Copyright Office publishes new MLC regulations
The MLC was created by the Music Modernization Act (MMA) to collect mechanical royalties from digital services and create a database that matches recordings with rights holders. It is also responsible for collecting the property rights information for each song and maintaining a database so that the right rights owners and songwriters receive the proper payments.
Prior to the creation and launch of the MLC on January 1, 2021, this process was managed by digital services and their consultants and generated some $ 424.3 million in unmatched royalties. These funds have since been turned over to the MLC for distribution. The MLC must first try to match these royalties with the rightful owners of those songs, and they have three years to do so, according to MMA. After that, if the correct rights holders cannot be identified, these funds are eligible for market share distribution, a mechanism inculcated in the MMA statute. The Copyright Office guidelines specifically address this issue.
Since the big publishers usually have the largest market share and yet have the best systems to ensure that their songs are not second to none, independent songwriters and publishers have complained that the majors would benefit from such distribution at the expense of independent songwriters.
In response to these concerns, publishers have repeatedly noted that the law states that the MLC can distribute these royalties after three years, and not that the MLC must distribute the unmatched black box sums. Meanwhile, the MLC itself has said it will exhaust all avenues to secure the royalties from rightful owners, including waiting for a longer period, if necessary, before considering making a market share split. .
Now, the Copyright Office has weighed in with a recommendation that likely ensures that the first distribution of black box funds accumulated before the MLC’s creation will not be distributed until five years after the claims portal is operational.
This is how the Copyright Office puts it in its newly published regulations for the MLC: “The Bureau considers this minimum fixed extension to be recommended in light of the understandable need of the MLC for a period of ramp-up. several years since the complaints portal is not yet available. , and the time needed to inform copyright owners about the existence of the MLC and the General License so that they know how to come forward to register and claim. In addition, the MLC said that DSP reports on unmatched utilization before 2021 “contain[s] over 1.3 terabytes and nine billion lines of data ”, which means that there is a lot to do for the MLC and copyright owners to attempt to match and claim, and that sufficient time should be allowed to do so. “
Three songwriters’ organizations that are generally problem-aligned: the Songwriters Guild of America; music creators from North America; and the Society of Composers and Lyricists – applauded the Copyright Office on this point.
The main concern of these organizations is the fact that the MLC board of directors consists of 10 publishers and only four songwriter publishers. Since the 10 publishers are among the largest publishers in the industry, they have a conflict of interest if they recommend a split in market share, say the three organizations and other independent songwriters, because they would likely be beneficiaries of such a dispersion of funds.
“Specifically, the Bureau failed to address the dangers inherent in conflicts of interest present on an MLC board of directors with ten music publishers (including all major global conglomerates) and only four authors. -composers “, we read in the press release published by the groups.
“Addressing this dangerous and exceptionally unfair construction of the MLC board of directors, which runs counter to the traditions of almost every other nation, is high on the legislative agenda of songwriters, composers and lyricists. Americans, ”said the president and songwriter of the Songwriters Guild of America. Rick carnes added in a press release. “We are going to deal with this problem now. “