AMLC Tells Nashville It Is Best Pick to Form Mechanical Licensing Collective, Arguing NMPA-Led Group Has Too Many Conflicts

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Five members either sitting on the board of directors or one of the committees of the American Mechanical Licensing Collective made their case yesterday to the Nashville songwriting community as to why they should be chosen to form the mechanical licensing collective (MLC) created by the Music Modernization Act and to administer the blanket license the bill also created.

The AMLC is one of two groups vying to be named the group to form the MLC by the U.S. Copyright Office. The other group, called the industry consensus group, is sponsored by the National Music Publishers Assn. and the Nashville Songwriters Association International, which held a town hall earlier in the day in Nashville but for a different reason: to focus on the appeal of the publishing rates awarded by the Copyright Royalty Board.

The MLC will collect mechanical publishing royalties from on-demand digital services like Spotify and Apple Music and disburse it to the copyright owners. The MLC is also charged with creating and managing a database that matches recordings to composition so that the money gets to the rightful owners.

John Barker of Clearbox Rights began the event asking each of the members present -- four on the stage and one attending remotely -- to explain why they believe their collective would be different from the one being formed by the NMPA.

Practically all of them responded with an answer about "black box" money, which is royalties for songs played where the recording couldn't be correctly identified and matched to publishers. The MMA calls for that money to be disbursed by market share, if the rightful owners can't be found. Since the major publishers all have direct licenses with the digital services and also all sit on the board of the competing collective, AMLC members on the stage said they were worried that its competitors would have a conflict of interest and award themselves money that rightfully belongs to independent songwriters, who don't know how to register their songs in the right places to ensure they get paid.

Jeff Price, who heads up Audiam, said that he wants the AMLC to be chosen because its board members do not have an inherent conflict of interest, which he said is not true of the board of the competing application, which will be prone to choose to distribute black box money by market share.

Price said that when he was running Tunecore, which he had co-founded based on sales that occurred overseas, he estimated that the artists they distributed, many of which wrote their own songs, never got paid on $100 million in publishing royalties because they didn't know how to claim it. That money was split out to other publishers over there instead. "I thought this was insane and that is one of the major reasons why we are forming the AMLC. You should get paid the money you earn but you should not get someone else's money," which is something that happens all the time in the music industry.

However, at the competing MLC, the majors don’t sit on the Unclaimed Royalties Oversight Committee nor do they sit on the dispute resolution committee, both of which are comprised of five indie publishers and five songwriters. It is these committees that will do the actual work to insure the right people will get paid, not the majors sitting at the top board of directors.

 

Songwriter Zoe Keating said she learned how to take care of the business side of being an artist and songwriter and does everything for herself. Yet, "as savvy as I am, I never collected international [publishing] royalties," she said. That's why she is involved to look out for songwriters, she added. Later on she added that she doesn't have a lot of faith that the NMPA cares about songwriters. When [the NMPA] owned HFA [Harry Fox Agency], songwriters like me couldn't register," she said. It was only when SESAC became the owner of HFA that she could register with HFA. She said she had an album on the charts for 54 weeks that sold 30,000 copies and she could never collect that money.

Price added that when the NMPA owned HFA, they wouldn't let Keating get into the club and get her own money and they are the ones creating the [competing] MLC.

Boogie Shack Music Group's Hakim Draper said that he too wanted to get involved to look out for songwriters, especially D-I-Y songwriters who don't know all the ins and outs of the music business. For example, after one conference where he was on a panel, he found out that the artist/songwriters didn't know what a PRO is -- a performance rights organization -- and he and his staff spent two hours after that panel helping 122 songwriters open a PRO account.

In explaining why he is involved with AMLC, songwriter and Songwriters Guild of America president Rick Carnes referred to the mission statement of the SGA, which he said was just two words: "Protect songwriters."

Barker noted that he became involved because during the writing of the Music Modernization Act, he tried to get some things changed that would better protect songwriters but he couldn't. For example, he asked that the board of the collective, which was to have 10 music publishers and four self-published songwriters should only have five members from the NMPA board and that way there could be five independent publishers on the board. This way there would be three camps and two of the groups would have to come together to get a majority. But that suggestion was shot down."

Another thing he tried to get changed was one word, he said. When it comes to disbursing "black box" money where the rightful songwriters and publishers can't be found," he said instead of the law saying that money "will" be disbursed after being held for three years, the law should substitute in the word "may." That way it would be like SoundExchange, which can use discretion as to when and even if it should disburse black box money.

But despite what Barker said, the law actually states that the money should be held “not less than three years,” not that the money has to be distributed after three years. The payments of any so-called black box money, if made, will be determined by market share, which means that all publishers, including the majors, will get some money.

In comparing the two competing applications to form the MLC, price said each group has a "very different approach." He said the AMLC wants to use existing systems, databases and recourses to begin with, like Music Report Inc.'s database and Dataclef systems, which will be the foundation of how it initially operates. "We don't want to stop what is happening already, we want to make it better," he says. 

So it plans to outsource and hire a bank instead of building its own bank to handle collections and payments. "We don't need to get a cloud, Amazon already has the cloud," he said. Our core should be resolving conflicts to eliminate the black box and thats where it plans to put an overlay of technical resources on top of what already exists. 

That's why the AMLC budget is so much cheaper than the one that could be built by the NMPA, which has a start-up budget of almost $50 million or more than what the AMLC plans to spend in the first five years, Price said.

Barker added that the NMPA has "done great things" for songwriters in fighting for higher rates, but that is where their responsibilities should end; and leave the MLC to the AMLC.

A video of the AMLC town hall event can be viewed here.

This post has been updated from its original version.