The MLC has a riches problem: It has been handed $424 million by music streaming services, and it now needs to find the rightful beneficiaries of these unpaid royalties.
Last week the Mechanical Licensing Collective (The MLC) – which started on January 1, 2021 to licensed and administer mechanical rights in the USA for the online use of music on behalf of songwriters and publishers – said it has received a total of $424,384,787 in accrued historical unmatched royalties from a total of 20 digital service providers (DSPs).
The package came with together with corresponding data reports that identify the usage related to these royalties: 1,800 data files, which contain in excess of 1.3 terabytes and nine billion lines of data.
Months-long efforts
The amount transferred by each DSPs matches more or less their market share. It goes from Apple ($163.3m) to Pacemaker ($278). It is led by Apple Music, Spotifyand AmazonMusic, the three of them accounting for 84.4% of the total. The amount does not include money previously paid out in multiple settlements.
The transfer of money and data was required by the Music Modernisation Act. DSPs had until February 15, 2021 to transfer all accrued royalties for unmatched uses of musical works that occurred prior to January 1, 2021. It was one of the conditions of eligibility for a specified limitation on liability for prior infringements.
For The MLC, the transfer of these monies "represents the culmination of a months-long effort on the part of The MLC and these DSPs to develop and implement the specifications for these usage reports." The MLC said it will begin the process of reviewing and analysing the data in order to identify and pay the proper copyright owners.
A massive win for songwriters
Reacting to the announcement, David Israelite, President & CEO of the National Music Publishers' Association (NMPA), said in an op-ed published by Billboard that while unmatched money "has plagued the music industry not only because money wasn’t being paid out, but also because the services wouldn’t divulge the scope of how much they were holding on to," now "that once elusive amount [...] can make its way to its rightful owners."
The transfer of the sums to The MLC, according to Israelite, "proves how broken the system was" and is "a massive win for music creators and also reveals a great deal about the streaming services themselves, most notably, how much they needed the MMA as well."
He noted that the $424m turned out to be "on the high end of reported estimates, while still falling short of the rampant rumours spread by third parties with something to gain by inflated falsehoods."
Mountains of matching
Israelite added: "The actual number exposes several realities, most notably that streaming services should have been doing a much better job at finding copyright owners, and now we know why they were so reluctant to say just how much they were keeping."
As far as matching in concerned, Israelite said he was convinced that the MLC "will do mountains of matching on its own," but he added that "it is also up to every copyright owner to delve into the portal once it’s launched and claim what is theirs. The good news is there is time. The MLC is working on making this information public and it rightfully decided to extend the matching period to liquidate the money from the law’s minimum of 18 months to three full years, giving copyright owners even longer to act."
"Do not let anyone tell you that this is some great victory by the lobbyists–this is a great victory by the lobbyists for Big Tech. They are paying us with our own money through a pig in a poke. If our lobbyists are going to celebrate anything, they need to celebrate when every penny is accounted for and paid to the right person," wrote songwriter and performer David Lowery (Cracker, Camper van Beethoven) on his Trichordist blog.
Keeping pressure on the MLC
For Lowery, the "hot potato" is now with the MLC, with the task to identify the songs and distribute the royalties. "But all in all," he concluded, "a potentially good day provided that money immediately begins flowing to songwriters. There’s a long way between here and there, but keeping pressure on will keep attention on that juicy target."
The Artist Rights Alliance said it was an "historic transfer" of unmatched royalties and "a great start," but the organisation added, "There’s a lot of work still to be done to get that money to the songwriters that earned it. We are grateful to the Copyright Office team that skillfully and doggedly worked through a number of complex issues in the months leading up this transfer, including major disagreements about the proper treatment of past industry settlements.
The ARA said that in the months ahead, it will engage further with the Office "about efforts by publishers who have already been paid for historical usages via settlement agreements to seek double payment out of these new funds." For the ARA, the major publishers that already settled with digital services and received payment from them "should not be allowed to claim a further share of the monies transferred to The MLC today."
Going forward, The MLC said it would provide additional information about historical unmatched royalties on a newly-created page on its website entitled 'Historical Unmatched Royalties'.
[Commentary:
Few businesses start their first operating weeks by being handed a piggy bank of over $424 million. So it must feel good to be at the MLC at the moment.
That's the easy part. The problems start now.
The first issue is the source of the money: these are sums for the use of songs that have not been identified by platforms over the years. So the follow-up question must be: Is that all? How can the MLC make sure that all the royalties have been accrued?
The estimated figure for the so-called "black box" of unidentified and unpaid mechanical royalties was in the region of $1.5 billion, a figure that was circulated by Jeff Price of Audiam, but hard to confirm. Austin, Texas-based lawyer Chris Castle surmises that the full amount of unpaid royalties is probably in between the two figures.
(As an aside, it is still fascinating to see that streaming platforms, three of them belonging to three of the biggest tech companies in the world — Amazon, Apple and Google — did not manage to get systems in place internally to deal with these issues. They got away with NOIs and the fact that they have not been held accountable for holding money that should have been paid to rights holders without paying penalties is just shameful. It's another $424m that they should be putting into the MLC's box, just for compensation.)
So now, who is going to go on a fishing expedition to ensure that platforms have indeed paid all the backlog related to unidentified songs? The NMPA? The MLC? The Copyright Office? Is Congress, which has voted for the Music Modernisation Act that created the MLC, going to investigate?
The second point is a crucial one for the future of the MLC: ensuring that it manages to match as many as possible of these unidentified songs and pay the rightful owners. The best result possible would be that there would only be a small amount to be put in the "to share" box at the end of the process.
Ensuring proper matching will be the most important stress-test for the newly-created MLC. And one that will be scrutinised by armies of songwriters and publishers in the US and abroad, as surely there must be a good share of this money that was generated by non-US repertoire.
There are too many assumptions going around that the royalties will not go to their rightful owners, so it is of the utmost importance for the MLC to succeed in matching the highest volume of songs possible in order to appease everyone and put to rest accusations that the MLC has been built by and for the big publishing companies.
This is just the start of the journey.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.