Archive for the ‘Music Modernization Act’ Category

@musictechpolicy Podcast: Eight Mile Style Sues Spotify Under Music Modernization Act

August 30, 2019 Comments off

Chris Castle discussion of Eight Mile Style lawsuit against Spotify under Music Modernization Act (driving with dogs series)

Eight Mile Style v. Spotify Complaint

Meet the New Boss:  Tech Giants Rely on Loopholes to Avoid Paying Statutory Royalties with Mass Filings of NOIs at the Copyright Office

Irving Azoff and Other Top Managers and Artists form the Music Artists Coalition

August 2, 2019 Comments off

We have entered an era where Big Tech controls the purse strings for the Mechanical Licensing Collective.  Despite that oddity, it’s refreshing to see the leaders of the music industry come together to form the Music Artists Coalition as a counterbalance to Big Tech and its counterpart, the MIC Coalition.  The MIC Coalition included Google directly at one point, but then stopped using the Google logo in their membership after Google became a lighting rod of opposition to the group.

The MIC Coalition is the face of opposition on a terrestrial royalty for artist pay for radio play, and they make no bones about it.  Irving Azoff has demonstrated that he’s one of the only managers in the music business who is willing to take on these people in court and we applaud him for it.  Along with MusicFirst and SoundExchange CEO Mike Huppe, those willing to stand up and be counted are few and far between.

mic coalition logo

There are, unfortunately, the inside-the-beltway Cassandras who have counseled a limp reaction to the MIC Coalition in recent years.  These may find some backbone now that the artists and managers who together account for approximately  80% of global turnover (just my guess) in both publishing and recordings say not so fast.  Because what political types are really good at is finding a parade then elbowing their way to the front of the line to pretend they were there all along–and if there’s anyone who can spot such people a mile off it’s the artists who are in this new group.

I’d say that the MIC Coalition is not as strong as they might appear.  Instead of cowering before them, let’s see how they hold up after a couple really hard round-house kicks and a little asymmetrical soft shoe.  Maybe they’ll still be standing.  But you won’t know if you don’t try.

Read more about it in Bloomberg.

I’m also really, really pleased to see Susan Genco taking a leading role in the management of the new organization.  Susan had the best quote in Bloomberg:

Neither of these groups speaks for the songwriters that must be compensated, according to Susan Genco, an industry veteran and board member for the Music Artists Coalition.
“We want state and national legislatures to know that if you want a true artist’s perspective, not one that may be compromised, this is the organization you call,” Genco said. “This is for artists, by artists and from artists.”

Susan has been at this for a long time in a variety of jobs that gives her that valuable 360 degree viewpoint.  She has earned the kind of hands-on experience working with the people who actually make the business run.  I have every confidence that she will bring the kind of well-adjusted creator-centered practical knowledge and trust that has been sorely lacking.  It’s not surprising that a quiet professional like Susan has the confidence of these top managers.

This new effort deserves your support.

[A version of this post appeared in MusicTechPolicy Monthly.]

Guest Post by @poedavid: “Dance Like Nobody’s Paying?” Spotify isn’t

July 15, 2019 1 comment

[We’re thrilled to welcome David Poe to MTP!]

by David Poe

Spotify’s disastrous “dance like nobody’s paying” ad campaign has now been demolished in the national press, garnering negative coverage in Newsweek, Billboard, NME, Hypebot, and more. Sometimes big corporations slip up and show us what they really think of us, and this was one of those times.  

But what’s Spotify’s plan?  Here, Variety’s Patrick McGuire suggests Spotify’s intent is to divide listeners and musicmakers:

Similar to the way many people bite into a cheeseburger with no consideration for the cow and farm of its origin, campaigns like Spotify’s widens the growing divide between listeners and creators. Audiences intellectually understand that music doesn’t magically materialize out of nothingness for the exclusive purpose of entertaining them, but as music continues its irreversible transition to all things digital, listeners are becoming less aware and interested in how artists create, record, produce, and share music. With a 2017 Nielsen Music report showing that, on average, Americans now spend over 32 hours a week listening to music, it’s clear that music is hugely important in the lives of listeners — just not in ways that provide meaningful visibility and support to musicians.

Ever heard that song “Put another nickel in / In the Nickelodeon”? It’s from 1950 (written by Stephen Weiss & Bernie Baum.)

Everyone loves streaming. But more than half a century later, most streaming services contend that a song isn’t worth a penny. I respectfully disagree.

Because a song isn’t really a song until someone listens to it, no  musicmaker should be faulted for utilizing all available platforms. But streaming in 2019 forces music makers and fans into the middle of a moral hazard. Music enthusiasts should be able to listen to streaming music without having to compromise their scruples, or that of their favorite bands.

Despite the lack of transparency in the music industry, The Trichordist has managed to cobble together an annual Streaming Price Bible.  It is the most credible summary I’ve found on what each streaming service pays, which may impact where Spotify listeners choose to put their dough-re-mi:


How Bad Is it for Music Makers?

You can easily see from the chart what each service pays for recordings.  At about $0.003 per stream, Spotify pays little but has the greatest market share.  At about $0.0002 per stream, Google/YouTube is even worse. 

Very different companies. Their commonality: free music, which has made them rich from ad revenue and data scraping, but mostly from their stock price increasing at the expense of musicmakers. 

Let’s put this in context.  To earn a monthly US minimum wage, an artist on Spotify would need 380,000 streams by some estimates.

To make the same monthly salary as the average Spotify employee, a songwriter would need 288,000,000 streams.

Frozen Mechanicals

For reference, the statutory rate for a song on a CD or download is 9.1 cents — 4.1 cents more than ye olde Nickelodeon of the 1950s. 


You might say that’s better than the old days—but it isn’t as good as it looks, because the song rate was frozen for 68 years before it began gradually increasing … only to be frozen again in 2009, where it will stay until 2022.


Clearly, streaming has all but replaced CDs and downloads, but without replacing revenue from songs to musicmakers. 

Money is being made from streaming if you look at it on an industry-wide basis.  But—due to the hyper efficient market share distribution of the “big pool” revenue share accounting instead of a user-centric model (or the “ethical pool,”) individual music makers are far worse off.  More than ever, streaming revenue is not paid to music makers who don’t share in the big advances or Spotify stock. 

You Can’t Compete With Free

The vast majority of Spotify users are in the “free tier”. By offering free access, Spotify artificially distorts the streaming market and disallows competition amongst streaming companies. As musicians have learned the hard way, you can’t compete with free.

Spotify likes to say it’s artist-friendly, a tool for music discovery. 

Guilty of chronic copyright infringement, Spotify was founded by a former pirate.  It’s a corporate ethos built on theft.  The Music Modernization Act essentially gave Spotify a new safe harbor, but its tactics haven’t changed.

There’s additional shadiness here: allegations of gender discrimination and equal pay violation, expensive, state-subsidized offices, executive  bonuses, corporate lobbyists, a dicey DPO and of course, the “fake artist” scandal.

Spotify’s ongoing lobbying campaign against artist rights continues despite the unanimous passage of the Music Modernization Act in Congress last year (and the jury is out on the MMA and Spotify’s safe harbor).  Shocker—Spotify apparently reneged on agreements it made to accept the Copyright Royalty Board’s mandated increase in songwriter pay.  Another bonehead move that was publicly rebuked by songwriters from Spotify’s “secret geniuses” charm offensive, including Nile Rodgers and Babyface.

Spotify was joined by Amazon, Google, and Pandora in “suing songwriters” to appeal the Copyright Royalty Board’s ruling that increased the paltry streaming mechanical rate, which Spotify lawyer Christopher Sprigman argued against in court.  

Apple Music does not have a free tier and yet was the only major streaming service that did not challenge the new royalty (44% more, which means 0.004 instead of 0.003, which is still bullshit.)  

This may be because Apple recognizes that music helped save its ass from financial ruin 20 years ago. Math is not my strong suit, but numbers indicate music (via the iPod, a now-obsolete door stop) generated nearly half of Apple’s accumulated wealth not to mention introducing a new audience to Apple’s other awesome products.

Or it could just be that Apple understands creators and may actually like us.  There’s a thought.  We were early adopters—Macs have been in every recording studio and creative department for decades.   

Apple Music’s intent to increase artist pay to a penny per side is its best yet, but now long overdue.   Which is a shame, because a trillion dollar market cap company could afford to redistribute some wealth.  If Apple offered a fair alternative, most would run screaming from the competition.

The Generational Problem

There are many who are more expert than me, some quoted in this post. I’d rather be staring into space strumming guitar and writing a song than here discussing music and money. 

But I’m concerned for the next generation of artists, especially the musical innovators. Here’s why:

There used to exist a sort of musical middle class. Artists in all mediums expected financial struggle but there was the possibility of making a living and even growing as an independent artist.  That might include a record deal or selling CDs at a gig in order to make it to the next town. 

Songwriters could get an album cut and get by or even do well if the album sold (Jody Gerson has a great explanation of this.)  Musicians of quality could see a light at the end of the tunnel.

Streaming has “disrupted” all of that.

Light’s out. 

Bands’ streaming access may—may—help build an audience that may somehow convince talent buyers to book gigs that route your tour, which is awesome. But sustaining a career is still cost-prohibitive for many. 

Thus the Top 40 is full of the children of the affluent. 

Not children of millionaires: Stevie. Dylan. John & Paul. Aretha.

Those of us who have been making music for awhile will remember the optimistic, 1990s-era “monetize the back end” argument: bands on the road can make up income lost to streaming by selling merch. 

I tour, too. I wish the best to every band who does so. 

But not every musician can travel … or got into music to sell a fuckin hat.

Another common sense rebuttal to “shut up and tour:” INCOME FROM LIVE SHOWS WAS NEVER MEANT TO REPLACE THAT OF MUSIC SALES — plus both have investment costs and overhead to produce.

Gas costs what gas costs. 

Mics cost what mics cost. 

Streaming doesn’t pay what music costs.

Sorry to yell. Just sick of this lie that to make up for streaming losses all recording artists, especially senior citizens, should tour forever. Or the assumption they are all rolling in dough! Tell that to the punk rock drummer, alto player, the cellist, the songwriter. 

Note: It’s almost impossible to buy a new car or laptop that plays a CD. Low income streaming has effectively replaced higher income physical sales. 

So if streaming is to be the primary method of music distribution — if not the only one — then pay artists fairly.  Or it really will be lights out, if not for the huge artists who regularly celebrate stupidity then for the ones whose songs you want played at your funeral.

Without musicmakers, Spotify has nothing. When Spotify says “dance like nobody’s paying,” it’s because they don’t. 

Given support from listeners and lawmakers, this era of economic injustice via streaming may one day be a footnote.  Fans should not be paying for music they don’t listen to which is what has been happening and is a hallmark of streaming gentrification.

Now, listeners must demand fair pay for musicians they claim to love, whether it is higher streaming royalties or a user-centric royalty allocation—or both.


The Countdown to Modernity: Copyright Royalty Board Posts Notices and Rules for MLC Assessment Proceeding — Artist Rights Watch

July 7, 2019 Comments off

Since there was no advance commitment or agreement on the budget for the Mechanical Licensing Collective (MLC) under Title I  of the Music Modernization Act, it appears that the clock is ticking on an agreement before the parties have to go before the Copyright Royalty Judges to be told what the budget (or the “assessment”) is to be.  The Copyright Royalty Board has beat the July 8 deadline for noticing the proceeding and has posted the notice and the rules for the hearing.

The “Notice announcing commencement of Initial Administrative Assessment proceeding and requesting Petitions to Participate” can be found here:

The regulations require the participation of the MLC and the Digital Licensee Coordinator (DLC) in the proceeding and permit the participation of copyright owners, digital music providers, and significant nonblanket licensees. 37 CFR 355.2(c)–(d).

The Judges hereby announce commencement of the proceeding, direct the MLC and the DLC to file Petitions to Participate, and request Petitions to Participate from any other eligible participant with a significant interest in the determination of the Initial Administrative Assessment…

Any participant that is an individual may represent herself or himself. All other participants must be represented by counsel….

Petitions to Participate and the filing fee are due on or before July 23, 2019.

The CRJ’s rules relating to the proceeding can be found here and have some relevant language relating to who can participate in addition to the MLC and DLC:

[T]he Judges believe that the views of other participants may be helpful, and perhaps essential, for the Judges to determine whether good cause exists to exercise their discretion to reject a settlement. The Judges, therefore, have modified [the regulations for the settlement negotiations and proceeding] to clarify that participants other than the MLC and DLC may participate in settlement negotiations and may comment on any resulting settlement.

via The Countdown to Modernity: Copyright Royalty Board Posts Notices and Rules for MLC Assessment Proceeding — Artist Rights Watch

The MTP Podcast: Revenue? What Revenue? Don’t be fooled on royalty audits vs. financial audits

February 8, 2019 Comments off


Whoever you are…I have always depended on the kindness of strangers.
From A Streetcar Named Desire, by Tennessee Williams

From Highlights of Managing Change under the Music Modernization Act’s Mechanical Licensing Collective (footnotes omitted.  A version of this article appears as How Will the Music Modernization Act’s Mechanical Licensing Collective Work? in 34 Entertainment Law & Finance 1 (No. 9, Dec. 2018.)

Audits: Only the MLC may audit the blanket licensees.  Only copyright owners may audit the MLC. However, audits must be conducted by certified public accountants and those auditors are obligated to look for overpayments—which probably violates a CPA’s duty of loyalty. As Warner Music Group’s Ron Wilcox testified to the CRJs, “Because royalty audits require exten- sive technical and industry-specific expertise, in WMG’s experience a CPA certification is not generally a requirement for con- ducting such audits. To my knowledge, some of the most experienced and knowledgeable royalty auditors in the music industry are not CPAs.”

It is also important to note that the collective may only audit once a year for the prior three years. Given that there will be bil- lions of transactions subject to audit (and eventually trillions in a three year period), it is unlikely that CPAs will be conducting census level audits. Projections and lump sum payments are likely, and lump sum payments tend to be distributed in the old- school method of market share distributions.

Is Self Auditing Hazardous to Your Health?…to-your-health/

Songwriter Liberty and Audit Rights Under Section 115: Music Licensing Study Filing…g-study-filing/

Attestation Agreements AICPA

Generally Accepted Auditing Standards AICPA

Generally Accepted Accounting Principles

How to Fix The Music Modernization Act’s Flawed “Audit” Clause…d-audit-clause/

Five Things Congress Could Do for Music Creators That Wouldn’t Cost the Taxpayer a Dime Part 3: Create an Audit Right for Songwriters…r-songwriters/

Guest Post by Keith Bernstein: Holy GAAP! Publishers Not Getting the Upside…ing-the-upside/


Copyright Office Issues Interim Rule for MLC Applications Including Oversight of MLC Board by Librarian of Congress

December 21, 2018 Comments off

The U.S. Copyright Office issued an interim rule for comment that lays out an intricate and well thought out approach to the Register’s role in designating the Mechanical Licensing Collective and the Digital Licensee Coordinator under Title I of the Music Modernization Act.

Consistent with the MLC’s role as a quasi-governmental organization (or quasi-private, depending on how you look at it), the interim rule confirms that “directors of the MLC are inferior officers under the Appointments Clause of the Constitution [,] that the Librarian of Congress must approve each subsequent selection of a new director….[and] that the Register work with the MLC, once it has been designated to ensure that the Librarian retains the ultimate authority to appoint and remove all directors.”  Presumably, state corporate laws governing the formation of the MLC will give way to this requirement.

The Librarian’s ability to can directors should help assuage some of the concerns about the powers of the MLC and is, of course, entirely consistent with the powers of the MLC as a quasi-governmental organization.

Another requirement that caught my eye relates to the “Hoffa Clause” that allows the MLC to invade the black box to pay operating expenses not covered by the services in the administrative assessment.  The Copyright Office seems quite aware of the moral hazard present, and asks the prospective MLC candidates to provide:

Information regarding whether and how the proposed MLC may apply unclaimed accrued royalties on an interim basis to defray operating costs, as well as any accompanying plans for future reimbursement of such royalties from future collections of the administrative assessment, including relevant legal considerations and guidelines in the event the proposed MLC does intend to apply unclaimed accrued royalties.

All in all, the Copyright Office should be commended for putting together a comprehensive and even-handed “job description” for the MLC and the DLC in keeping with the Office’s statutory role in getting this quasi-governmental organization up and running.

Weekly Key Dates and Accomplishments for the Mechanical Licensing Collective Under the Music Modernization Act (11/30) by Artist Rights Watch (The “Countdown to Modernity”)

December 2, 2018 Comments off

As best we can tell from the outside looking in, this chart has the dates for key events in the critical path to launch for the Mechanical Licensing Collective as required by the Music Modernization Act.  We have called the chart the “Countdown to Modernity.”  Obviously, this chart is not intended as legal advice, and you should consult your own attorney about any of these dates or events.  Note:  After 1/9/19, this chart, updates and analysis will be available to premium subscribers of MusicTechPolicy.

Recall that the Register of Copyrights gets to pick the entity to operate as the Mechanical Licensing Collective. The Tennessean reported that the first fully-formed candidate to emerge is the American Music Licensing Collective or the “AMLC”.  (AMLC’s website is  Within days, Digital Music News also reported that two AMLC board members have left the organization for reasons that their source says were “directly tied to threats”.  Digital Music News continues to report on these alleged “threats.”

The appearance of multiple candidates for the yet to be designated MLC raises another question–what about any existing black box?  MTP and ARW readers will recall that the MLC is allowed to invade the black box to cover certain administrative costs that exceed the “administrative assessment” to be paid by the blanket licensees:

INTERIM APPLICATION OF ACCRUED ROYALTIES.—In the event that the administrative assessment, together with any funding from voluntary contributions…is inadequate to cover current collective total costs, the collective, with approval of its board of directors, may apply unclaimed accrued royalties on an interim basis to defray such costs, subject to future reimbursement of such royalties from future collections of the assessment.

Digital Music News also focuses on this issue:

According to the MMA’s language, mechanical licenses [presumably meaning royalties] that remain unclaimed after just one year will be largely mopped up by major publishers according to marketshare, an arrangement that has drawn protest.  The value of the initial unclaimed tranche of funds has been estimated to be as high as $1.5 billion, at least according to a report by Variety.

We’re not big believers in this $1.5 billion number and it’s not exactly right that Variety reported that number–the Variety story has changed several times and is still a bit murky.   Due to a later update to the article concerned it’s a bit unclear exactly what Variety meant in the original unsourced reporting.  The original story as reported in Artist Rights Watch stated the industry-wide black box was $1.5 billion:

The DSPs are holding some $1.5 billion in unmatched mechanical royalties. If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Variety subsequently changed that language in the story at least twice that we know of, but never actually retracted the $1.5 billion number as far as we can tell, although they may have depending on your point of view of what constitutes a “retraction”.  In any event, the story now reads:

The DSPs are holding millions in unmatched mechanical royalties — the sum of all Notice of Intent (NOI) filings currently parked at the U.S. Copyright office, while unknown, is climbing. If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Note–there’s still no source for either the “$1.5 billion” or the “millions” or for the “update”.  Remember that in the MMA Senate Judiciary Committee hearing, Senator Feinstein said that the black box could be hundreds of millions.

Remember that the “initial administrative assessment shall be effective as of the license availability date” which is 1/1/21.  It is not clear whether the initial administrative assessment will cover the MLC’s prospective costs, its startup costs, or both.  One fair interpretation of the MMA is that the initial assessment shall be prospective and shall not cover startup costs, although the parties can, of course, agree to pay more than they are obligated to incur by statute.  It is unclear if those additional costs would be passed down to all blanket licensees (who may object to paying more than the statute requires).  You would think that this important issue would be clearly stated in the statute, but it is not.

The following chart is a work in progress, and if anyone sees anything wrong in it or something that should be clarified or corrected, please let us know.  It should be considered a draft, but we hope that it will solidify over the next few weeks.  We expect activity to pick up once the MLC filing deadline arrives.

Due to the formation of the AMLC, there are now two candidates for the MLC, there may be more coming.  The COUNTDOWN TO MODERNITY chart needs to distinguish AMLC from the competing NMPA/NSAI MLC which does not have a name as far as we know.  Until the NMPA/NSAI collective adopts a name, we will refer to it as the NMPA/NSAI collective.

The main takeaway from this chart should be the clock is ticking and time is going by.  Our prediction?  Time will become the MLC’s biggest enemy, if there isn’t already a time bomb in the drafting of the Music Modernization Act.  What we don’t see in the MMA is any discussion of what happens if a deadline is blown for whatever reason.

But mark your calendars–we see the first key date as January 9, 2019 when the Copyright Office will request filings from MLC candidates, which so far include the AMLC and the collective to be formed by NMPA/NSAI.  That’s 38 days from now and holidays count.  The countdown to the License Availability Date: 761 days from now.









(Assume deadline of 1/9/19)

MLC/DLC/CRJ 45 days 770 days


MLC/DLC/CRJ 219 days 545 days
585 days 179 days
616 days 149 days

(Assume deadline of 1/9/19)

MLC/CO 39 DAYS 723 days
ANNOUNCED BOARD NOMINEES AMLC board announced (see DMN and above)

NMPA/NSAI called for nominations.

The deadline for NMPA nominations passed on November 15  see NMPA.  NSAI are accepting nominations for songwriter board member seats with a December 15 deadline.  (these are nonstatutory deadlines) Songwriter board selection by Steve Bogard (NSAI), Rick Carnes (SGA), Lynn Gillespie Chater (SGA), Dallas Davidson (BMI), Chris DeStefano (NSAI), Bob DiPiero (BMI), Dan Foliart (ASCAP), Adam Gorgoni (SONA), Michele Lewis (SONA), Paul Williams (ASCAP)

(Assume final deadline of 1/8/19)

MLC 39 DAYS 723 days
APPOINTED BOARD AMLC Board Announced (DMN reports Howard and Mestel depart):

John Barker (founder, president & CEO of ClearBox Rights, LLC).

Brownlee Ferguson (founder, Bluewater Music).

George Howard (co-founder of both Music Audience Exchange and TuneCore and CIO of Riptide Publishing).

Lisa Klein Moberly (founder and president of Optic Noise).

Benji Rogers (singer-songwriter, founder of PledgeMusic and co-founder of dotBlockchain Media)

Jeff Price (founder of Audiam and co-founder of TuneCore)

Henry Gradstein (music industry attorney at Gradstein & Marzano, P.C.)

Larry Mestel (founder, Primary Wave)

Ricardo Ordoñez (founder and president of Union Music Group)


(Assume deadline of 1/9/19)

MLC/CO 39 DAYS 723 days
ENGAGED  MLC VENDORS AMLC:  Clearbox Rights, Audiam (others?)


(Assume deadline of 1/9/19)

MLC 39 DAYS 723 days
PAID MLC VENDORS AMLC: See board members above


MLC 270 days 545 days

(Assume deadline of 1/9/19)

MLC/CO 39 DAYS 726 days


MLC=Mechanical Licensing Collective

DLC=Digital Licensee Coordinator

CRJ=Copyright Royalty Judges

DCCOA=District of Columbia Circuit Court of Appeals

CO=Copyright Office

LAD=License Availability Date

*Topic areas to be updated as announced

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