U.S. Copyright Office Approves Mechanical Licensing Collective Sponsored by NMPA

uschools/Getty Images
The United States Capitol Building

There’s a new federally appointed team in charge of licensing music to digital services -- and getting songwriters paid.   

Now comes the harder part: getting the streaming companies to fund the team’s efforts.   

As expected, the U.S. Copyright Office Friday designated the group led by the National Music Publishers Association (NMPA), the Nashville Songwriters Association International (NSAI) and the Songwriters of North America (SONA) to build and operate a new organization known as the Mechanical Licensing Collective (MLC).  

“Based on the submissions received and the selection criteria provided in the statute, the Register designated the Mechanical Licensing Collective, Inc. as the MLC, and the Digital Licensee Coordinator, Inc. as the DLC, with the Librarian’s approval,” according to a post on the Copyright Office's website.

“This has been a long, deliberative process and we are pleased with the result,” NMPA president/CEO David Israelite said in a statement. “The Copyright Office set a high bar and the team behind the MLC submission was transparent, thorough and representative of the entire music publishing and songwriting community. We look forward to seeing the benefits of the Music Modernization Act come to fruition. As we now move to the funding phase, it is critical that the digital services commit to supporting the MLC properly and become more transparent, starting with disclosing the amount of unmatched money currently at their companies.”

How much black box money is already built up is a hot industry issue, because the MLC has the power to disburse payments by market share if the rightful owners can’t be found. While estimates are all over the board up to $2.5 billion, Billboard estimates 2015-2018 black box money at most $250 million.

The MLC designation won out over a group called the American Mechanical Licensing Collective, led by Audiam’s Jeff Price, Clearbox’s John Barker, and Songwriter Guild of America’s Rick Carnes and others.

“Now that the consensus MLC has been selected, the group will formally begin operations, according to the NMPA statement on the Copyright Office designation. “This will include the negotiation of a budget with the digital streaming services who, by law, must fund the collective. It will also include partnering with a vendor to provide administration and matching services and development of a user portal through which publishers and songwriters will be able to manage rights and royalties.”

The announcement further said that if a funding agreement cannot be voluntarily determined, the MLC and the digital services will go before the Copyright Royalty Board (CRB) which will set the MLC's budget through an assessment proceeding

On the issue of funding, based on public comments previously made, so far negotiations between the MLC and the digital services have yet to produce an agreement with parties worried that the MLC funding will wind up before the CRB, in a trial that could take over a year. The CRB was designated by the Music Modernization Act to set the funding levels if negotiations failed.

The Digital Media Assn. welcomed the designation of the industry consensus group as the operator of the MLC, noting its DiMA members were the source of the overwhelming majority of on demand streams and mechanical royalties paid in the U.S.

“DiMA’s member companies have extensive experience with the challenges posed in collecting and processing the data needed to connect songwriters with their royalties,” DiMA CEO Garrett Levin said in a statement. “We look forward to sharing that knowledge and working collaboratively with MLC Inc. to establish a comprehensive, effective and cost-efficient mechanical licensing system that is governed by specific and measurable success metrics as intended by the MMA…. The success of the MLC is important to all of us within the music industry, and ensuring we have an effective, comprehensive and cost-efficient mechanical licensing system will benefit the entire music ecosystem. Vigilant oversight and accountability will be critical to ensuring the success of the MLC, and we look forward to continued collaboration with Congress, the Copyright Office and all stakeholders to help the MLC reach its goals.”

The Music Modernization Act assigned the Copyright Office the role of overseeing the MLC to ensure it effectively tracks down and distributes royalties to the correct copyright owners. The group behind the AMLC issued a statement: "We are pleased that the AMLC could bring into focus the potential impediments and inherent conflicts in the MMA to ensure all songwriters are paid the royalties they earned. We continue to offer the Copyright office, the music services, DiMA and the designated MLC our support and help to achieve this end." 

Others groups praised the Copyright Office designation, which begins the countdown to be up and running by Jan. 1, 2021. "American songwriters have looked forward to this advance in music licensing for years," songwriter and NSAI president Steve Bogard said in a statement. "The MLC creates a number of historic gains for songwriters including participation in the governance of a mechanical rights agency on both board and committee levels and being guaranteed an activity-based share of unclaimed funds. We have an opportunity now to work with streaming companies to significantly advance digital mechanical licensing efficiency and transparency."

Meanwhile, SONA executive director Michelle Lewis said in a statement: “SONA would like to thank Karyn Temple and the US Copyright Office for their efforts and their expertise, and we welcome the designation of the coalition-led MLC as the chosen licensing collective. SONA will remain committed to being a guardian of the MMA, which we and other stakeholders worked so hard to pass. We intend to work with this MLC to help educate all songwriters on the importance of accurate registration and to ensure that a state of the art database be built, serving all entitled parties to receive the royalties they have rightfully earned.“

The designated MLC’s board includes chairman Alisa Coleman (ABKCO) and directors Jeff Brabec (BMG); Peter Brodsky (Sony/ATV); Bob Bruderman (Kobalt); Tim Cohan (peermusic); Scott Cutler (Pulse Music Group); Paul Kahn (Warner/Chappell Music); David Kokakis (UMPG); Mike Molinar (Big Machine Music); Evelyn Paglinawan (Concord Music); Kara DioGuardi (Songs by KDG); Oak Felder (Crow’s Tree Publishing); Kevin Kadish (We Are Made of Music); and Tim Nichols (THiS Music).

Non-voting members include NMPA executive vp & GC Danielle Aguirre and NSAI executive director Bart Herbison.

In a joint statement, the Association of Independent Music Publishers officials --national chair and Los Angeles chapter president Teri Nelson-Carpenter, New York chapter president Alisa Coleman and Nashville chapter president John Ozier-- said "The AIMP is happy to support the U.S. Copyright Office’s decision to select the NMPA, SONA, and NSAI submission for governance of the Music Modernization Act’s (MMA) Mechanical Licensing Collective (MLC). We have worked closely with these organizations to provide guidance on the MLC’s Board of Directors and various committees, and are glad to see that independent music publishers will have a strong voice in the implementation of the MMA and beyond. With the majority of the 14-member MLC Board consisting of independent publishers and songwriters — including AIMP New York Chapter President Alisa Coleman (ABKCO) as MLC Board Chair, AIMP Nashville Board member Mike Molinar (Big Machine Music), and AIMP members Evelyn Paginaw (Concord Music), Tim Cohan (peermusic), Bob Bruderman (Kobalt), and Scott Cutler (Pulse Music Group) — as well as all the AIMP members on MLC committees, we are in the best position to stand up for the rights of independent publishers, songwriters, and other rights-holders."