@SenatorLeahy Starts the Countdown for MLC Review

Many songwriters are not aware that the mechanical licensing collective is a statutory entity that is required to be operated by a nonprofit company with certain characteristics. The nonprofit is appointed to a five year term by the Register of Copyrights, the head of the U.S. Copyright Office.

Currently–emphasis on currently as in not forever–that nonprofit company is also named The MLC, Inc. The MLC, Inc. was designated on July 1, 2019 by Karyn A. Temple, then the Register of Copyrights, and approved by Carla Hayden, the Librarian of Congress. This can get confusing because you find yourself saying things like “The MLC did X” or “The MLC did Y” and it may not be clear whether you are talking about the statutory entity or the nonprofit company currently performing the statutory functions.

What you can say is that when speaking of any action or inaction by the MLC, you are speaking of The MLC, Inc. This is because that statutory entity is conceptual and cannot itself take action mandated by Congress. That Congressional mandate must be followed by the nonprofit designated by the Register and the Librarian to comply with Congressional intent as enumerated in the Copyright Act, currently The MLC, Inc.

The MLC, Inc. is appointed to a five year term subject to a competency review by the U.S. Copyright Office. The Copyright Office will determine whether The MLC, Inc. should be allowed to continue for another five years. That review starts in January 2024 so is coming up fast. This is the reason why in my comments I asked for a specific feedback loop for measuring the MLC, Inc.’s performance be made part of the Copyright Office oversight; unfortunately we were told that the general “Contact Us” complaint webform would suffice. I wonder how that is working out. The five year review date has been baked into the Copyright Act since 2018, so the deadline has been on the oversight calendar since The MLC, Inc.was designated by the powers that be in 2019. Time flies, you know.

During the recent U.S. Senate Judiciary Committee hearing on its oversight of the Copyright Office (September 7, 2022), questions for the record were provided for the current Register by Chairman Patrick Leahy, two of which concerned the MLC. Question 1 related to the $500,000,000 black box currently being held by The MLC, Inc. and question 2 related to the Register’s five-year oversight review. I would suggest that these two questions are related–having screwed up one, how can your review not include a close look at how $500,000,000 of other people’s money is treated and how the administrative assessment (paid by the digital music services) is being spent.

I would also suggest that the question asked about the 5 year review question tells you that somebody is paying attention at Senate Judiciary. But you can decide yourself, here’s the question by Senator Leahy and answer by Register Shira Perlmutter (who inherited the MLC oversight from former Register Temple):

You are scheduled to review the MLC in January 2023. In that process, will you address whether you view the MLC’s current statutorily imposed makeup, which has ten publishers and four songwriters, as fair?

Response: Under the MMA, the Office is tasked with reviewing the MLC’s designation every five years, with the first such review commencing in January 2024. 17 U.S.C. § 115(d)(3)(B)(ii). As part of that process, we must solicit information from the public concerning whether the existing designation should be continued or a different entity satisfying the statutory criteria should be designated. Congress has indicated that “continuity in the collective would be beneficial to copyright owners so long as the entity previously chosen to be the collective has regularly demonstrated its efficient and fair administration of the collective in a manner that respects varying interests and concerns. In contrast, evidence of fraud, waste, or abuse, including the failure to follow the relevant regulations adopted by the Copyright Office, over the prior five years should raise serious concerns within the Copyright Office as to whether that same entity has the administrative capabilities necessary to perform the required functions of the collective.” H.R. REP. NO. 115-651, at 6 (2018); S. REP. NO. 115-339, at 5 (2018).

The Office is committed to undertaking a thorough review of the MLC’s designation during the review proceeding. At this early date, however, we cannot predict what the record of that proceeding will be or what conclusions we may be able to draw. We are aware of concerns that some groups have raised regarding composition of the MLC’s board. We continue to engage with stakeholders on this issue and others related to the operation of the MLC. Of course, the board’s composition is set by statute and any changes would require an act of Congress. 17 U.S.C. § 115(d)(3)(D)(i).

Note first that Senator Leahy seems to think the review starts in January 2023; the Register says 2024. I think I know why, but will look into it deeper.

It must be said that while the board composition of the MLC is as much an issue today as it was when the bill was being drafted, the better answer to Senator Leahy would be that the board’s composition hasn’t changed since it was drafted in the legislation written by the lobbyists and lawyers that you voted for, Senator. For that is the truth.

If the truth is a little too flip, it sounds like Senator Leahy is thinking about changing the board composition in hopes of making he board more fair and more consistent with the world’s CMOs organizations in the Copyright Office’s own study and since the board has not managed The MLC, Inc. well enough to pry their hands off of the black box.

Changing the board composition would require Congress to act because the board composition is mandated in the legislation written by the lobbyists and would exist in the next mechanical licensing collective operating nonprofit if Congress fires The MLC, Inc. Such hearings would be a good place to discuss metadata justice that is sadly lacking, systemic change in reporting, revising regulations, and how the Copyright Office intends to oversee the distribution of $500,000,000 of other people’s money.