Legacy Music Industry Shouldn’t Watch Over Royalties Of Independent Songwriters [Op-Ed]

Although there was plenty of trepidation leading up to the recent passage of the Music Modernization Act, the legislation was met with surprisingly little controversy once it was passed. Since then, unfortunately, some details have emerged over how the royalties of independent songwriters will be monitored that are raising the ire of some in the music industry.

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Guest post by Mike Masnick of Techdirt

Last year, a very strange thing happened in the copyright space: a pretty major update to copyright law was passed and it wasn't that controversial. Leading up to that passage there had been plenty of concerns, but a compromise was worked out last fall that was… actually pretty good for everyone involved. It wasn't how any sane society would craft copyright law from scratch, but the key aspects of the Music Modernization Act were to attempt to fix a lot of other really broken stuff. At the time we focused on the fact that it would help expedite moving some very old music into the public domain, which was great. But the much bigger deal to the music world was a reform of the mechanical licensing process for songwriters.

As we discussed in walking through one of a few lawsuits that had been filed against music streaming platforms over mechanical licensing, it was such a complex area of copyright law that basically no one fully understood it. Every single copyright lawyer I spoke to in trying to understand it would give me a totally different answer. So part of the Music Modernization Act was to clear up the questions around mechanical licensing and internet services, making it easier for songwriters to actually get royalties they're owed, without the convoluted process that used to be in place.

As with all things, the devil is very much in the details, and suddenly things are looking a bit problematic. The law directs the Register of Copyrights to designate an entity to become the new "mechanical license collective" (MLC), effectively creating a brand new collection society for these mechanical royalties. The Copyright Office has an open comment period on this, which is about to end, and musician Zoe Keating has noticed that the entire process appears to be rigged to (of course) help divert money to the big music publishers and away from independent artists. She's written a very detailed, but well worth reading, description of the problematic aspect of what's happening, and is asking the Copyright Office to extend the comment period as more songwriters — especially independent ones, learn what's going on and can weigh in.

The key part in all of this is that the organization that represents the biggest music publishers, the National Music Publishers' Association (NMPA) is angling to run this new MLC. Indeed, it appears to be acting as if it already is in charge of it:

The NMPA very cleverly named their proposed group the “MLC” and continually refer to it as the “industry consensus” group. David Israelite in his sworn testimony to congress said the NMPA “is the trade association representing all American music publishers and their songwriting partners.” That’s not quite true. The NMPA does not represent songwriters like me.

Again, there is so much confusion on the street about mechanical royalties. I’ve been talking to all the songwriters I can the last couple weeks. So many are confused about what these royalties are and how to collect them. Some songwriters have tried to educate themselves and have read up about it only then to be confused by the NMPA’s naming confusion and as a result, think that the NMPA’s MLC is already The MLC or that it is the same as the AMLC or that everyone is on the same page. In short, there is confusion. That confusion benefits the NMPA.

A big part of the role of whoever becomes the MLC (whether it's the NMPA's version or another one) is, of course, to get the money they've collected to the artists who deserve it. And therein lies a bit of a concern:

There is a pot of unclaimed royalties that have already been paid by music services that is estimated to be between $1.5 and $2.5 billion. A major task of the new MLC will be to apply some clever technology to match that money to its rightful owners. I’ve already explained the difficulty of collecting when you’re unrepresented. Without question, a large portion of these unclaimed royalties belong to self-published songwriters.

The new law says that after three years the board of the MLC can decide to liquidate that pot of unclaimed royalties and distribute it to themselves by market share. This strikes me as a huge conflict of interest. Does the NMPA even have any incentive to do what it takes to match the royalties to whomever earned them? Are the unclaimed royalties of unrepresented songwriters just going to keep getting distributed to Sony, Universal etc now and forever going forward?

If you've been reading Techdirt for a really long time, this may sound familiar. Way back in 2004, the law over a different kind of royalty — for interactive streams — that was collected by a new group (SoundExchange) spun off from the organization representing the big record labels (the RIAA) said that it, too, could keep the money for itself, if the organization couldn't find artists. And, magically, SoundExchange had "trouble" finding lots of artists, including some really big names. By 2009, we noted that SoundExchange was hanging on to over $100 million that belonged to artists. Public outcry over this did eventually result in SoundExchange promising not to just keep the money for itself, and to its credit, after a lot of work, the organization did become much better at finding artists.

But it boggles the mind that having already gone through that experience 15 or so years ago, the Copyright Office would set up a nearly identical boondoggle. And, as Keating notes, the NMPA doesn't want much oversight over its proposed organization (unlike the competing proposal, which Keating is supporting):

If the NMPA is awarded this contract by the Copyright Office they will control billions of dollars in royalties without oversight (unlike the AMLC, the NMPA proposal says the Copyright Office will not oversee their entity) and with a conflict of interest that gives them incentive to liquidate and distribute unclaimed royalties to their members rather than to the songwriters who actually earned them.

This is increasingly important. As we've continued to show in our latest Sky is Rising report, the number of musicians and music being created continues to skyrocket. And a whole lot of that is coming from independent songwriters and musicians. The idea that the legacy industry should be able to collect and be in charge of distributing many millions of dollars owed to those independents seems problematic in many ways — and it's not helped by the presumptuous attitude of the NMPA in pushing its own organization as the solution.

Keating is asking the Copyright Office to, at the very least, extend the deadline for comments beyond April 22nd, and hopefully the Copyright Office will listen.

The education issues here are huge. All the songwriters, large and small, that I’ve talked to have asked why they haven’t heard about any of this controversy when so much money is at stake. “If it was a big deal, why haven’t I heard about it?”. I can’t believe the deadline is as soon as April 22. We need more time to educate songwriters on this issue so they can choose which entity will administer their mechanical royalties.

I call on the Registrar of Copyrights to extend the comment period.

Meanwhile, I call on all songwriters to submit comments to the Registrar of Copyrights.

As Keating points out, one of the biggest challenges she's always had in making a full-time living as a successful independent musician is not piracy, but rather the legacy industry getting in the way and keeping money it owes her.

Ironically, a lot of the obstacles in the early stages of my career came not from file-sharing/piracy sites but from the established music industry and their gate-keeping. I understand that the NMPA is trying to protect its members from an industry that most often tries to siphon off as much of their member’s earnings as possible, but they should not protect themselves at the expense of unrepresented songwriters. Lets not bake the mistakes of the past into future systems.