Statements of Account – The Trichordist

We’ve been reviewing the comments posted on the Copyright Office website regarding the accounting regulations for Section 115. We are humbled that so many of you used our post as a guideline for your own comments, and we learned a lot from all of you. Thank you. Thank you for your thoughts and thank you for helping to take ownership of our future.

We thought you might be interested in reading comments from Lisa Thomas Music Services (publisher for independent songwriter/recording artists such as Don Henley and Glenn Frey of the Eagles, Randy Newman, Janet Jackson, Walter Becker of Steely Dan, Ray D. Parker, Jr., Mary Chapin Carpenter and Bonnie Raitt, among others), songwriters Danny O’Keefe , Michelle Shocked, Don Coyer, and Bob Regan as well as David’s comment. All of these songwriter’s thoughtful comments are part of the public record now and are up on the Copyright Office site, but we’ll reproduce David’s comment here:

December 10, 2012

Tanya M. Sandros
Deputy General Counsel
U.S. Copyright Office
101 Independence Ave. S.E.
Washington, D.C. 20559-6000

Re: In the Matter of the Mechanical and Digital Phonorecord Delivery Compulsory License, Proposed Regulations for Reporting Monthly and Annual Statements of Account for the making and distribution of phonorecords, Docket No. 2012-7

Dear Ms. Sandros:

I am David Lowery and I founded the bands Cracker and Camper Van Beethovan. I am also an instructor in the Music Business Program at the University of Georgia at Athens. I am writing to you regarding the proposed regulations for statutory licenses for mechanical royalties. These views are my own and should not be attributed to anyone else.

Other comments will address each of the proposed regulations, but I wanted to give you some general thoughts based on my experiences as a songwriter and music publisher. I want to emphasize that I am all for making music licensing easier, but am concerned that the Copyright Office get a clear picture of what it’s like for songwriters, especially independent songwriters, to live with the laws you make.

1. No Audit: As a songwriter, I have no idea whether I am being paid correctly by any digital service and I am not allowed to audit them. As far as I know, no digital service complies with the rules anyway, so it almost doesn’t matter whether the Copyright Office keeps them the same or changes the rules. This is untenable. When I gave a mechanical license to my record company, I could always audit the label’s mechanical royalty accountings if I chose to do so. Let’s be clear—the new boss is way worse than the old boss. If statements from digital services could be at least as bad as record company accountings, it would be a major step forward.

Respectfully, I would suggest that the Copyright Office should be working especially hard to provide songwriters with a good analog for a royalty audit.

2. Bait and Switch: I routinely receive a “notice of intention to use” my work that is always late. This violates the basic rule of statutory licensing. The “NOI” I receive often comes with a letter asking me to log into a website to see if I am owed money by the digital service or how much I am owed. When I go to the website I am asked to “sign” a click through agreement that makes significant changes to the few statutory rights I have. This is the worst kind of trickery and is worse than the worst direct mail campaigns because I can always throw away the junk mail. This trickery involves my life’s work and I’d rather not throw it away.

I respectfully suggest that the Copyright Office should expressly prohibit anyone who uses the statutory license from further burdening songwriters by trying to trick them into a click through agreement that makes them give up the rights the songwriter is entitled to under the Copyright Act.

3. Minimum Amount for Payment: Digital services sometimes issue a check for one penny along with the bait and switch trick license—yes, $0.01. I have no idea why they send a penny check, but I assume it has something to do with proving they paid for the rights they get in their click agreement. I also understand from songwriter friends that it is pretty common to get penny checks. So if these services can send a penny check when it benefits them, then why do I have to wait to earn $50 before I get paid? And what about the bait and switch technique is supposed to give me confidence that these services will ever pay my $50 and how would I ever know what my earnings were if I can’t audit?

I would respectfully point out to the Copyright Office that these services chose to get into the music business and they have known for over a decade what their obligations are. They save a bunch of money by using the statutory license instead of direct licensing, and I do not understand why they cannot simply pay what they owe when they owe it like everyone else is supposed to do.

4. Black Box: If I am lucky enough to get a certified statement from a CPA, I have no way of knowing if the CPA ever looked at my earnings or if there are any “black box” earnings that I’m entitled to. Given that I get no certifications and no audits, there’s no telling how much money should have been paid that wasn’t.

I respectfully suggest that the Copyright Office work with CPA associations to find clear guidelines for CPAs to follow that make the services pay out 100% of the money owed to songwriters or give it to the State unclaimed property agencies like an unclaimed utility deposit.

5. Don’t Protect Scofflaws: I am not convinced that these services have gotten all these mistakes done without a plan. Some may be innocent mistakes, but some seem very calculated. Respectfully, the Copyright Office should not allow services who have never complied with the law to get protection of the laws they have evaded.

Thank you for this opportunity to hear from me and other songwriters on this important issue.

Sincerely,
David C. Lowery

December 12, 2012December 12, 2012 by thetrichordist

The Copyright Office public comment period for statements of account on mechanical royalties closes tonight, so there’s still time for songwriters to post comments about the proposed regulations.

The new regulations apply to the license that some services like Spotify rely on for on-demand streaming as well as the new categories of statutory licenses that the Copyright Royalty Judges are expected to approve any day now. It’s probably hundreds of millions of dollars–and we have no idea whether it ever gets paid or paid right.

Seem like a big number? Not really when you consider that services like Spotify launch with millions of tracks and those require millions of mechanical licenses for on demand streaming. They could go to the publishers and songwriters for a direct license, but they prefer to “carpet bomb” notices to songwriters. If you ask a big publisher they will tell you that they receive hundreds of thousands of these notices every year–and 95% of them are filed late and should be terminated.

One thing the regulations required is that online services have to send songwriters a monthly statement of account certified by an officer of the retailer company as correct. As far as we can tell, this has never happened. Why? Because a “certification” means that the officer of the company is taking responsibility for the accurateness of the statement. Personal responsibility. This is exactly the reason why the law requires the certification and exactly the reason why no one has done it as far as we can tell.

The law also requires that a CPA certify the statements on an annual basis. This has been done once that we know of.

Bear in mind–these licenses have been in place for 10 years. No certifications in 10 years. And now the retailers are asking for yet another break through the Digital Media Association (you’ll remember them from IRFA and trying to screw ASCAP songwriters).

Oh, and by the way–you are prohibited from auditing any service that uses the statutory license and the best you can rely on are these certifications and the CPA auditing the retailer’s financials.

We here at the Trichordist think that there are certain aspects of the way that big tech companies have handled the mechanical royalty process that is absolutely horrendous, particularly for indie writers, but truly for everyone.

We want to encourage you to write your own comment. It can be a letter, you don’t have to be a lawyer or hire one. If you want to read what other people are saying, you can read the first round of comments at this link: Initial Comments on Statements of Account.

When you get it written, you can file it at this link: Copyright Office Electronic Filing Page

In particulary, you might want to read comments from Bob Segar’s publisher, Gear Music or Austin attorney Chris Castle.

Here’s a few reasons why that you might consider in writing to the Copyright Office:

1. No Audit: As a songwriter, I have no idea whether I am being paid correctly by any digital service and I am not allowed to audit them. This is untenable.

2. Publishers Clearing House: I routinely receive a “notice of intention to use” my work that is always late. This violates the basic rule of statutory licensing. The “NOI” I receive comes with a letter asking me to log into a website to see if I am owed money or how much I am owed. When I go to the website I am asked to sign a click through agreement that makes significant changes to the few statutory rights I have. This is the worst kind of trickery and is worse than the worst direct mail campaigns because I can always throw away the junk mail. This trickery involves my life’s work!

3. Black Box: If I am lucky enough to get a certified statement from a CPA, I have no way of knowing if the CPA ever looked at my earnings or if there are any “black box” earnings that I’m entitled to. Given that I get no certifications and no audits, there’s no telling how much money should have been paid that wasn’t.

4. Don’t Protect Scofflaws: You cannot allow services who have never complied with the law to get protection of the laws they have evaded.

December 10, 2012December 10, 2012 by thetrichordist

The Trichordist

Tag: Statements of Account

Songwriter comments on Section 115 Rulemaking

What Can Songwriters Do: Copyright Office Comment Period Ends Today for Mechanical Royalty Statements of Account

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