This op-ed is by the American Music Licensing Collective (AMLC), one of two announced groups so far planning to submit an application to the U.S. Copyright Office to form the mechanical licensing collective (MLC) that was created by the Music Modernization Act to oversee the blanket mechanical license that the law also establishes. The U.S. Register of Copyrights will select by July which applicant gets to form and run the MLC, which will also create and maintain a musical works database, resolve ownership and data conflicts, and collect royalty payments from digital services that it will disburse to music composition rights holders.
Two weeks ago, the other group planning to submit an application to form the collective announced its board and committee members, as well as endorsements from a number of industry groups. This column is a response to that announcement.
The Mechanical Licensing Collective will be a non-profit organization charged with the payment of songwriter and music publisher “mechanical” royalties to the rightful songwriter and music publishers. In addition, it must maintain a musical works database, providing blanket licenses to U.S. digital streaming sercvices; hold onto earned but unpaid money; resolve conflicts; and more.
The Register of Copyrights will designate the MLC from submitted applications based on an entity proving itself able to achieve the goals of the MLC, as well as meeting all the legal requirements as stipulated in the MMA.
Last week it was reported in the press that an organization planning to apply to be designated as the MLC prematurely suggested that the competition among entities to become the MLC is all but over.
This suggestion was made despite the Register of Copyright making no such statement and still awaiting receipt of complete applications, which are not due until mid-March. If the suggestion is true, the selection process would at best not have been made — and, at worst, been compromised.
It is possible that the reported public press statement indicating their application is “the only one that meets the statutory definition” is inaccurate or perhaps rests on the role the traditional industry played in the passage of the Music Modernization Act. Although we recognize the role and importance those organizations played in getting the bill drafted and passed, we agree with the Copyright Office’s statement that “[s]ervice on the Board or its committees is not a reward for past actions, but is instead a serious responsibility that must not be underestimated.”
The suggestion that only one entity gets to compete — which, by default, is not a competition — counters the MMA and the Copyright Office’s intentions and requirements. In fact, to help encourage the needed competition, the Copyright Office publicly stated that “the Office does not read this clause as prohibiting a musical work copyright owner from endorsing multiple prospective MLCs.” The intent of the law is to clearly allow copyright owners to recognize and endorse multiple groups.
As the MLC will work for independent and major music publishers as well as all global music copyright owners, this ties into the MMA provision that clearly states, and logically requires, that the MLC have “substantial support” from “musical copyright owners” who together represent “the greatest percentage of the Licensor Market for uses.”
About 90 percent of the millions of global music copyright creators own and control their own copyrights. Each month alone in the U.S. there are over 500,000 new recordings of new songs from tens of thousands of DIY, self-owning copyright owners being delivered to U.S. music services and made available to stream. In just the last year, hundreds of thousands of DIY copyright owners have created and distributed at least 6 million works. In the past 10 years, estimates place that number closer to millions of copyright owners distributing over 20 million songs to streaming services. The majority of works being written, recorded, distributed and made available to stream overwhelmingly come from this constituency.
It is this constituency of millions of hard-working individuals, with a rising market share, that represents the majority of musical works copyright owners. These global copyright owners, combined with the legacy industry, make up the entire Licensor Market eligible to be streamed in the U.S. Surely the intent of the law is not to make them irrelevant in the process of establishing the MLC, particularly when there is a further important distinction between the two market segments: some of the biggest publishers in the traditional music industry are expected to bypass and not use the MLC due to their direct licensing deals with the digital streaming services, as compared to the millions of global copyright owners whom will rely on the MLC for licensing and payments.
This point further exacerbates the yet-to-be-resolved conflict of interest; that is, board members of the MLC can recommend other copyright owners’ money be liquidated and given to themselves through market share disbursements, all without actually having to use the MLC for their own copyrights. This outcome is most certainly not the intended application of the law.
This speaks as to why competition is needed.
The AMLC is competing to become the MLC. The AMLC’s board members are independent songwriters, technologists, entrepreneurs, music publishers and administrators, legal scholars and business people who have profound and extensive knowledge in the areas of administration, technology and identification of royalties without the same conflict of interest as the other.
The AMLC believes it serves all copyright owners including the independent writers and publishers as well as the major music publishers. It believes the companies and individuals of the board members of the MLC should use the MLC whenever possible. In addition, the AMLC directly addresses the importance of serving both the traditional industry as well as the independent writers and publisher, as it is their songs which will generate the vast majority of licenses and royalties flowing through the MLC.
In further contrast, the experience and credentials of the AMLC in the relatively new world of digital streaming are impressive and profound. This can be seen not just by examining the creation of the technology, innovation and success of its board members but also by the fact that some of the AMLC board members were hired by the traditional industry to build the systems they needed to fix their data, resolve conflicts, audit statements, confirm splits, locate recordings and more (the very same needs of the MLC).
The AMLC has been forthright and has highlighted that its primary goals are to get all copyright owners and songwriters paid what they earned and reducing black box money by ensuring those funds go to its rightful owners and are not liquidated without intense due diligence. Finally, the AMLC is focused on keeping any perceived or actual conflict of interest to the lowest possible minimum and avoiding any activities that might give one group of copyright owners advantages over other groups of owners.
To that end, as we further expand our board, round out our committees and put forth an efficient one of a kind cutting edge technology solution we encourage the spirit and goal of the MMA to create competition, allowing the best entity possible to emerge and serve the world’s songwriters, publishers, and copyright owners under the requirements of the law.
To learn more about the AMLC, click here.