Update on the Music Modernization Act: An MLC is Selected, What Now?
Almost immediately following passage of the Music Modernization Act (“MMA”), the Copyright Office turned to one of its principal tasks under the Act: the selection of a new Music Licensing Collective (or “MLC”) to administer the licensing and payment of mechanical royalties.
Two contenders put themselves forward for the job. One, the American Music Licensing Collective (“AMLC”), spearheaded by Jeff Price formerly of Tunecore, put together an impressive leadership slate consisting of industry talent, songwriter advocates, and data specialists. The other was put forward by many industry entities that had originally pushed for the MMA, including the National Music Publishers Association and songwriter advocates SONA and NSAI: the Music Licensing Collective (“MLC”).
Since passage of the MMA, the competition and rhetoric has been heated — sometimes overheated, in our view. Ultimately, the Office found the MLC best fit the criteria required by the MMA.
The Artist Rights Alliance opted not to focus on the AMLC v MLC battle royale. Both proposed entities, in our view, include songwriter advocates with integrity.
What is most important to us the fair distribution of royalties, particularly unmatched royalties being held by music services in what’s become informally called the “Black Box.” For years, digital services have offered music to their listeners while claiming they could not find the license holder (and so did not know who to pay for the rights). Large sums of money have been held by the services essentially in escrow. The total amount owed by digital services is unknown and disputed though it is clear that tens of millions and maybe hundreds of millions of dollars are a good ballpark estimate of what is at stake.
The MLC is tasked with administering all royalties including the “Black Box.” Here’s the catch: if the MLC can’t find the songwriters who are owed these monies and the songwriters don’t themselves find and sign up with the MLC, in as little as three years the unmatched royalties will be redistributed by overall market share — in other words paid out to songwriters based on their share of all the already claimed royalties. But those with the highest market share are likely to have already been fully paid what they are owed — they are the ones who have registered their works with the MLC or have direct licensing agreements with music users. Giving them a share of “black box” is a crude solution that risks a “double dip.” It should be a last resort.
We believe it’s critical that those payments go to the songwriters who actually wrote the songs music services used to the maximum extent practicable. It’s fair to assume that many songwriters who haven’t properly registered their works for payment often have not done so because they don’t know how to (or event that they are supposed to) or that they simply lack the resources. Many of the songwriters who know the least about how this system works likely need the money the most.
We are pleased that the MLC’s submission to the Copyright Office includes a commitment “to implement policies allowing use of (the MLC’s) discretion to retain unclaimed accrued royalties and continue matching efforts in situations where there is reasonable evidence that this will result in material increases in matching success.”
We intend to closely monitor the MMA’s implementation to ensure that the new MLC keeps that promise.
