MLC’s Unmatched 13% Song Rate Isn’t Enough, Says Atty Chris Castle

(Hypebot) – We often hear that Mechanical Licensing Collective (MLC) match rates – the accuracy of matching a song with its creator – are “industry standard”, but that’s an earlier thought to the Music Modernization Act and is no longer relevant.

The Music Modernization Act (MMA) updated copyright law in 2021 to make legal licensing fairer for creators and more efficient for digital music providers.

“All artists are paid for their creations” – no qualifiers…

A guest post by Chris Castle of Music Tech Solutions.

It is becoming increasingly clear that the is not succeeding in its Congressional mandate to build the definitive database of music rights so that all the songwriters are paid. We often hear that MLC match rates are “industry standard,” but that’s pre-MMA thinking and no longer relevant in a post-MMA world. (Not to mention that these are the same “industry standards” that have produced mammoth levels of unmatched payouts that the MLC is mandated to fix.) As we’ll see, any match rate below 100% is inconsistent. with the mandate of the MLC Congress. which will be relevant when those who control MLC operations are scrutinized by Congress in the not-too-distant future. Remember that The MLC, Inc. may be a private company in the traditional sense, but the MLC (different from The MLC, Inc.) is a statutory creation whose functionality is awarded to current operators if they do a good job in giving effect to the mandate of Congress. Congress can withdraw this agreement and essentially “fire” the MLC, Inc.

Financial and business documents on table with multiethnic hands working on them. Latin business manager with colleagues working on new startup project. Close-up businessman and businesswoman hands including pie and bar charts during meeting.

It is also becoming increasingly clear that the Copyright Office is not keen on its congressionally mandated watchdog role, as it has remained silent thus far, no matter how badly the MLC results. are absurd. The difference in post-MMA planning is that every MLC royalty audit must be accompanied by a FOIA request to the Copyright Office regarding what they knew and when they knew it. None of these remedies were available in combination for songwriters in a pre-MMA environment. (If you took the king’s shilling and signed up for HFA, you got part of a mostly unknown providence audit recovery often based on projections.)

Fortunately, due to paid services for MLC operations as well as the cost transfer combinations of direct licensing, mandatory and service-supported modified general licenses (and significant non-general), cost will never be a factor for The MLC, so the only consideration should be the benefit to all songwriters of getting it right.

Not everyone sees it that way. I raised this point during a Copyright Office roundtable on MLC and was immediately challenged by Spotify’s government relations manager and the head of the Digital Media Association (neither of them them has made no royalty statement in his lifetime in all likelihood). They rejected my position that the MMA requires there to be no cost-benefit analysis in matching – remember, services are supposed to pay for this matching feature as part of their agreement for MMA safe harbor giveaway.

Now, I am sure that these DIMA companies are perfectly capable of getting a match rate that is within the limit. Just because they’ve never done it doesn’t mean they can’t ever do it. They just need a little guidance.

Fortunately, we have congressional guidance on this matter in the Legislative History of Title I of the Music Modernization Act which states:

Testimony provided by Jim Griffin at the June 10, 2014 Committee hearing highlighted the need for more robust metadata to support the payment and distribution of music royalties…In an era when Americans can purchase millions of products through a app on their phone based on the UPC code on the product, the music industry’s failure to develop and maintain a master database led to extensive litigation and underpaid royalties for decades . The Committee believes that this should to finish so that all artists are paid for their creations and that so-called “black box” revenues do not harm the success of the industry as a whole.

H.Rep. 115-651 (115and holiday 2n/a Sess. April 25, 2018) at 8. (emphasis mine)

I realize Spotify’s head of government relations would want to protect her employer like the head of DIMA would and immediately tries to kill the idea that MLC needed to set new industry standards and the services would pay for it . And that’s a reasonable deal in exchange for the gift of safe harbor.

But that wasn’t the deal they made. Now you can well say that services don’t have to give a blank cheque, that costs have to be reasonable, and that services have a say in how the money is spent, especially given their expertise in helping the world’s intelligence agencies find things and people, or so Mr. Snowden says. But we’re already seeing the services got a big deal for their tens of millions in MLC costs if the match rate is just as bad as before MMA (or worse). It wasn’t their business either.

The deal they made was to ensure that “all artists get paid for their creations.” No qualifiers.

Everything means everything.

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