SGA remains unconvinced that the presence on the MLC board of a small minority of music creators (no matter how diligent and well-meaning they may be) will be able to prevent the major music publishing corporations from attempting to successfully exert undue influence. SGA is highly concerned that such multi-national conglomerates may already be seeking to diminish the MLC’s ability to secure proper financing specifically earmarked for designing and carrying out a global program to identify the proper owners of the musical compositions connected to the huge, above-referenced cache of unmatched royalties. SGA similarly doubts that the independent music publishers on the MLC board, many of whom are contractually and/or commercially tied to the major music publishers, will be sufficiently motivated to join with those few MLC songwriter board members to ensure that the rights and interests of such yet-to-be identified music creators and small publishers are properly respected.

In consideration of the foregoing, SGA once again respectfully requests that the USCO and the Librarian of Congress promulgate regulations that make clear to the MLC the expectation that a certain, adequate percentage of the MLC’s Administrative Assessment shall be devoted to undertaking a bona fide and reasonably exhaustive, global search for the rightful owners of currently unmatched royalties, as explicitly intended by Congress under the MMA.

To be continued in Part 3.

@SGAWrites Suggestions to @CopyrightOffice on MLC Operations Part 1

The US Copyright Office solicited comments from the public about the operations of the Mechanical Licensing Collective.  Those first round of those comments (called “initial comments”) were due in November and the second round of those comments (which are called “reply comments” because they essentially comment on the initial comments) were due December 20.

The Songwriters Guild of America filed initial comments and also filed reply comments.  We’re going to post SGA’s reply comments in three parts and then we’ll post other commenters who we think made really good points (like CISAC and BIEM among others).  Note that SGA’s comment includes a post by Chris Castle, but we are going to link to that post rather than reproduce it as you may have already read it.

All the comments focus on some central themes that seem to be on everyone’s mind which can be boiled down to oversight, oversight and more oversight.  While the DLC controls the MLC’s purse strings, the MLC has been given largely uncontrolled power over songwriters that needs to be checked by the government on behalf of the governed.  SGA’s comment can be boiled down to its motto:  Protect Songwriters.

Reply Comments of the Songwriters Guild of America, Inc.
Re: Notice of Inquiry Issued by the United States Copyright Office Concerning the Orrin
G. Hatch-Bob Goodlatte Music Modernization Act of 2018 Titled “Blanket License
Implementation Regulations”

I. Introduction and Statement of Interest

These Reply Comments are respectfully submitted by the Songwriters Guild of America, Inc. (“SGA”), the longest established and largest music creator advocacy and copyright
administrative organization in the United States run solely by and for songwriters, composers, and their heirs. Its positions are reasoned and formulated solely in the interests of music creators, without financial influence or other undue interference from parties whose interests vary from or are in conflict with those of songwriters, composers, and other authors of creative works.

Established in 1931, SGA has for 88 years successfully operated with a two-word
mission statement: “Protect Songwriters,” and continues to do so throughout the United States and the world.

SGA’s organizational membership stands at approximately 4500 members, and through its affiliations with both Music Creators North America, Inc. (MCNA) (of which it is a founding member) and the International Council of Music Creators (CIAM) (of which MCNA is a key Continental Alliance Member), SGA is part of a global coalition of music creators and heirs numbering in the millions. Of particular relevance to these comments, SGA is also a founding member of the international organization Fair Trade Music, which is the leading US and international advocacy group for the principles of transparency, equitable treatment, and financial sustainability for all songwriters and composers.

These Reply Comments are meant to supplement the initial comments (“Initial Comments”) filed by SGA in its submission dated November 8, 2019 (see Attachment A), the full content of which is hereby repeated and reconfirmed.

The two most important points stressed by SGA in those Initial Comments were as follows:

1. The obvious and overwhelming necessity for inclusion of music creator information in
the Mechanical Licensing Collective’s (“MLC”) musical works database; and,

2. The equally imperative necessity for robust US Copyright Office oversight of the MLC’s
carrying out of its statutory duties, commitments and activities, especially regarding the
identification of unmatched works and royalties.

It was originally anticipated that SGA’s Reply Comments would focus chiefly on the recommendations submitted by other individuals and organizations as part of the initial round of inquiry. Intervening events concerning the activities of the Mechanical Licensing Collective (MLC) since SGA’s initial submission, however, have caused SGA to recalibrate its focus. Due to the importance of conveying to the US Copyright Office (“USCO”) and the Librarian of Congress some of the very concerning information that has come to light over the past several weeks, SGA believes its Reply Comments must now of necessity deal principally and forthrightly with those issues rather than with the critiquing of submissions filed by its colleagues.

II. Additional, Recent Developments Illustrating the Necessity for Close Scrutiny and Oversight of the MLC by the USCO and the Library of Congress

A. The Resignation of Recording Artist/Songwriter/Music Creator Activist David Lowery from the MLC, and the Process of Replacing Music Creator Members on the MLC Board and Committees Prior to its designation by the USCO and the Librarian of Congress as the organization that would serve as the MLC, the entity established principally by the major music publishing conglomerates and known as the NMPA/MLC conducted an extensive campaign aimed at gaining industry support for its MLC candidacy.

As part of that campaign, it and its affiliated music creator and publisher organizations frequently raised the participation of recording artist/songwriter/music creator activist David Lowery on the Unclaimed Royalties Oversight Committee (“URO Committee”) as potentially the most compelling proof of the entity’s commitment to ensuring that the voice of the independent music creator would always be heard.

Throughout his career, Mr. Lowery has been an outspoken advocate for the rights and interests of musical artists and creators. His mere presence within the NMPA/MLC’s proposed Committee structure legitimized for many the group’s candidacy among independent songwriter and composer groups. Those organizations might otherwise have objected more strenuously to an entity controlled in large part by the multi-national music publishing conglomerates being designated to serve as the MLC.

On July 5, 2019, the NMPA/MLC was indeed selected as the official MLC, and Mr. Lowery was simultaneously approved to serve on its URO Committee. Within a few short weeks after that announcement, however, Mr. Lowery resigned from the URO Committee and disassociated himself from the MLC with the statement that he “lacked the bandwidth” to carry out the watchdog role he had hoped to fill. Shortly thereafter, Mr. Lowery began to publish commentaries highly critical of certain decisions and activities being carried out by the MLC (and highly revealing of his apparent reasons for resigning), the gravity of which issues will be discussed further, below.

Mr. Lowery’s sudden and unexpected departure from the MLC and the URO Committee,
however, has raised even more immediate concerns within the independent music creator community, not only as to the reasons why he might have resigned, but also over the process by which he will be replaced. It is the position of SGA that a system which would allow the MLC board of directors (consisting of ten music publisher representatives and just four music creators) to select and/or approve replacement directors and committee members on behalf of the creative community, without meaningful input from creators or approval by the Librarian of Congress and the Register of Copyrights, is an absurdity. Such an unbalanced, unchecked process would virtually guarantee the removal of what little influence actual music creators have over future MLC activities and decision-making—a result wholly inconsistent with Congressional and Executive intent (especially as regards the crucial work of the URO Committee).

As SGA pointed out in its comments to the US Copyright Office dated April 22, 2019 concerning the original designation of the MLC (see Attachment B):
With the knowledge that ‘permanently’ unmatched royalties will eventually be
distributed on a market share basis to them, [the] largest music publishers will almost certainly do all they can to influence, hamstring and obscure the search process…. It will take highly experienced, non-conflicted and strongly independent-minded board members of the Mechanical [Licensing] Collective to resist this pressure, and to act in ways that fulfill their duties up to the mandated standards of fairness, transparency and accountability set forth in the Act.

The necessity for those characteristics in board members is amplified by the fact that the Mechanical Collective board may even override the recommendations of its own, statutorily established Unclaimed Royalties Oversight Committee if it sees fit to do so. It thus falls to the Register of Copyrights to serve as investigator, analyst and arbiter concerning this crucial, threshold issue of appropriate board and committee member selection as part of its evaluation of the competing candidates for designation as Mechanical Collective.

In honing in on its concerns regarding that specialized duty of the Register, members of Congress took the opportunity in both the Senate and House Reports to elaborate on their expectations regarding the qualifications of board and committee members proposed for service by any Mechanical Collective candidate, and the obligation of the Copyright Office under the direction of the Register to use its own, appropriate judgement in independently evaluating and verifying the credentials of those directors and committee members proposed. That Congressional posture was undoubtedly taken to ensure that all board and committee members of the Mechanical Collective possess the proper background and abilities to execute their duties to protect the rights of creators and other interested parties without conflict, pursuant to the terms of the Act.

Specifically, the applicable section of the Senate Report reads:

The Board of Directors of the new collective is required to be composed of individuals matching specific criteria. The detailed requirements concerning the overall framework of the Board of Directors of the collective and its three committees, the criteria used to select individuals to serve on them, and the advance publication of their names and affiliations all highlight the importance of selecting the appropriate individuals. Service on the Board or its committees is not a reward for past actions, but is instead a serious responsibility that must not be underestimated. With the advance notification requirement, the Register is expected to allow the public to submit comments on whether the individuals and their affiliations meet the criteria specified in the legislation; make some effort of its own as it deems appropriate to verify that the individuals and their affiliations actually meet the criteria specified in the legislation; and allow the public to submit comments on whether they support such individuals being appointed for these positions. It has been agreed to by all parties that songwriters should be responsible for identifying and choosing representatives that faithfully reflect the entire songwriting community on the Board.” (emphasis added) S. Rept. 115-339 at 4-5.

The otherwise identical section of the House Report concludes on the following note:

During the entire discussion of the legislation, it has been agreed to by all parties that songwriters should be responsible for identifying and choosing the songwriter representatives on the Board. The Committee strongly agrees with such an approach. (emphasis added) H. Rept 115-651 at 5.

Further, it seems of particular importance that the Executive Branch also regards the careful, post-designation oversight of the Mechanical Collective board and committee members by the Librarian of Congress and the Register as a crucial prerequisite to ensuring that conflicts of interest and bias among such members not poison the ability of the Collective to fulfill its statutory obligations for fairness, transparency and accountability. The Presidential Signing Statement, in fact, asserts unequivocally that ‘I expect that the Register of Copyrights will work with the collective, once it has been designated, to ensure that the Librarian retains the ultimate authority, as required by the Constitution, to appoint and remove all directors.’ (emphasis added)

Pursuant to such clear guidance from both Congress and the White House concerning the selection and replacement of music creator board and committee members, SGA urges the adoption by the USCO of regulations mandating inclusion in the MLC by-laws of a process that includes meaningful music creator participation in the selection process without music publisher interference, with further review and approval by the USCO and the Librarian of Congress of all music creator candidates for MLC board and committee service. To do otherwise would be akin to empowering the wolves to select the watchdogs that purportedly guard the sheep. And that is a result that is not only emphatically in conflict with Congressional intent, but one that is also guaranteed to produce exactly the opposite, long-term results Congress and the Executive Branchwere seeking by passage of the Music Modernization Act (“MMA”): remunerative fairness and justice for creators consistent with the principles set down in Article I, Section 8 of the US Constitution.

To be continued in Part 2.

Press Release: Songwriters Guild Of America Files Reply Comments With Us Copyright Office Again Urging Stringent Oversight Of Music Licensing Collective

We wanted to post this press release from the Songwriters Guild regarding its reply comments to the Copyright Office public consultation on regulating the Mechanical Licensing Collective.

The Guild generously raises some very helpful issues and also is concerned about David’s departure from the MLC.  Unfortunately, the Guild’s comment is still not available on the Regulations.gov website, so Artist Rights Watch linked to a copy of it.  We’re not quite sure why the Copyright Office hasn’t gotten around to posting the Guild’s comment (or David’s yet for that matter) along with the 32 others they have posted before the Christmas break, but we’ll keep you informed on their progress.  Hopefully that’s just an oversight that we noticed because we’re back to work now.

Here’s the press release.

New York, December 20, 2019–  The Songwriters Guild of America (SGA), the longest established and largest music creator advocacy and copyright administrative organization in the United States run solely by and for songwriters, composers and their heirs, has submitted a series of comments and requests to the US Copyright Office regarding oversight of the newly-formed Mechanical Licensing Collective (MLC).  Its comments were filed on December 20, 2019 at the invitation of the Register of Copyrights, pursuant to the duties assigned to the Librarian of Congress and the Copyright Office under the Music Modernization Act of 2018 (MMA).  SGA’s comment is here.

“Due to the inherent and sometimes unavoidable conflicts of interest surrounding the formation and activities of the MLC under the law,” states SGA president and songwriter Rick Carnes, “the music creator community believes that the highest degree of scrutiny must be applied by the US Government in overseeing MLC activities.  Hundreds of millions of dollars in songwriter and composer royalties will be at stake on an annual basis, and to protect us from conflicts of interest within the MLC in regard to such issues as matching currently unclaimed royalties to their proper owners, Congress wisely placed the responsibility of evaluating MLC  activities for fairness, transparency and accuracy to the US Copyright Office.  SGA fully supports the efforts of the Register of Copyrights to formulate regulations that protect the rights of music creators as Congress intends, and will work with the Office to help ensure it is enabled to vigorously and effectively perform its oversight functions.”

Specifically, the comments filed by SGA include requests for regulations governing the MLC that mandate:

  1. Recognition of the obvious and overwhelming necessity for inclusion of songwriter and composer information in the MLC Musical Works Database;
  2. Adoption of internal MLC rules requiring adherence by board and committee members to strict conflict of interest policies;
  3. Inclusion in the MLC by-laws of a process for replacing music creator board and committee members that includes meaningful music creator community participation in the selection process without music publisher interference, and review and approval by the USCO and the Librarian of Congress of all such music creator candidates and appointees. (“To do otherwise,” states Carnes, “would be akin to empowering the wolves to select the watchdogs that purportedly guard the sheep”);
  4. The immediate compilation, calculation and publication of the aggregate amounts of unmatched royalties being held or already transferred to the MLC by digital music distributors, and to update such information on an ongoing basis;
  5. The allocation of sufficient funds specifically enumerated in the MLC budget to be utilized solely for mounting a bona fide, global effort to identify unmatched royalties.

SGA also applauded the recent appointment of Maria Strong to serve as Acting US Register of Copyrights, and urged the Librarian of Congress to select as permanent Register a person  especially knowledgeable about and sympathetic to the rights and needs of the creator and author community, and without conflicts of interest in regard to prior affiliation with digital distributors, big tech, and/or corporate copyright owners (and their respective trade associations).

Finally, SGA suggested that the Copyright Office exercise diligent oversight in reviewing certain recent MLC initiatives, including the awarding of contracts to potentially controversial third parties such as The Harry Fox Agency and ConsenSys, and in investigating the sudden withdrawal from participation on the MLC  Unclaimed Royalties Oversight Committee of songwriter, recording artist and music creator rights activist David Lowery.

“SGA’s intended role in this process,” concludes Carnes “is to serve as an independent monitor of MLC activities, working with the US Copyright Office and other US Government agencies in ensuring that the rights and interests of music creators under the MMA are fully observed.  We have operated as an organization for over 85 years with a two-word mission statement: Protect Songwriters. And that is exactly what we intend to do in this case.”

 

 

“Fair Trade Music” Initiative Launched

FROM THE PRESS RELEASE:

For the first time in music industry history, over 25,000 songwriters and composers from nearly fifty countries throughout Europe, North America, South America, and Africa have joined together to form a new, wholly independent advocacy Network for music creators. Its immediate goal will be the championing of a set of Fair Trade Music Principles designed to ensure transparency, fair compensation, and autonomy for music creators in an increasingly complex and non-transparent music business landscape.

The Fair Trade Music Principles are as follows:

1. FAIR COMPENSATION — Music business models must be built on principles of fair and sustainable compensation for music creators.

2. TRANSPARENCY–International standards must be developed and adopted that ensure efficient and transparent management of rights and revenues derived from the use of our works. These standards must apply to all entities that license such rights, and which collect and/or distribute such revenues.

3. RECAPTURE OF OUR RIGHTS–Music Creators must have the ability to recapture the rights to their works in a time frame no greater than 35 years, as is currently available to songwriters, composers and artists in the United States. The effect of recapture of rights must apply globally.

4. INDEPENDENT MUSIC CREATOR ORGANIZATIONS–Music Creators must have their own independent entities that advocate for, educate and provide knowledgeable support for members of their community, including aspiring songwriters, composers and artists. Music Creators speak for themselves, not through those with interests in conflict with them.

5. FREEDOM OF SPEECH–Music Creators must be free to speak, write and communicate without fear of censorship, retaliation or repression in a manner consistent with basic human rights and constitutional principles.

READ MORE HERE:
http://online.wsj.com/article/PR-CO-20130604-903736.html

YOU MAY ALSO ENJOY:
Principles for an Ethical and Sustainable Internet