While all sectors of the industry came together to ensure passage of the Music Modernization Act (MMA), it looks like the process of financing the Mechanical Licensing Collective will be a bit more contentious, according to David Israelite, CEO and president of the National Music Publishers Association, who spoke at the music publishing summit American Independent Music Publishers (AIMP) in New York City on Wednesday (June 12).
He elaborated that if the two coalitions with competing plans for how to run the MLC — the “Industry Consensus Group,” backed by the Recording Industry Association of America (RIAA), NMPA, ASCAP and BMI, among others, and the American Music Licensing Collective (AMLC) — can’t agree on the necessary funding to build and operate the MLC, the decision will need to go before the Copyright Royalty Board.
During several panels summit at the day-long event, attendees were also filled in on some of the behind-the-scenes drama involved in making the MMA a reality, as well as the implementation of different aspects of the law.
At the first panel, moderated by Billboard deputy editor Rob Levine, panelists gave their perspective on how the bill overcame so many obstacles to eventually become law. RIAA chairman and CEO Mitch Glazier pointed out that the story of everyone working together to pass the MMA has a much less warm and fuzzy beginning: It started with many of the different sectors suing each other.
“Each part of the bill had to have the rights enforced in a court of law,” he said. The Compensating Legacy Artists for their Songs, Service and Important Contributions to Society Act (mercifully abbreviated to CLASSICS), a precursor to the MMA, existed because “an artist in Tennessee [Mark Volman of the Turtles] had to bring a lawsuit” against SiriusXM. In that case, Glazier said Israelite “had the guts to enforce publisher rights” by holding the digital service providers (DSPs) accountable for payments due to publishers and songwriters for songs where they couldn’t properly match the publishers to the records in question.
But getting a consensus wasn’t enough, Israelite noted. The MMA had to be crafted so that “others,” like the radio industry, “that could have stopped it” would agree to stay to the sidelines.
Moreover, added American Association of Independent Music (A2IM) CEO Richard James Burgess, “if one of us dropped out, it could have scuttled the bill. We wanted to include terrestrial performance rights [for sound recordings], but it became obvious that the bill wouldn’t happen if that was included. So there was a lot of compromise and a lot of coming together and trying to not get in the way.”
Some industry players, Glazier said, waited out the process on the sidelines and tried to step in to stop the MMA only as it neared its conclusion. But that didn’t work; if those players had engaged from the beginning, they would have gotten more out of the law.
Having an “army of songwriters” on the Capitol helped the bill get over the finish line, he added. Additionally, even though many of the A2IM label members don’t have pre-1972 catalogs that would benefit from the law giving those master recordings the right to collect royalties, they came to D.C. to help lobby for the bill. Those actions, he said, showed that those creators were “not just out for themselves, but for the greater good of the community.”
While the MMA requires DSPs to underwrite building and operating the MLC, those rules aren’t active until Jan. 1, 2020. Until then, Israelite said, “that means the money has to come from somewhere. That is what the NMPA is doing. We are prepared to fill that void until it will get funded.”
He added that if the Industry Consensus Group is selected by the Copyright Office to run the MLC, it is unlikely that it will reach an agreement with the DSPs on how much is necessary to fund the collective. That would necessitate a rate trial overseen by the Copyright Royalty Board to determine how much will be needed to build and operate the MLC. “The digital services are trying to underfund it,” he said.
Register of Copyrights Karyn Temple thanked the industry for giving the agency a new workload. “We worked very closely with Congress on the MMA,” she said, noting that much of the bill had come out of a report that the Copyright Office prepared in 2011. “Now that the bill has crossed the finish line and became law, Congress recognized our role and gave us a lot of things to do… We immediately had to stay up all night for weeks” to get everything done by some of the deadlines in the law.
“First off,” she said, “the Copyright Office is reviewing the two organizations that are vying to operate the MLC; and as soon as it gets done with that, the Copyright Office will have to help draw up regulations for the MLC; and it will have to periodically review the MLC. It also has a role in helping to spread the word and educate songwriters and publishers about the MLC to help insure everyone gets paid correctly.”
With regard to choosing between the Industry Consensus Group and the AMLC, she said, “We understand there are certain ambiguities about the wording concerning the designated party needing to be endorsed by and enjoy substantial support from musical copyright owners.”
Some say that market share should be measured by the the number of licenses while, others say it should be measured by the revenue that the licenses generate. To that end, she said the Copyright Office hasn’t made any firm decision “but we did say that it was clear that it has to be a U.S.-based market share for licenses.”
Temple also reported that the Copyright Office had asked for and received 600 reply comments online about the MLC. “Our goal is to closely review comments and insure that we have a transparent process,” she said, while assuring publishers and songwriters that the Copyright Office will fulfill all the work it needs to do “to insure that the MLC works for you.” She implored attendees to come forward with any ideas on how to get the word out on the MLC to songwriters.
Moving onto to other items pertaining to the Copyright Office, she said that the wait time between filing documents and being able to view them in the database has been reduced to five months. “That’s not great, but we are still working on it,” Temple said. “We understand how important it is to catch up with registration… We also are improving our practices for you to register multiple types of works together in one group, i.e. all the liner notes, all the songs, the sound recording and liner notes.”
The Copyright Office is also working on a new public record database to digitize all of its information so that the paper archives and the current digital database are all in one system.
Finally, she urged more songwriter and publishers to take advantage of the pre-registration process that the copyright office has set up. “We have only received 600 pre-registrations this year,” she said.
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