With the March 21 deadline behind us, the Copyright Office has received, as expected, two applications for the Mechanical Licensing Collective: one co-sponsored by the National Music Publishers Association and a pair of songwriting groups, and the other from a group calling themselves the American Mechanical Licensing Collective. There was also one application for the Digital Licensing Coordinator role, overseeing the interests of digital services in how the MLC is operated. That application was organized by the Digital Media Association, or DiMA.
According to the licensing coordinator filing, a board of directors will consist of Nick Williamson, who is involved in running the day-to-day music publishing operations at Apple; Lisa Selden, global head of operations for Spotify; Sarah Rosenbaum, music counsel at Google; James Duffett-Smith, Amazon’s global head of music publishing; and Cynthia Greer, VP and associate general counsel at Pandora parent company SiriusXM.
In establishing why it is qualified to become the digital licensing coordinator — which will have a number of roles to play in order for the MLC to work, including assessing and paying the latter’s budget — the DiMA-sponsored application said that it is best suited because, according to proprietary data assembled by the Harry Fox Agency and Music Reports Inc., its members are the source of 84 percent of all streams in the U.S.; 94 percent of subscribers; and 88 percent of royalties paid out.
As it is, this was the only group that applied for the DLC role so it seems likely it will be anointed by the Copyright Office, which was given those responsibilities by the Orrin G. Hatch-Bob Goodlatte Music Modernization Act. That law created a blanket mechanical license that allows services to play all recorded music, and then pay music publishing royalties to the MLC, which has been charged with creating a database to match recordings to compositions so that the correct rights owners will be paid.
In using those percentages to establish why it was the most qualified group, the DiMA-sponsored application defined what it means by ‘use’ — the definition of which has emerged as a key sticking point between the two groups eying the MLC role.
“…If the market were to be defined by the sheer number of musical works made available by a proposed DLC’s supporters, that too could have been simply stated,” in the MMA. Instead, the statute identifies usage as the key metric to “those services that make the most use of the rights conferred by section 115 licenses.”
While DiMA had yet to make an endorsement of which MLC application it will back, its noting of the qualification of the amount of streams seem to suggest that it agreed with the interpretation favored by the NMPA-sponsored group, which has the backing of 27 industry groups and all five major music publishers.
So far, sources say, DiMA and its members have met with and are listening to both groups before deciding on an endorsement.
When contacted for comment, newly appointed DiMA CEO Garrett Levin issued a statement to Billboard. “Since the earliest days of the Music Modernization Act negotiations, DiMA and its member companies have worked to ensure the entire music ecosystem benefits from an effective, comprehensive, and cost-efficient mechanical licensing system,” Garrett said. “We continue to be focused on this goal, working collaboratively with all stakeholders — including NMPA — throughout the implementation process.”
While DiMA members include companies that dominate the streaming marketplace, that may not always be the case. In its filing, it said it will seek to include input from the services that comprise the remaining 6 percent of its subscribers, which represent 16 percent of U.S. streams and 12 percent of royalty payouts.
Its application states that “in addition to facilitating the continued discussions among the founding (and principal) members of DLC, Inc., the entity will, immediately upon designation (if not before), engage in outreach to other licensees, and consult with them on the issue of the equitable apportionment of the administrative assessment so that the resulting agreement reflects the broadest possible industry consensus.”
It further states: “Such outreach efforts will include informal discussions through existing industry relationships, and, to the extent appropriate, formal meetings to review and invite comment on written draft proposals. This outreach will overlap with outreach to these licensees with respect to becoming members of DLC, Inc.”
The Copyright Office has also received and posted 11 comments on the MLC and DLC from various interested parties, which were posted today, too.
This is a developing story.