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Tag Archives: Mechanical Licensing Collective
By Chris Castle
[This post first appeared on MusicTechPolicy]
We've all heard rumors about how much is in the "inception to date" black box at the digital music services. The main reason that nobody knows is another example of the dismal drafting of the Music Modernization Act.
Wouldn't you think that if the class actions against Spotify gave the insiders the leverage to negotiate the MMA giveaway that they could at least have gotten an immediate accounting from the services for how much of the songwriters' money they've been holding all these years? But no, it's sleepy time in Washington yet again. From the Land of Frozen Mechanicals they bring you more Brinksmanship 101. The retroactive black box payment is due to be made by the services to the MLC and its data vendor, HFA–remembering that HFA was also the data vendor for at least some of the services that created the black box in the first place.
However, there is some activity at the Copyright Office now about how to get this money paid. It's at the Copyright Office because while drafting the aircraft carrier revision to the Copyright Act (aka Title I of the Music Modernization Act), the hard parts were never drafted and were left to the Copyright Office to handle through regulations. Musicians–you've seen this before. This is the Washington version of "we'll fix it in the mix." So you do have feel sympathy for the Copyright Office in the situation when all the smart people leave them twisting in the breeze.
Not that I necessarily believe this number, but for the first time the services have given a bigger than a breadbox idea of how much is in the black box. The DLC's lawyers filed an "ex parte" letter in which they made that revelation (along with the known universe: Artist Rights Alliance Ex Parte Letter (Nov. 17, 2020), Digital Licensee Coordinator Ex Parte Letter (Nov. 17, 2020), Mechanical Licensing Collective Ex Parte Letter (Nov. 17, 2020), Music Artists Coalition Ex Parte Letter (Nov. 17, 2020), Nashville Songwriters Association International Ex Parte Letter (Nov. 17, 2020), National Music Publishers' Association Ex Parte Letter (Nov. 17, 2020), Recording Academy & Songwriters of North America Ex Parte Letter (Nov. 17, 2020), Songwriters Guild of America et al. Ex Parte Letter (Nov. 18, 2020).)
The DLC itself is at the mercy of its members in terms of revealing this number but they claim the following in the Digital Licensee Coordinator Ex Parte Letter (Nov. 17, 2020):
DLC also provided a rough estimate of accrued royalties that are available to be transferred to the MLC, based on a limited survey of a subset of DLC members at a particular point in time, and with the crucial caveat that the precise amounts are in flux as digital music providers continue to engage in robust matching efforts. Specifically, DLC estimated that several hundred million dollars were available to be transferred to the MLC as accrued royalties, even after accounting for the derecognition of accruals based on preexisting agreements containing releases to claims for accrued royalties.
DLC also explained that the accruals that were derecognized because copyright owners were paid and provided releases were a fraction of that amount—on the order of tens of millions of dollars.
So now we know at least that much. We know there are "several hundred million" dollars at issue in the black box and we generally know where the money is. We may know that DLC members hold the money. We also know that this money has not been identified, but we at least know enough to get the nose of the camel in the tent.
Posted in Artist Rights, Black Box, Digital Licensee Coordinator, Guest Post, Mechanical Licensing Collective, Music Modernization Act
Tagged Chris Castle, Digital Licensee Coordinator, DLC, Mechanical Licensing Collective, MLC, Music Modernization Act
[One of the problems that The MLC will encounter is matching songs to transaction data from the "safe harbor services" using the blanket licenses and enjoying the reach back safe harbor giveaway in the Music Modernization Act. There are different ways to do this, but it appears that The MLC wants to gather sound recording metadata (like the ISRC unique identifiers) and then map the songs to the sound recordings based on sound recording information from the services. This is hardly an authoritative basis to determine sound recordings, but that appears to be what The MLC intends to do. SoundExchange is the authoritative source for this information and they've been assembling that data for many, many years. This except from SoundExchange's comment to the Copyright Office sheds light on the issues. Again, you'll rarely find any of the issues in these Copyright Office comments discussed in the trade press unless someone like The MLC issues a press release. It's also worth noting that The MLC has merely stated that The MLC "agrees that the data in the public MLC musical
works database is not owned by the MLC or its vendor." First, "data" is not the same as a "database". We want to find out if there is any difference between disclaiming ownership of individual data and claiming ownership of the database as a whole. But second, there's no proof yet that The MLC's current "data quality initiative" does not simply update the database of The MLC's vendor, HFA.]
Read the entire SoundExchange comment here.
SoundExchange appreciates the inclusion in Section 210.31(h) of the Office's proposed regulations the requirement that MLC Database include a "conspicuous" disclaimer that states that the database is not an authoritative source for sound recording information. It appears that the
MLC has decided to populate the MLC Database with sound recording identifying information sourced from usage data provided by digital music providers (rather than authoritative sources such as rights owners). SoundExchange believes this decision will result in the MLC Database being chock-full of redundant records variously misidentifying a large number of sound recordings.
Nonetheless, SoundExchange also recognizes that the MLC needs to launch its business on a tight timetable, and that the Office has sought to mitigate the issue through other provisions such as the requirement to provide data provenance. However, the MLC's decision makes it critically important the MLC's disclaimer concerning sound recording information be clear and prominent, and perhaps linked to a more detailed explanation of the issue, because this design decision carries a significant risk of confusing the public, which needs to understand what the MLC Database is and what it is not….
[I]t is critical that the MLC Database be easily accessible to all other
industry participants, so others can build on the MLC Database to create value-added resources for the industry. For example, while the MLC's reluctance to include and organize its data around authoritative sound recording information may make sense given practical constraints, it represents a missed opportunity to develop a resource with authoritative linkages between sound recordings and musical works that would be of significantly greater value for participants in the ecosystem. Fortunately, the statutory requirement that the MLC make its data available to others provides an opportunity for third parties to fill that void. This kind of function depends on API access to the MLC Database.
Posted in Mechanical Licensing Collective, Music Modernization Act, SoundExchange
Tagged ISRC, Mechanical Licensing Collective, Musical works database
Songwriters Guild and Society of Composers & Lyricists Copyright Office Comments on Database Ownership and Songwriter Credit in Public Database
[The Songwriters Guild of America and the Society of Composers & Lyricists filed a joint comment with the Copyright Office on proposed rules implementing the public database that The MLC, Inc. is charged with stewarding. They raise a host of issues, but also focus on the ownership issue raised by the Alliance of Recorded Music and the songwriter credit issue raised by Kerry Muzzey.]
Ownership of the Musical Works Database
As to the issue of "ownership" of the Musical Works Database, SGA and SCL were gratified by the USCO's clear statement quoting the MMA that:
[w]hile the mechanical licensing collective must 'establish and maintain a database containing information relating to musical works,' the statute and legislative history emphasize that the database is meant to benefit the music industry overall and is not 'owned' by the collective itself. Under the statute, if the Copyright Office designates a new entity to be the mechanical licensing collective, the Office must 'adopt regulations to govern the transfer of licenses, funds, records, data, and administrative responsibilities from the existing mechanical licensing collective to the public, either for free or at marginal cost, pursuant to the MMA.'
Nevertheless, we feel compelled to repeat once again the admonitions voiced by attorney Christian Castle in his recent submission to the USCO concerning practical issues, problems and anomalies that have arisen even prior to the commencement date of MLC public operations concerning the construction of the Musical Works Database:
I believe that The MLC is encouraging songwriters to correct their song data in the HFA database and that no data from HFA has been transferred to The MLC as yet, and may never be. If The MLC is having data corrected and filled out in the HFA database, then the rules applicable to vendor access to the database may not apply because the Congress's musical works database is not actually being created at The MLC, it's being created at HFA. Time will tell if I am correct about this, but it does seem that if I am correct, then The MLC and HFA are working together to exploit an imagined loophole in Title I that violates Congressional intent and certainly the spirit of MMA. Respectfully, the Office should find out what is going on.3
SGA and SCL believe that these are important questions of fact that require answers to ensure that data ownership issues are as clearly defined as possible in advance of any conflicts that may arise. Clarifying that (i) all data and corrections made through HFA will be mirrored in the Musical Works Database in real time, and (ii) that being compelled to provide data to HFA under color of authority from Title I does not constitute a license to HFA for any other purpose, will be important steps forward.
As we have also previously stated, the contractual role and authority of HFA (or any other vendor) should be subject to transparent scrutiny by all interested parties, includingthe music creators whose works are the subject of all information that resides in the database. That includes examination of the contractual rights of the vendor in regard to the data flowing through its own systems and/or those of the MLC, the ancillary vendor use rights (if any) of such data during both the pendency and post-expiration/termination periods of such contract(s), and the clarity of rights ownership of data by the MLC and successor iterations of the MLC (including as regards the Musical Works Database). We respectfully call on the USCO to address more robustly these important issues of transparency and data ownership, and ignore unsupported assertions that transparency and scrutiny of vendor relationships will invite inefficiencies as opposed to clarity and competition.
Songwriter and Composer Names in the Public Musical Works Database
As the USCO is aware and has recognized, SGA and SCL have been consistently outspoken concerning the fact that out of all pertinent identifiers for musical compositions, the names of the music creators of a work are among the only constant and unique data points. In all but the rarest of circumstances, such information is never subject to change, and therefore one of the most important and reliable elements necessary for accurate identification and matching of works.
Moreover, the extension of proper credit to human creators as part of this crucially important Musical Works Database –rather than simply limiting identifiers to the names of corporate assignees of rights which are frequently subject to change and termination– is both appropriate and essential to the fulfillment of the ideals and underpinnings of the MMA set forth in Article I, Section 8 of the US Constitution. As that section makes clear, copyright protections are first and foremost meant to serve the interests of the creators and the public, not the corporate entities that serve in an instrumental but secondary role as rights administrators.
We have therefore remained completely at a loss to understand why this crucial category of information was omitted from the MMA as a specifically required identifier (and why the music publishing community for some reason failed to support our efforts to correct that oversight), and are especially thankful that the USCO has put forth a proposed rule
that requires the MLC to include songwriter and composer information in the database. SGA and SCL continue to remain disquieted, however, with the additional qualifier added by the USCO concerning the standard to be applied by the MLC in seeking music creator data: "to the extent reasonably available to the collective." Such a limited standard serves to diminish the requisite and explicit value of songwriter/composer identifying information.
We respectfully believe that music creator information should be more clearly defined as a mandatory data point required to be pursued for inclusion in the database by the MLC with vigor, and suggest once again that the rulemaking more specifically reflect the imperative nature of this duty. A more appropriate standard would be, in our view: "to the extent available to the collective through its best efforts to secure such data." The avoidance of creating loopholes that may permit music publishers to omit music creator information from the data they voluntarily provide to the MLC is essential, and the independent community of songwriters and composers continues to seek the assistance of the USCO in this regard.
In respect to the foregoing, we desire to make clear that SGA and SCL also continue to support the rights of those music creators who may wish not to be publicly associated with certain musical works. That is and must continue to be right of any songwriter or composer. We therefore support the proposed rule put forth by the USCO that grants the MLC discretion to allow music creators the option of having songwriter/composer information listed anonymously or pseudonymously. We would, however, prefer that such a regulation be extended into a mandatory direction to the MLC to accept such direction from a music creator.
Read the whole comment here.
Posted in Artist Rights, Copyright Office, Mechanical Licensing Collective, Music Modernization Act
Tagged Copyright Office, Mechanical Licensing Collective, Society of Composers & Lyricists, Songwriters Guild of America
Copyright Office Comments by Composer @KerryMuzzey: Include Songwriter Credits in MLC Database
[Kerry Muzzey is an independent classical and film composer and artist rights advocate. In his comment to the Copyright Office on the MLC regulations he asks why songwriter names are not required to be included in the public database currently being stewarded by The MLC, Inc. Including songwriter names in the database seems like a fundamental building block of identifying a song–assuming that's what you want to do. It would be like SoundExchange reporting not including an artist name in the transaction data. It makes no sense. Yet, it's an issue as we will see.]
My name is Kerry Muzzey. I am an independent classical and film composer, and am self-published. It is crucial that the MLC database be searchable and completely public-facing, not only by song title but by writer's name and publishing entity name or by ISWC or BMI/ASCAP IPI/CAE. Independent artists and music publishers must have the ability to search the "black box" of royalty collection, not only for unpaid royalties, but for accrued royalties that appear under a misspelling of an individual's name, publishing entity, or in the event that a similar song title has resulted in the misattribution of the writer/publisher credit to another writer/publisher or artist. This transparency is essential not only for accurate accounting of royalties for an individual, but also for any works that are co-written, have multiple publishers, and/or whose performance rights are represented by multiple PROs. Any composer, songwriter or music publisher should have the ability to "disambiguate" their works from any other similar- or matching-title works or similar or identical writer names, by a simple error submission/correction process (after completing any necessary verification of identity).
Read the entire comment here.
Posted in Artist Rights, Copyright Office, Music Modernization Act
Tagged Copyright Office, Kerry Muzzey, Mechanical Licensing Collective, Music Modernization Act
#ShowUsTheMoney: Guest Post: @CopyrightOffice Regulates the @MLC_US: Selected Public Comments on MLC Transparency: Chris Castle
[This is an except from Chris Castle's June 7 comment to the Copyright Office regarding the transparency of The MLC. You can read the entire comment here. Although The MLC has launched its "Data Quality Initiative" to great fanfare, that DQI process merely confirms how bad the HFA database is since there still is no MLC database as required by law. Since there's no indication of when The MLC is going to launch and there is a strong indication that nobody in power is doing anything about it (looking at you, Copyright Office), this is a particularly timely excerpt. Remember you heard it here first if your mechanical royalty statements drop to zero once The MLC takes over on January 1. That is 113 days from today and we have yet to seen a thing from The MLC and we have no promise of when we will see anything. Given that there has been zero investigative journalism on this topic from industry outlets aside from "how does The MLC withstand its own awesomeness" the comments that we are serializing are about all you're going to get in the way of transparency.]
Quality Control of The MLC's Operations and Platforms
There is an immediate need for The MLC to demonstrate that its systems actually work. That need will be ongoing, so it would be well for the Office to promulgate regulations requiring a periodic public demonstration of the operability of The MLCs systems, a frequent public disclosure of bugs and bug fixes, and a frequent public disclosure of any missed payments or other glitches. These matters are appropriate for the transparency of The MLC because if either The MLC or another MLC are not required to disclose these items, no one may ever know there was a problem (but see the discussion of whistleblowers below).
In considering the timing, I would caution the Office against thinking in years rather than weeks. There is a tendency to think about these things in annual or more time periods. This will prove to be a mistake given the scale and volume of transactions. Would you tell Visa it only need to confirm the integrity of its fraud detection systems once every three years? Or should it be more frequently? Financial services is a good corollary for streaming mechanicals, with the exception that the royalty payable for each stream starts several decimal places to the right unlike credit card transactions.
There is an immediate need for this transparency. Recall that MLC executive Richard Thompson said at the Copyright Office panel on unclaimed royalties last December, "[A] lot of the time since July has been spent working very closely with the staff at HFA and ConsenSys, really starting to nail down how all of this is going to work at the, you know, lowest operational level, all of the things that we need to work out." (Referencing the July 8, 2019 designation of The MLC as the MLC.) [1]
Of course, The MLC didn't announce the selection of HFA and ConsenSys until November 26, 2019[2] and was evidently still interviewing vendors up to that date. Even so, I'm sure The MLC has been hard at work on developing their platform.
Mr. Thompson also stated at the December 2019 panel:
So our current timeline has the first version of the portal going live late Q2, early Q3, of next year [i.e., 2020]. I emphasize again that is the first version. That will not be functionally complete. It will have the, you know, the first set of functionality that we want to make available to the rightsholder community. So in particular, sort of, being able to look at your catalog, manage your catalog.[3]
Late Q2 to early Q3 is now. [As of this post, it is the end of Q3 and we still have nothing but Mr. Thompson still has a job.] To my knowledge, The MLC has made nothing available for songwriters to know what is going on at The MLC or how to start registering works.
Mr. Thompson also stated:
"You know, the first version of the portal doesn't have statementing on it, because we won't need statementing until 2021, you know, the first quarter of 2021."[4]
I would respectfully ask the Office to determine what happens if The MLC is not able to render statements on time. Presumably the income from streaming mechanicals that had been paid by the services directly to songwriters or music publishers would be transferred over to The MLC as of the License Availability Date (currently January 1, 2021). If that transfer occurs and The MLC is not then ready for "statementing" (or, presumably, its corollary, "paymenting") for the billions if not trillions of streaming transactions for all the world's music in less than a year's time from today, then streaming mechanical royalties could drop to zero until The MLC could handle both statementing and paymenting.[5]
While Mr. Thompson seems to be focused on the Q1 2021 distribution date for royalties payable in the normal course, the other significant statementing and paymenting date is July 1, 2021 when the first unmatched distribution is to be paid under Title I. There are also the obvious and expressly stated "public notice of unclaimed royalties" reporting requirements for The MLC's public facing website listing all unmatched songs (or shares of songs) and publicity efforts for the unmatched.[6] This provision, too, is glitchy, but presumably will come into effect soon. I realize there may be some side deals cut regarding extending that statutory payment date, but it would at least be a confidence building exercise to know that The MLC could make the unmatched payment as of the statutory date if called upon to do so.
Songwriters have very little visibility into The MLC's operations except what came out at the Copyright Office panels, for which I am grateful, and also various interviews. There is little substantive information in the press, and even less on The MLC's website. Therefore, it would be very helpful if the Office could require The MLC to demonstrate to the public how its platform is to function. Such a demonstration might bring helpful suggestions from their peers or the ex-US CMOs that have been operating for decades.
It would also be helpful if the Office promulgated a bright line regulation that told songwriters around the world if the July 1, 2021 goal posts have moved and if so where they have been moved to. I must say I have somewhat lost the page on this, given former Register Temple's last testimony to the House Judiciary Committee about who has agreed what on delaying distribution. This rulemaking would be a great opportunity to tell the world if and how the insiders have decided to change the law.
As the House Judiciary Committee stated:
Testimony provided by Jim Griffin at the June 10, 2014 Committee hearing highlighted the need for more robust metadata to accompany the payment and distribution of music royalties….In an era in which Americans can buy millions of products via an app on their phone based upon the UPC code on the product, the failure of the music industry to develop and maintain a master database has led to significant litigation and underpaid royalties for decades. The Committee believes that this must end so that all artists are paid for their creations and that so-called ''black box'' revenue is not a drain on the success of the entire industry.[7]
Having accomplished their goal through compulsory legislation, we are all watching the database cadre get to work and looking forward to learning how it is done from their teaching.
Alternatively, as is widely suspected among some songwriters I have spoken to, The MLC might rely on HFA's statementing and paymenting functionality to limp along by sending necessary but not sufficient statements to HFA publishers or publishers that HFA can match. This would be, essentially, the same process that got a couple of HFA's licensing clients sued repeatedly, and ironically led to the Title I safe harbor in the first place.
Absent proper transparency in the runup to the License Availability Date, any sudden drop in revenue would catch songwriters by surprise. In the time of the pandemic, such a sudden contraction of income could be even more devastating than usual.[8]
Transparency would help shine sunlight on that problem. While The MLC may give interviews and appear on panels describing their activities, we should remember the words of the great Bruin John Wooden who cautioned that we should not mistake activity for achievement. If you practice free throws by yourself all weekend, it doesn't mean you'll be a better player with the team at Monday practice—or that the team is any more likely to win when it is game time at Pauley on Saturday.
[1] Transcript, United States Copyright Office Unclaimed Royalties Study Kickoff Symposium (Dec. 6, 2019) at 28 ln 15 hereafter "Kickoff Transcript".
[2] Tatania Cirisano, Mechanical Licensing Collective Selects Leadership, Partners for Copyright Database, Billboard (November 26, 2019).
[3] Kickoff Transcript at 40 ln 2.
[4] Kickoff Transcript at 40-41.
[5] It is well to note that such a contraction probably would not affect direct licenses or HFA's modified compulsory licenses.
[6] 17 U.S.C. § 115 (d)(3)(J)(iii).
[7] House Report at 8.
[8] Songwriters are already expecting lower royalties in January 2021 according to BMI's President and CEO Mike O'Neil: "[We] anticipate an impact in January 2021, when today's performances and corresponding licensing dollars (2nd quarter 2020) will be reflected in your royalty distributions. While you may see a lower distribution that quarter than you might typically receive under ordinary circumstances, given BMI's business model, we have the time and ability to plan for this outcome." A Message from Mike O'Neil, BMI.com (April 7, 2020) available at https://www.bmi.com/news/entry/a-message-from-bmi-president-ceo-mike-oneill-regarding-royalty-payments
Posted in Artist Rights, Copyright Office, Copyright Policy, Mechanical Licensing Collective, Music Modernization Act, Songwriter Rights
Tagged Chris Castle, Copyright Office, Mechanical Licensing Collective
Guest Post: MLC Metadata Showdown: What's in a Name? Your money.
Guest post by Chris Castle
There is an unsurprising discussion going on about song titles in the metadata deliberations regarding the regulations mandating the conduct of the Mechanical Licensing Collective quango. The least surprising part of the discussion is that the services change song titles as it suits them.
This explains why you can get your song metadata all nice and pristine and yet your payments are still screwed up because somehow the titles got changed. It's not a surprise–they've been doing it for years. Unless the services are prohibited from continuing this boneheaded..there I said it..practice, their supposed great yearning for the database in the sky will come a cropper.
The MLC recently raised this issue with the Copyright Office:
The DMPs do not have the same method for altering metadata, and their alterations significantly increase the difficulty of matching. There was a discussion of the DLC's example of changing the sound recording licensor's metadata for the "Radio Edit" version of the song "Hello," so that the song title becomes "Hello (Radio Edit)." It was noted that the MLC's musical works database will have the musical work title "Hello." Whereas the unaltered sound recording licensor's 5-character title "Hello" will be a direct match to the MLC's musical works database title, the 18-character "Hello (Radio Edit)" is much less of a match in the eyes of an automated string comparison algorithm. Similarly, the MLC does not see merit in the DLC's argument that each DMP should be allowed to alter metadata such as to remove characters that they deem "illegal" (and there is no standard or consensus on what is an illegal character) as this will only hamper matching efforts.
Let's acknowledge that there's nothing new here–this problem has been around for years and was allowed to fester into a business practice. I first wrote about it in the context of the "address unknown" debacle where all concerned allowed services to change song titles and then claim they couldn't find a copyright registration for the title they changed. Sound Kafka-esque? Mais certainement.
Here's an example from the address unknown filings that started in 2016. Google filed an address unknown for "Fragile' by Sting. Bizarre, you say? Yes, of course. But here it is:
Notice that Google affirmed that Google was not able to find "Fragile" written by Sting in the public records of the Copyright Office. (Leave aside the absurdity that "Google can't find [X]".)
And yet, guess what I found in the public records of the Copyright Office after about a 20 second search:
What do you know, "Fragile" written by Sing is in the public records of the Copyright Office. But of course Google only affirmed they couldn't find "Fragile (Live)" which at best is the title of the recording, not the song. But it's the song title Google chose to look for, not the actual title of the song–and the compulsory mechanical license available under the address unknown theory is for the song not the sound recording. So wouldn't you think that the party relying on that compulsory license should have to search for the correct work? Or else…what? Maybe for starters they don't get to rely on the address unknown because they had the address available to them and chose not to look. And you know what they say–you can't find what you don't look for.
Google, Spotify and other services (but not Apple) got away with this loophole of a loophole because they were allowed to. And this isn't the only one, by the way. There are likely hundreds of thousands of songs that the services claimed they couldn't find in the Copyright Office records because the service changed the name of the song and then looked for the name they made up. Some might call this fraud (or a violation of 18 USC Sec. 1001, making false statements to a Congressional agency). (I wrote a pretty extensive article on this in 2017 for the ABA Entertainment & Sports Lawyer. I wish it were old news.) So why were the services allowed to get away with this? Don't let the revolving door hit you on the way out. (And speaking of revolving doors, see Is it Time for the Inspector General to Review the Copyright Office's Administration of Address Unknown NOIs?)
Now after all the hoorah of the Music Modernization Act Title I (the MLC part) the services are still trying to get away with this hogwash. And who can blame them? They were allowed to get away with it before so why not keep doing the fraud? Of all the predictable insults, this one is probably the most predictable because the services were allowed to get away with it in the millions of "address unknown" songs at a time when serious and sustained opposition might have stopped it. Some things are worth suing over more than others.
Should they keep getting away with it? It will likely just make the black box bigger. Parce que l'enfer, c'est les autres.
Posted in Artist Rights, Mechanical Licensing Collective, Music Modernization Act
Tagged Chris Castle, Copyright Office, Mechanical Licensing Collective, Song metadata
@musictechsolve: Defiance or Collaboration? The Role of the Presidential Signing Statement in MLC Board Appointments
[Jem Aswad reports in Variety that Concord Music Publishing and Pulse Music Group have announced a joint venture with Concord acquiring a majority stake in Pulse. Both Concord and Pulse have board seats on the Mechanical Licensing Collective. This presumably means there will be an opening on the MLC board that will have to be filled. There is a question as to whether the Librarian of Congress has to approve a new board member. Chris Castle discusses this issue in this post from last year on MusicTech.Solutions.]
Even though they have a long history, Presidential Signing Statements are not exactly front and center in every civics class or constitutional public law class in America. You may be hearing about them for the first time now. But that doesn't mean they have not been an important part of Constitutional law-making and jurisprudence.
Presidential Signing Statements were first used by President James Monroe in 1822 in the form of a "special message" to the Senate. Presidents Andrew Jackson, John Tyler and Ulysses Grant also issued signing statements, but they were used infrequently until the 20th Century. Then their use picked up quite a bit starting with President Theodore Roosevelt and continuing to the present day. So the use of Signing Statements is quite bipartisan. While Signing Statements may not themselves have any actionable legal effect, they should not be ignored, either.
The MMA Presidential Signing Statement
Not surprisingly, there is a Presidential Signing Statement accompanying the Music Modernization Act ("MMA") specifically relating to Title I and at that specifically relating to the MLC board appointments. The relevant language is:
One provision, section 102, authorizes the board of directors of the designated mechanical licensing collective to adopt bylaws for the selection of new directors subsequent to the initial designation of the collective and its directors by the Register of Copyrights and with the approval of the Librarian of Congress (Librarian). Because the directors are inferior officers under the Appointments Clause of the Constitution, the Librarian must approve each subsequent selection of a new director. I expect that the Register of Copyrights will work with the collective, once it has been designated, to ensure that the Librarian retains the ultimate authority, as required by the Constitution, to appoint and remove all directors.
Let's explore why we should care about this guidance.
According to Digital Music News, there have been changes at the Mechanical Licensing Collective, Inc. ("MLCI") the private non-profit permitted under Title I of the MMA [in addition to the potential opening due to the Concord/Pulse consolidation]:
[I]t appears that two separate MLC board members are jumping ship. The details are just emerging and remain unconfirmed, though it appears that two members — one representing indie songwriters and the other on the publishing side — are out of the organization.
Because the board composition of MLCI is preemptively set by the U.S. Copyright Act along with many other aspects of MLCI's operating mandate, the question of replacing board members may be arising sooner than anyone expected. As MLCI is a creature of statute, it should not be controversial that law-makers play an ongoing role in its governance.
The Copyright Office Weighs In
The Copyright Office addressed board appointments for MLCI in its first request for information for the designation of the Mechanical Licensing Collective (83 CFR 65747, 65750 (December 21, 2018) available at https://www.govinfo.gov/content/pkg/FR-2018-12-21/pdf/2018-27743.pdf):
The MLC board is authorized to adopt bylaws for the selection of new directors subsequent to the initial designation of the MLC. [If these bylaws have been adopted, we haven't seen any announcements and as far as we know, they have not been posted. If you know otherwise, please let us know. The MLC website appears to be down. UPDATE: as of 1/13/20 the mechanicallicensingcollective.org now resolves to songconnect.org]
The Presidential Signing Statement accompanying enactment of the MMA states that directors of the MLC are inferior officers under the Appointments Clause of the Constitution, and that the Librarian of Congress must approve each subsequent selection of a new director. It also suggests that the Register work with the MLC, once designated, to address issues related to board succession.
When you consider that MLCI is, for all practical purposes, a kind of hybrid quasi-governmental organization (or what the Brits might call a "quango"), the stated position of the President, the Librarian of Congress and the Copyright Office should not be surprising.
Why the Controversy?
As the Songwriters Guild of America notes in comments to the Copyright Office in part relating to the Presidential Signing Statement (my emphasis):
Further, it seems of particular importance that the Executive Branch also regards the careful, post-designation oversight of the Mechanical Collective board and committee members by the Librarian of Congress and the Register as a crucial prerequisite to ensuring that conflicts of interest and bias among such members not poison the ability of the Collective to fulfill its statutory obligations for fairness, transparency and accountability.
The Presidential Signing Statement, in fact, asserts unequivocally that "I expect that the Register of Copyrights will work with the collective, once it has been designated, to ensure that the Librarian retains the ultimate authority, as required by the Constitution, to appoint and remove all directors."
SGA regards it as a significant red flag that the NMPA-MLC submission to the Copyright Office devotes the equivalent of ten full pages of text principally in attempting to refute this governmental oversight authority, and regards the expression of such a position by NMPA/MLC as arguably indicative of an organization more inclined towards opaque, insider management control than one devoted to fairness, transparency and accountability.
So the Presidential Signing Statement to the MMA is obviously of great import given the amount of ink that has been spilled on the subject. Let's spill some more.
How might this oversight be given effect and will it be in the public record or an informal process behind closed doors? Presumably it should be done in the normal course by a cooperative and voluntary collaboration between the MLC and ultimately the Librarian. Minutes of such collaboration could easily be placed in the Federal Register or some other public record on the Copyright Office website. Failing that collaboration, it could be done by either the Department of Justice (unlikely) or by individuals (more likely) asking an Article III court to rule on the issue.
Of course, the issue should not delay the Copyright Royalty Judges from proceeding with their assessment determination to fund the MLC pursuant to the controversial voluntary settlement or otherwise [which was released after this original post]. One could imagine an oversight role for the CRJs given that Congress charged them with watching the purse strings and the quantitative implies the qualitative. The CRJs have until until July 2020 to rule on the initial administrative assessment and appeal seems less likely today given the voluntary settlement and the elimination of any potential objectors.
Since the Title I proponents drafted the bill to require a certain number of board seats to be filled by certain categories of persons approved by Congress in a Madisonian balance of power, the Presidential Signing Statement seems well grounded and furthers the Congressional mandate.
Yet there is this conflict over the Presidential Signing Statement. What are the implications?
A Page of History is Worth A Volume of Logic
The President's relationship to legislation is binary—sign it or veto it. Presidential Signing Statements are historically used as an alternative to the exercise of the President's veto power and there's the rub.
Signing Statements effectively give the President the last word on legislation as the President signs a bill into law. Two competing policies are at work in Presidential Signing Statements—the veto power (set forth in the presentment clause, Article I, Sec. 7, clause 2), and the separation of powers.
Unlike some governors, the President does not enjoy the "line item veto" which permits an executive to blue pencil the bits she doesn't like in legislation presented for signature. (But they tried–Line Item Veto Act ruled unconstitutional violation of presentment clause in Clinton v. City of New York, 524 U.S. 417 (1998).) The President can't rewrite the laws passed by Congress, but must veto the bill altogether. Attempting to both reject a provision of a new law as unconstitutional, announce the President's intention not to enforce that provision AND sign the bill without vetoing it is where presidents typically run into trouble.
Broadly speaking, Presidential Signing Statements can either be a President's controversial objection to a bill or prospective interpretive guidance. Signing Statements that create controversy are usually a refusal by the President to enforce the law the President just signed because the President doesn't like it but doesn't want to veto it. Or to declare that the President thinks the law is unconstitutional and will not enforce it for that reason—but signed it anyway.
The President can also use the Signing Statement to define or interpret a key term in legislation in a particular way that benefits the President's policy goals or political allies. President Truman, for example, interpreted a statutory definition in a way that benefited organized labor which was later enforced by courts in line with the Signing Statement. President Carter used funds for the benefit of Vietnam resisters in defiance of Congress, but courts later upheld the practice—in cases defended by the Carter Justice Department. The practice of using Presidential Signing Statements is now routine and has been criticized to no avail for every administration in the 21st Century including Bush II, Obama and now Trump.
Since the 1980s, it has become common for Presidents to issue dozens if not hundreds of Presidential Signing Statements during their Administration. So it should come as no surprise if the Department of Justice drafted up the statement for the MMA prior to it being presented to the President to be signed into law. (See the American Presidency Project archives https://www.presidency.ucsb.edu/documents/presidential-documents-archive-guidebook/presidential-signing-statements-hoover-1929-obama)
Defiance or Collaboration?
What does this mean for the MMA? The President certainly did not call out the statutorily required board membership of the MLC as an unconstitutional overreach that he would not enforce. To the contrary, the MMA Signing Statement expresses the President's desire that the legislation comply with the requirements of the Constitution.
Moreover, the MMA Presidential Signing Statement is not a declaration about what the President will or won't enforce but rather interprets a particular section of a long and winding piece of legislation. (Title I principally amended Section 115 of the Copyright Act—now longer than the entire 1909 Copyright Act.) This kind of interpretation seems to be consistent with the practices of prior Presidents of both parties, not an end-run around either the veto power or separation of powers.
Failing to acknowledge the admonition of the signing statement would seem an unnecessary collision both with long-standing jurisprudence and with a sensible recommendation from the President of how the Librarian, the Copyright Office and the Justice Department expect to approach the issue in collaboration with the MLCI. That's possibly why the Copyright Office restated the Signing Statement in the RFP.
Title I of the MMA is a highly technical amendment to a highly technical statute. A little interpretive guidance is probably a good thing. Collaboration certainly makes more sense than defiance.
Posted in Artist Rights, Guest Post, Music Modernization Act
Tagged Chris Castle, Concord Music Publishing, Mechanical Licensing Collective, Presidental Signing Statements, Pulse Music Group
CISAC and BIEM Suggestions to US Copyright Office on MLC Oversight Regulations
We often overlook the international dimension to the Mechanical Licensing Collective created by Congress in the Music Modernization Act. We're not the only ones.
One of the most insightful comments in the Copyright Office's public request for suggestions for regulations to govern the MLC came from CISAC and BIEM.
CISAC stands for Confédération Internationale des Sociétés d'Auteurs et Compositeurs. Founded in 1928, CISAC has been working on the data exchanges and standard identifiers for songs and other non-recorded works since 1994. CISAC created the much discussed abd widely adopted International Standard Work Code ("ISWC") for songs.
BIEM stands for Bureau International des Sociétés Gérant les Droits d'Enregistrement et de Reproduction Mécanique. Founded in 1929, BIEM represents mechanical collecting societies in some 58 countries.
You may not recognize those acronyms, so here is how the two organizations describe themselves in their comment:
The International Confederation of Societies of Authors and Composers (CISAC), and the International Organisation representing Mechanical Rights Societies (BIEM) are international organisations representing Collective Management Organisations ("CMOs") worldwide1. CISAC and BIEM members are entrusted with the management of creators' rights and, as such, have a direct interest in the regulations governing the new blanket licensing system for digital uses as well as the activities of the Mechanical Licensing Collective (MLC).
Another way to say it is that the MLC was to a large extent modeled on these mechanical rights societies with some important differences, starting with governance. The president of CISAC is Jean-Michel Jarre, the composer. That's right, a composer is the president. Just sayin'. You may remember Jean-Michel from the #irespectmusic campaign when he was all-in early:
Photo by Helienne Lindvall
Here's an excerpt from the CISAC/BIEM filing that we though was important, but you should take a few minutes and read the entire thing. It's not very long and it includes vitally important concepts that were never mentioned in Title I of the Music Modernization Act. The comment is spelled out very politely from people who actually know what they're doing. Let's just say that independent songwriters are not the only ones who may end up in the dreaded black box.
Remember that MLC is accountable (no pun intended) for identifying and paying potentially on all songs ever written or that may ever be written that are exploited in the US under the new blanket compulsory license in Title I of MMA. This doesn't mean that all songs will be exploited all the time, but it does mean that MLC has chosen to be responsible for identifying every song and paying royalties to every songwriter as and when exploited–so to speak. All with the authorization of the U.S. Congress. Starting next January.
Comments on Section B: Data Collection and Delivery Efforts
The correct identification of copyright owners shall be a key objective of the MLC. Regulations shall ensure the appropriate onward distribution of royalties to copyright owners, whether national or foreign, and therefore that non-US [Collective Management Organizations ("CMOs")] are entitled to make registrations and thus, claim royalties with the MLC.
 Support the Non-Discriminatory Treatment of Foreign Rightholders
In compliance with article 5.1 of the Berne Convention guaranteeing non-discriminatory treatment between national and non-national creators, the Office should promulgate regulations that ensure rightholders of "US works"
and "non-US works" enjoy the same rights and are equally treated when their works are exploited in the US territory.
 Provide adequate means for CMOs to submit rightsholder information
Outside the US and in particular in Europe, it is common practice for creators to entrust the administration of both performing and mechanical rights to CMOs. As the history of mechanical rights collective management in Europe shows, CMOs are indispensable in the process of establishing the correct ownership of musical works (and shares of such works) on behalf of individual right holders. Oftentimes non-US CMOs are also responsible for the registration of works information licensed in the U.S. that are only sub-published, or not published at all, in the U.S. In this regard, it is essential that non-US CMOs are also entitled to make registrations and, thus, claim royalties with the MLC. Importantly, non-US CMOs (in particular BIEM Members) are normally able to contribute data in relation to work identification and to the registration of work information in the MLC's Database with a high degree of reliability; in many cases their contributions would be necessary to supplement data submitted by DMPs.
Therefore, the role of non-US CMOs in the identification of works should be expressly foreseen by the regulations. Likewise, the role of CMOs should also be expressly foreseen by the Regulations with regards tothe proper use and implementation of data standards such as ISWC that will ultimately support the proper identification of rightsholders.
Posted in Artist Rights, Copyright Policy, Music Modernization Act
Tagged BIEM, CISAC, Jean Michel Jarre, Mechanical Licensing Collective, Music Modernization Act
David Lowery's Suggestions to the Copyright Office for Regulation of the Mechanical Licensing Collective Part 4
The US Copyright Office solicited comments from the public about the operations of the Mechanical Licensing Collective. The first round of those comments (called "initial comments") were due in November and the second round of those comments (which are called "reply comments" because they essentially comment on the initial comments) were due December 20.
All the comments focus on some central themes that seem to be on everyone's mind which can be boiled down to oversight, oversight and more oversight. While the DLC controls the MLC's purse strings, the MLC has been given largely uncontrolled power over songwriters that needs to be checked by the government on behalf of the governed.
David Lowery did not file initial comments but as he notes, developments made him feel compelled to speak up in the reply comments. We're going to post his reply comments in four parts, and then we'll post other commenters who we think made really good points (like CISAC and BIEM among others). (If you want to skip ahead and read the entire comment, you can download it here.) This is Part 4 of four parts.
Comments of David C. Lowery, Notice of Inquiry for Blanket License Implementation Regulations Issued by the United States Copyright Office Concerning the Orrin G. Hatch-Bob Goodlatte Music Modernization Act of 2018
Additional MLC Oversight: Transparency and Financial Disclosure
There is little financial disclosure required of the MLC or the DLC. As far as DLC is concerned, I expect they will represent the interests of the services. They are also paying the money for MLC which in a way is itself an inherent conflict but is under the oversight of the Copyright Royalty Judges. For the moment, DLC does not appear to be involved in the MLC operations or decision-making. Time may reveal a need to examine this relationship more closely for financial disclosures.
However, the MLC is mandated to engage in many operations fraught with moral hazard, not the least of which is matching and the black box distributions. The MLC has already demonstrated that it has the ability to pick the least appropriate vendors for inexplicable reasons other than the past ownership of HFA by the National Music Publishers Association.
This past ownership creates a special disclosure situation regarding the selection of HFA as a vendor given how long Title I had been in the works (the rumored "SIRA II"). Was the sale of HFA conditioned on HFA becoming the principle vendor of the MLC (like HFA was to be the "General Designated Agent" in SIRA I)? Was Blackstone's withdrawal of opposition to MMA in the Senate conditioned upon some benefit flowing to HFA? Has the vendor selection process been the kabuki dance it appears to be? As my friend and co-amici Guy Forsyth wrote, "Americans are freedom loving people and nothing says freedom like getting away with it." Did they get away with it? If the Copyright Office doesn't force disclosure, we'll never know unless the issue gets litigated in one of the pending lawsuits against Spotify—and isn't redacted.
It only seems reasonable that the MLC should disclose any incentives, payments or other benefits received by its board members, non-voting members (DiMA, NMPA, NSAI or SONA for example), officers and other key employees from any person or entity MLC does business with. These benefits should include payments of the administrative assessment, real estate transactions paid for by the assessment, or shares of stock or units of Ether granted to anyone in the supply chain. This kind of anti-payola affidavit is required of various consultants in the music business already so there seems to be no reason why it should not be required for persons of influence at the MLC. And, of course, all such affidavits or disclosures should be part of the public record so that everyone from songwriters to Members of Congress should be able to have a clear picture of who is involved with MLC.
This will be particularly applicable to any payments from the black box which is truly other people's money. Any proposed payments of the black box should be itemized, published online in an easy to read format prior to being distributed and certified by an independent CPA that is not related to MLC or any board member or vendor. This disclosure may help reduce the inevitable lawsuits. In fact, it would be best if any CPA undertaking certification work for MLC should agree in advance that they would do no other work for the MLC related parties for a significant period of time, say five years.
The "interim application of accrued royalties" is another clause that is fraught with conflicts of interest. Respectfully, the Copyright Office should clarify that MLC board members act as fiduciaries in their decisions to take money from the black box to meet the MLC's expenses in the case of a shortfall from the administrative assessment. If they're not fiduciaries, an explanation would be helpful.
In fact, the entire clause relating to the "interim application of accrued royalties" is itself vague and ambiguous. Consider the language:
In the event that the administrative assessment, together with any funding from voluntary contributions as provided in subparagraphs (A) and (B), is inadequate to cover current collective total costs, the collective, with approval of its board of directors, may apply unclaimed accrued royalties on an interim basis to defray such costs, subject to future reimbursement of such royalties from future collections of the assessment.
This paragraph is, in my judgment, one of the most important yet least discussed clauses in the entirety of Title I. Absent implementing rules to the contrary, the clause allows MLC to effectively write itself interest free and nonrecourse loans from other people's money to cover the costs of a budget that MLC itself determines at a burn rate solely in the control of MLC—currently with no oversight by anyone.
The clause raises a number of questions about the meaning of the statutory language which the Congress likely intended to be clarified in regulations regarding the spending of other people's money by the MLC. In particular. terms in the statutory language that must be known in order to determine what sums are the "costs" concerned, when are they determined, and what happens if the loan once taken is never repaid. (Which raises income tax issues if nothing else.)
The statutory language also leaves to regulations what happens if the songwriters whose monies are taken from the black box and spent by MLC are later identified because they come forward or due to matching efforts of the DLC or the MLC.
Are those songwriters supposed to wait to be paid from "future collections of the assessment," if ever? Which future collections? The next assessment after those songwriters are identified? Or another one some time in the future?
Are they to be paid in the normal course at the next accounting period after becoming identified? Immediately upon being identified?
And most importantly perhaps, how will anyone outside of the MLC know this loan is occurring? The mere fact that a board of directors thinks it's a good idea to avoid themselves having to make voluntary contributions to the MLC's operations by writing themselves an interest free non-recourse loan from monies they hold in trust (or should hold in trust) is a terrible position to put on board members voting against the loan.
I would respectfully suggest that this entire clause has no place in legislation that was sold as a great boon for songwriters. If it must be in the law, then the Copyright Office has a golden opportunity to shed sunlight on another mysterious operation of the MLC.
I suggest several areas of mandatory disclosure. First, the balance of the black box should be public and prominently posted on a monthly basis to the MLC's website. Songwriters should be able to search for their titles and determine how much is being held. SoundExchange currently has this feature for the public as do other societies around the world.
The black box should be held in a true escrow account by an escrow agent (such as an unrelated bank) that has clear instructions in regulations as to how and when such funds are to be disbursed, either as a loan or royalty payment.
If the board of MLC decides to write itself a loan from these funds, they should not be able to use the black box as a piggy bank, but rather should borrow against identified funds based on available metadata so that repayment can be accomplished efficiently.
For example, if Songwriter X can look up on the MLC's website that the MLC board borrowed money for songs A, B and C that were unmatched at the time of the loan, then if Songwriter X is later identified, she can demand payment of her royalties from MLC which the MLC should be required to pay from its current accounts and not take from future black box payments.
Failing to require payment from fresh cash will create an endlessly iterative process by which MLC borrows from Peter to pay Paul, using old money to pay new obligations.
Finally, all these transactions should be well documented and those documents should be published on the MLC website. For example, the statute requires board "approval" to initiate the loan. That approval should take the form of a recorded board vote with minutes to be published on the MLC website, or better yet in the Federal Register. The loan should be documented in the form of a promissory note to the escrow agent. It should also be clear that the MLC board has a fiduciary duty to the songwriters and publishers whose money it is borrowing that is separate from the board's safe harbor elsewhere in Title I.
Having just gone through the PledgeMusic debacle, I am sensitized more than ever to companies that go insolvent while handling the money of artists with the result that the artists never get paid. If the MLC cannot meet its obligations and requires "interim" loans from the black box, how is that not the case of a company operating while insolvent? Why should the officers and directors of MLC enjoy any lower standard of care or responsibility than they would if they were operating any other company while insolvent?
Surely this was not the intent of Congress.
Finally, I note that the budget proposed by the MLC to the DLC was less than the administrative assessment agreed to in the CRB settlement. Respectfully, the Copyright Office ought to make clear that this shortfall does not trigger the MLC's ability to take an "interim" loan in the amount of the shortfall. This issue highlights another point requiring clarification—at what point is a shortfall determined? It seems that it should be at a time the shortfall occurs following investigation into why it occurred by an inspector general-type person (such as the Inspector General of the Library of Congress).
The MLC knows how much it's got in its rather rich kitty to spend on all its various activities. If it also knows that if it goes over budget it can write itself interest free loans from the black box based on its own internal decision and authority, what incentive is there to stay on budget?
Additional MLC Oversight: Transparency and Songwriter Ombudsman
While Congress and the Copyright Office theoretically retain oversight over the MLC, this is of cold comfort to songwriters who are run over by MLC, its policies and its vendors. The vast unmatched problem is the most obvious foreseeable outcome where songwriters need a safety valve, but there are other possibilities.
For example, if the MLC continues HFA's sad history of simply failing to pay songwriters, it's just not adequate to say that songwriters can audit MLC or sue. Songwriters should not have to incur even more costs or engage in the labyrinthine process of individual or class action lawsuits against an entity funded by the largest corporations in the world.
The only real leverage that songwriters have over MLC is to persuade the Copyright Office not to re-designate the incumbent. In order for that to be a realistic threat, the Copyright Office regulations should provide for a feedback loop that songwriters can avail themselves of that the Copyright Office must take into account when determining its re-designation. Such complaints must be included in the Copyright Office's oversight report to Congress. As such a practice is essentially the Copyright Office setting a policy or regulating itself, I see no reason why that practice cannot be set forth in regulations.
However, the Copyright Office is in an ideal position to create an ombudsman-type position with oversight of the entire MLC/DLC process. Such a role would allow the world's songwriters an immediate outlet for surfacing negligence by MLC. By preserving anonymity of those complaining, any songwriter—whether or not affiliated with MLC—could have an outlet to report any objectionable behavior while being protected along the lines of the Whistleblower Protection Act.
The ombudsman should be completely unrelated to the incestuous practices of MLC and HFA, should be a paid position deducted from the millions in MLC's rich operating budget, and should be meaningfully consulted in any re-designation.
Creating an ombudsman role would benefit the entire system by maintaining a watchdog and whistleblower role that would help keep the system honest.
Additional MLC Oversight: MLC and DLC Database Conflict of Interest Policy
I would also respectfully call the Copyright Office's attention to the inherent conflicts between MLC and its vendor HFA in terms of reselling data HFA acquires by virtue of its role as MLCvendor. If the Copyright Office does not prohibit HFA from selling for other commercial purposes the data it acquires through its engagement by MLC to facilitate the compulsory blanket license, the Congress will have just handed HFA a near insurmountable advantage over its competitors. Remember there are other licenses like "micro sync" licenses that are outside of the compulsory mechanical license. Currently there is robust competition and innovation in this market segment, but without this prohibition HFA would crush its young competitors.
The same could be said of ConsenSys, which seems to be desperately seeking use cases for its Ether cryptocurrency. This creates an odd set of incentives for an MLC vendor, not to mention a need for disclosure by the MLC of any stock grants or Ether transfers.
Songwriters are compelled to do business with MLC despite bitter complaints about the imbalance in favor of major publishers in its governance. Songwriters are also compelled to do business with MLC despite bitter complaints about HFA due to what can be described as a bait and switch where the MLC pushed out a lot of hope only to go back to business as usual with long-time cronies.
This cannot be what Congress had in mind, and is even greater evidence for why the Copyright Office should require MLC candidates to fully disclose their vendors and their relationship with their vendors before designation.
Respectfully, any data vendor of the MLC should not be allowed to leverage their privileged role to private benefit after being paid absurd amounts of money to fail upwards.
As Madison said, we're not angels. But songwriters rely on the Copyright Office to be our better angels.
Thank you for providing this opportunity to discuss these important issues.
David C. Lowery
Tagged Copyright Office, Mechanical Licensing Collective, Music Modernization Act
MLC's Reporting and Failure to Account
This section responds to the Office's question regarding MLC's Payments and Statements of Account.
As an overall comment, the MLC should be required to publicly post at least an aggregated version of all information it receives from DMPs supporting the calculation of royalties (transactions, TCC, deductions from gross, etc.). It will be impossible for songwriters to conduct a desktop audit of their statements with their accountants if key elements of the calculations are missing. Respectfully, the Copyright Office really needs to understand how many times we have seen this movie and how we definitely know how it ends.
This is the old hide the ball trick where royalty statements include everything except the one key piece of information needed to duplicate the reported calculations. Again, let's not have meet the new boss, worse than the old boss. The Copyright Office has a golden opportunity to get this right—so please, please take heed. It will save a lot of time and litigation.
For example, the MLC is already saying things like this:
Accordingly, the MLC believes that any regulations obligating the MLC to distribute royalty reports and payments to copyright owners on a monthly basis should not require that such reports and payments be for a particular royalty period, which is at least in part outside of the MLC's control.
Actually, this is wrong. If the MLC reports do not designate which period the payment corresponds to, there will be no way for songwriters to know what they are being paid for. This boils down to receiving a statement that says, here's some money, or worse, no money for you. If there is no explanation of when the royalties were earned or last paid on a service-by-service basis, there is no way for songwriters to know if any service is current.
Plus, the Congress gave the MLC fearsome powers over DMPs and songwriters. If services are late, we expect MLC to chase them and chase them hard. They wanted this job, and now they have it. If songwriters have to wait until MLC get around to auditing trillions of transactions to know a service is late paying, unpaid money is as good as gone even for matched works.
As drafted, Title I places great emphasis on the user of the blanket license's obligations to account and pay royalties but there is no corollary obligation for MLC. Indeed, it seems that the MLC is already backtracking on timely payments by lowering expectations of timely DMP payments. The DMP has a lot to lose if they are not timely with payments and statements.
There is virtually no downside for the MLC. I respectfully suggest that there be some teeth put into the MLC's failure to account, for both the "known knowns" and the "known unknowns," that tracks the penalties on the license user.
It does not appear that sufficient attention has been paid to the MMA's major change in the compulsory licensing structure—the insertion of another gatekeeper into the stream of payments, a gatekeeper that has selected the former affiliate of one of its principal promoters with a known and well litigated history of failures for the very functions it is to take on with a Congressional mandate.
Incredibly, no one has included language addressing what happens if the MLC defaults. Auditing years after the fact is not going to get it done. In fact, the audit language in Title I is so antiquated that it could easily have come from a 1980s record deal. (Not to mention the meaningless and expensive requirement of a CPA to conduct royalty audits.) The audit language is simply not fit for purpose in a world of trillions of individual transactions rather than hundreds of millions of CDs. Songwriters forced to use the compulsory license need a much more immediate and much toothier remedy against the government's MLC monopoly. In other words, the Music Modernization Act already needs to be modernized and the Copyright Office has a chance to do it—but the clock is ticking.
Language could be adopted in regulations that mirrors the statutory language for default by users of the blanket license, substituting the copyright owner for the MLC and the MLC for the digital music provider. For example:
"If the copyright owner does not receive the monthly payment and the monthly and annual statements of account from the MLC when due for reasons within the control of the MLC, the owner may give written notice to the MLC, unless the default is remedied not later than 30 days after the date on which the notice is sent, the MLC's ability to administer the compulsory license for such copyright owner will be automatically terminated. "
Because the Copyright Office is charged with implementing regulations under a broad statutory grant, it seems that this loose end could be remedied in regulations without need of an amendment to Title I, particularly because the failure to include such a provision benefits those who controlled the pen for the drafting of Title I.
The Copyright Office should also take into account any failures to account when reviewing the re-designation of MLCI at the five year review mark.
Additional MLC Oversight: FOIA
Continuing the theme of sunlight as the best remedy, please consider the relationship of the Freedom of Information Act and the MLC. The Copyright Office complies with Freedom of Information Act requests (FOIA). The public interest would be served in having access to all correspondence and internal materials not subject to a FOIA exemption that relate to Title I of the Music Modernization Act as well as the "address unknown" NOI process that preceded and contributed to it.
Availability of these materials is particularly relevant given the lack of transparency required of MLC and the DLC (odd redactions in CRB filings for the administrative assessment is but one example) and the general mystery of why HFA was selected by MLC given the history of HFA with NMPA and the legislative process.
Rather than wait for a FOIA request for these materials, the Copyright Office should voluntarily make these materials available on Copyright.gov. I would recommend this process be repeated annually if not more frequently.
To be continued in Part 4


Syberia 3 will be available starting tomorrow in Europe and Tuesday next week in North America on PC, PS4 and Xbox One.
The last trailer of Syberia's epic saga new chapter, takes us on Kate Walker's enchanting adventure and outlines her path through the challenges she will face in helping the Youkols complete the great migration of the snow ostriches.
Her journey in the heart of Siberia to accompany these proud animals to their sacred lands, the place of their reproduction, promises to be a true expedition punctuated by situations as unexpected as her encounters with strange characters and trials that will all solicit her mental abilities and events that will shatter her life.
"Kate Walker therefore continues her imaginary wandering like a lost star no longer constrained by its sun. Through this Eastern European landscape sublimely tired by wars and utopias", declares Benoit Sokal, author and art director of Syberia's saga.
The enchanting music created by the composer Inon Zur perfectly illustrates the universe imagined by Benoit Sokal and sublime the mysterious atmosphere of this new trailer.
Impersonating Kate Walker, players will benefit from a brand new way to freely explore striking landscapes and circumvent their mysteries and puzzles in ways they have not experienced before.
Syberia 3 is developed by Koalabs Studio and will be available April 20 in Europe and April 25 in North America on PlayStation 4, Xbox One, PC / Mac. It will be fully dubbed in French, English, German, Polish, Russian, Spanish and subtitled in French, English, German, Spanish, Italian, Dutch, Polish, Russian, Czech, Korean, Simplified and Traditional Chinese. The original soundtrack of the game is handled by Inon Zur (Fallout 4, Dragon Age, Prince of Persia), already in command on Syberia 2. The game is rated T for Teen.


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WORLD OF AUCTION
TV Mini Series | 30 min | Documentary, Culture | 2013 (EU)
Stories of people at the forefront of a blossoming global culture, Journey to the East explores the history and impact of Asian culture on life today.
Producers: Normann Bjorvand, Hong Yan, Johan Samuelsson
Language: English/Mandarin
Filming Locations: Sweden
Production Co: NTD Nordic
Runtime: 30min
Sound Mix: Dolby Digital
Format: HD
World of Auction explores two of Europe's finest antiques & auction houses: Bukowskis and Auktionsverket, both located in Stockholm, Sweden. The mini-series delves into the rich world of fine art and precious artifacts.
The World of Auction series also highlights Chinese antiques and culture, and is filled with insightful interviews with CEOs and prominent Antique Experts from Europe's top auction houses, including sellers and collectors of great art as they shed light on their trade and tell stories of lost and discovered art.
This insightful series allows viewers to experience and appreciate extraordinary art, gain insight into unparalleled service and expertise in the craft of collecting antiques as well as unique and real-time online bidding services. The series also highlight people coming to buy back what was once theirs as they come to appreciate their own cultural heritages in modern times.
AUKTIONSVERK: Stockholms Auktionsverk was founded in 1674, on the initiative of Baron Claes Rålamb, who was Governor of Stockholm at that time. As such, we are the oldest auction house in the world still operating today. In fact, we have sold items in styles now known as Baroque, Rococo and Gustavian while they were still contemporary. Our list of distinguished customers over the centuries features names such as King Karl XI, King Gustav III, our Swedish national bard Carl Michael Bellman, and authors August Strindberg and Selma Lagerlöf.
BUKOWSKIS: Founded in 1870 by Polish nobleman Henryk Bukowski, Bukowskis has conducted auctions in Sweden for the past 140 years. Some of the great collections the company has had the privilege to sell include, to name but a few, the collection of King Charles XV in 1873 and the estate of Film Director Ingmar Bergman in 2009. During the 1920's, Bukowskis enjoyed the sole right to sell the etchings by one of the best known Swedish classical artist Anders Zorn, which established the company as an actor in the Fine Art category. Bukowskis is one of the oldest salesrooms for Fine Art in Scandinavia and continues to showcase the unique and beautiful even today.
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Southwark Santa school features in Channel 4 show
London SE1 website team
A new Channel 4 show that follows a group of unemployed men as they are taken through their paces at Santa School in Southwark - but only the best will make it into the grottos in time for Christmas.
Santa School in the Garry Weston Library at Southwark Cathedral
The Great Suffolk Street-based company Ministry of Fun has been organising anarchic PR stunts and training up would-be Father Christmases for a decade and a half.
For Channel 4's two-part series Bad Santas, MoF's James Lovell and Matt Grist offered a unique opportunity to a carefully selected group of men who have had a difficult past and are looking to make a fresh start.
James and Matt wanted to give them the chance to regain their confidence and find employment.
Whilst working with the MOF, the men must attend Santa School and pass a number of challenges from learning how to wear a Santa costume with confidence, how to perfect the art of a jolly 'ho ho ho', learn the most popular toys for Christmas and most importantly, how to deal with those tricky questions from children.
The company's annual Santa School is held in the Garry Weston Library at Southwark Cathedral.
Episode 1 will follow Santa trainers James Lovell and Matt Grist as they make their shortlist from a great range and mix of Santa wannabes including men who are homeless, jobless, on the sick and even those who have had a brush with the law. The successful candidates will be put through some tough training before they are allowed to graduate as Santa.
The second episode follows James and Matt trying to get work for the Santas and their subsequent employment. The programme shows how some are more successful than others, and just how tough it is to get work when you have a criminal record on your CV.
• Bad Santas is on Channel 4 at 9pm on Monday 17 and Tuesday 18 December.
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Bangladesh Bank yesterday asked all banks and financial institutions to send reports by next month on the legal compliance of housing and real estate projects they financed.
The compliance report should also be submitted in cases of the buildings and spaces the banks and FIs have got on their own use.
The reports will have to be submitted by June 30, said a Bangladesh Bank circular issued yesterday.
The central bank move came after the country's deadliest industrial accident at Rana Plaza that tumbled down on April 24, killing more than 1100 people. A branch of BRAC Bank was housed at the collapsed building.
Before providing credit to any individual and organisation for constructing residential and commercial building, purchasing apartment and floor space, developing land and building, banks need to ensure laws related to building construction, environment and proper documents issued by authorities, said a BB circular.
An official said it has been noticed that some banks were disbursing loans for constructing building and developing land to private sector that does not have appropriate approval.
The banks will provide credit to the housing sector after ensuring laws and regulations, including Building Construction Act – 1952, Bangladesh National Building Code – 2006, Bangladesh Environment Conservation Act – 1995, Environment Conservation Rules – 1997, Fire Protection and Prevention Act – 2003, Private Housing Project Land Development Rules – 2004, Local Government Pourashava Act – 2009 and other necessary laws, according to the circular.
The banks will have to look into whether their clients take approval for housing projects from the National Housing Authority, Rajdhani Unnayan Kartripakkha and other authorities.
Prior to opening office or branch for its own use in any building, the bank required to check if that building was constructed in accordance with the laws and regulations.