On March 6, the new president/CEO of the Digital Media Association (DiMA), Graham Daviespublished a suspension calling the five-year anniversary of the Music Modernization Act (MMA) a “key moment for course correction” in a blog post about the MCL. In the process, he suggested the agency has “exceeded its mandate” in collecting and administering the general engineering license in the United States.
On Monday (March 18), the National Music Publishing Association (NMPA) responded to the letter in an email to members, in which it said DiMA's “calls for change” were not “a good faith effort to make MLC more efficient and transparent”.
So why are the two organizations sparring now?
Under the MMA, the MLC — which acts as the collector and administrator of the general engineering license in the United States — is reviewed every five years by the Copyright Office in a process called “redetermination.” This process will be a routine phenomenon moving forward to ensure efficiency, effectiveness and neutrality for the organization.
Now, with the first redefinition of the MLC currently underway, both its critics and supporters have become more vocal in hopes of influencing outcomes and/or public opinion about the agency's operations to date.
DiMA's blog post begins by saying it “remains committed to the success of MMA and the engineering licensing collective it founded.” The letter later focuses on the fact that its membership, which includes the world's largest streaming services, is required by MMA to foot the bill for MLC. While the letter does not call for this arrangement to be changed, the agency notes that it believes this system has led to a lack of incentive for MLC to be cost-effective, neutral and efficient.
“Reasonable costs of the collective cannot include everything from travel to distant lands to communication with songwriters well beyond the US licensing system,” Davies writes. DiMA CEO/chairman, who took over the role in January this year, also points out that MLC “sued one of the franchisees [Pandora] who pays his own expenses — using money from the franchisee to pursue his claims against a franchisee on a new legal theory.'
The NMPA's response, titled “DiMA Using MMA Review of Copyright Office as Opportunity to Rewrite History and Undermine MLC's Progress,” focuses first on re-explaining to its members the history of MMA and MLC and the nature of the MLC's duties before receiving her reply to the DiMA. He has a much more favorable view of the MLC overall, arguing that the organization “is currently the most efficient, transparent and cost-effective licensing collective in the world”.
The NMPA goes on to say that streamers “don't want what's in the best interests of music publishers or songwriters,” calling DiMA's “new…strategy” “an attempt by the world's biggest digital companies to leverage their power to pay less , to do is easier for noncompliance and makes it more difficult for the MLC to carry out its legislative responsibilities as Congress envisioned.”
“Make no mistake, when the big techs say 'right,' they mean a change in the carefully negotiated law to fund only MLC activities that benefit digital companies,” the letter continues.
DiMA's blog post can be read here. You can read NMPA's full response below.
MMA Five years later
It's amazing how much progress can be made in five years. In 2018, the Music Modernization Act (MMA) became law, creating the Mechanical Licensing Collective (MLC) and fundamentally changing the way songwriters and music publishers are licensed and paid by digital streaming services.
Since 2018, MLC has done a great job building a rights organization that today represents thousands of rights holders, manages over fifty general licenses and has distributed over $1.5 billion in rights.
The MLC revision
According to the MMA, the Copyright Office reviews its original MLC designation every five years, with the first review beginning last January.
DiMA, the trade association representing the five largest digital music companies—Spotify, Apple, Amazon, Google and Pandora (DSPs)—recently released a blog about the rating process.
In it, DiMA called for radical changes that would subvert the purpose of the MMA and the MLC under the guise of a “course correction” and focus on the “neutrality” of the MLC. Reflection on this pivotal point is essential. But what is clear is that the digital services' calls for change are not a bona fide effort to make the MLC more efficient and transparent, as they claim, but quite the opposite. It's time to set the record straight.
MMA History Update
It is important to remember that DiMA and the DSPs were heavily involved in the drafting of the MMA, which reflected the culmination of years of negotiation and consensus building between songwriters, music publishers and digital music services.
The MMA's central compromise was the creation of a new engineering licensing collective to administer Section 115 general streaming licenses, governed by rights holders and funded by DSPs. The agreement to fund MLC's operations was made in exchange for MLC taking over DSPs' rights management responsibilities and providing DSPs with limited liability for hundreds of millions in legal damage exposure due to their past failures to properly license and distribute rights.
The fundamental role and responsibilities of the MLC
The MMA gave the MLC extensive responsibilities under Section 115. In addition to managing licenses and distributing rights, the MMA expressly provides that the MLC must handle non-compliance by DSPs through legal enforcement efforts, license defaults and collection of late fees. Requires the MLC to audit DSPs to ensure proper royalty payments and accounting. These critical rights have traditionally been held by copyright holders. However, the MMA took those legal rights away from the rights holders and gave that power only to the MLC to act on their behalf.
The Act further empowers the MLC to initiate proceedings before the CRB to determine its funding and before the Copyright Office for rulemaking and regulatory proceedings on behalf of copyright holders. The MLC may also negotiate against the DSPs and on behalf of the rights holders ex ante provisional royalty rates for new service offerings under the general licence.
The success of MLC
By any measure, the MLC has succeeded in meeting the MMA's broad directive. After just five years, it manages more than 50 interactive streaming licenses and distributes billions of rights to thousands of rights holders. He has responded to calls from MMA and the US Copyright Office to focus on reaching out to all copyright holders, from the smallest self-published songwriters to the largest music publishers and domestic and foreign organizations that exploit musical works in the US. fully public database. And yes, it has just announced the launch of DMP audits and used legal enforcement where necessary to ensure compliance, such as the recent Pandora litigation.
It has managed to do all this with the lowest operating budget of any other license management collective. MLC is still developing its capabilities and over the next five years will continue to grow and improve, but it is currently the most efficient, transparent and cost-effective licensing group in the world.
The Vision of DSPs
Back in 2019, as industry participants sat down to develop the new MLC, it was clear that while DSPs wanted the benefit of a general license and limited liability, they did not want to fund an effective MLC that could achieve everything required by law . . A DMP executive suggested that the MLC could only be several employees at a WeWork.
Fortunately, the music publishers and songwriters who supported and created the MLC understood—and convinced the DSPs at the time—that in order to develop a collective that fulfilled the MMA's mandate and addressed the important issues of the past, the MLC needed reasonable financing. in its broad statutory powers.
In their latest calls for “course correction” and “neutrality” of the MLC, however, DSP and DiMA are once again trying to undermine the MLC and the central compromise they agreed to.
Make no mistake, when the big techs say “the right course,” they mean a change in the carefully negotiated law to fund only MLC activities that benefit digital companies.
When they talk about “neutrality”, what they mean is to “neutralize” the MLC's ability to fulfill the clear responsibilities set out for him in the MMA. These responsibilities include being an effective administrator of the compulsory license, being a diligent enforcer of reporting obligations and DSP royalties, and being a strong defender of the rights that MLC is charged with licensing on behalf of music publishers and songwriters. It should come as no surprise that MLC neutrality towards DSPs, either in word or in spirit, is nowhere to be found in MMA.
In brief
DSPs don't want what's in the best interest of music publishers or songwriters. Instead, this new DSP/DiMA strategy is an attempt by the world's largest digital companies to leverage their power to pay less, facilitate non-compliance, and make it harder for the MLC to fulfill its statutory responsibilities as envisioned by Congress.
Their strategy will neutralize rights holders by weakening the only entity created and authorized to act on their behalf in relation to engineering licenses – the MLC.
As we look to the next five years, please know that the NMPA will remain laser-focused on fulfilling the MMA's clear goals and ensuring that the MLC is empowered to work effectively for all of us.
from our partners at https://www.billboard.com/business/publishing/music-streamers-publishers-clash-mlc-future-1235635896/
