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Save the Date: Nov. 28 Music Modernization Act at the Dallas Bar Association

November 11, 2018 Comments off

If you’ll be in Dallas, Texas on November 28, I will be discussing the Music Modernization Act at a luncheon sponsored by the Dallas Bar Association Entertainment & Sports Law Section.  The meeting is scheduled for noon at the Belo Mansion,
2101 Ross Avenue in Dallas.

The talk will focus mostly on the Music Licensing Collective and Digital Licensee Coordinator in Title I, but will also cover the Wyden Loophole in Title II for pre-72 recordings.

More information on the Dallas Bar Association site.

Read Highlights of Managing Change Under the Music Modernization Act’s Music Licensing Collective in the current issue of the Texas Entertainment & Sports Law Section Journal.

 

COUNTDOWN TO MODERNITY (11/5/18)–The Progress to Production Chart for the Mechanical Licensing Collective

November 5, 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 Mechancial Licesing Collective as required by the Music Modernization Act–the “Countdown to Modernity.”

This 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.

To our knowlege, no one else has published a chart like this.  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 that hasn’t already happened 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 7, 2019.  That’s 64 days from now and holidays count.

ARTIST RIGHTS WATCH
COUNTDOWN TO MECHANICAL LICENSING COLLECTIVE LAUNCH
WEEK 4

KEY DATES SCHEDULE FROM ENACTMENT DATE (10/11/18)

TO LICENSE AVAILABILITY DATE (1/1/21)

EVENT ACCCOMPLISHED WHO OWNS? TIME EXPIRED   BEFORE LAD TIME REMAINING TO LAD
REQUEST FILING TO BE MLC STATUS UNKNOWN—Deadline  1/7/2019 COPYRIGHT OFFICE 90 DAYS 726 days
DESIGNATION OF MLC STATUS UNKNOWN—Deadline  7/7/2019 COPYRIGHT OFFICE 270 days 545 days
FORMATION OF MLC NONPROFIT STATUS UNKNOWN MLC 4 weeks 112 weeks and 5 days
SUBSTITUTION OF BLANKET LICENSE FOR ALL EXISTING COMPULSORY LICENSES AUTOMATIC 1/1/2021 COPYRIGHT OFFICE 789 days
MLC BUDGET STATUS UNKNOWN

(Assume deadline of 1/7/19)

MLC/DLC/CRJ 112 weeks and 5 days
INITIATE ASSESSMENT PROCEEDING w/CRJs [MUST COMMENCE NO LATER THAN 7/7/2019]

STATUS UNKNOWN

MLC/DLC/CRJ 271 days 545 days
ASSESSMENT RULING [PUBLISHED IN FR NO LATER THAN 7/7/2020] MLC/DLC/CRJ 637 days 179 days
APPEAL OF ASSESSMENT RULING 30 DAYS AFTER PUBLICATION OF ASSESSMENT RULING MLC/DLC/CRJ/ DCCOA 667 days 149 days
MLC BUSINESS PLAN STATUS UNKNOWN

(Assume deadline of 1/7/19)

MLC/CO 90 DAYS 726 days
ANNOUNCED BOARD NOMINEES STATUS UNKNOWN

Update on Nominations (Deadline November 15, 2018):  NMPA and NSAI are accepting nominations for board seats.  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 deadline of 1/7/19)

MLC 90 DAYS 726 days
APPOINTED BOARD STATUS UNKNOWN

(Assume deadline of 1/7/19)

MLC/CO 90 DAYS 726 days
APPOINTED DLC STATUS UNKNOWN—Deadline  7/7/2019 COPYRIGHT OFFICE 270 days 545 days
ENGAGED  MLC VENDORS STATUS UNKNOWN

(Assume deadline of 1/7/19)

MLC 90 DAYS 726 days
PAID MLC VENDORS STATUS UNKNOWN (ASSUME 7/7/2020 IF NO APPEAL OF ASSESSMENT) MLC 270 days 545 days
ANNOUNCE MLC DATA STANDARDS STATUS UNKNOWN MLC/DLC
REGULATIONS* STATUS UNKNOWN COPYRIGHT OFFICE
COMMENTS AND REPLY COMMENTS ON REGULATIONS STATUS UNKNOWN ALL
EXPLANATION OF OPERATIONS: HOW TO REGISTER WITH MLC AND COST OF REGISTRATION STATUS UNKNOWN

(Assume deadline of 1/7/19)

MLC/CO 90 DAYS 726 days
REGISTRATION START DATE STATUS UNKNOWN

 

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

Save the Date! NYC Music Business & Law Conference November 16

October 24, 2018 Comments off

I’m honored to be included in a panel at the New York State Bar Association’s annual Music Business & Law Conference on November 16 with truly awesome panelists.

11:50am-12:50 pm      Music Modernization Act (US) / International Developments

The Music Modernization Act could be the most consequential copyright legislation in a generation. This panel will describe what it does, what it doesn’t do, how it affects current business and legal practices, and its effect on domestic and international copyright holders.  Bring your questions.

Panelists:
Marc Jacobson, Esq. (Moderator)
Chris Castle, Esq. – CC Legal Firm and Music Tech Solutions Blog
Charlie Sanders, Esq. – Counsel-Songwriters Guild of America
Alexander Ross, Esq. – Wiggin LLP (UK)
Christine Pepe, Esq. (IP, Music, and Digital Law Consultant)

 

Billions and Billions: Carl Sagan Meets the Music Modernization Act

July 24, 2018 Comments off

According to a post in Variety, there seems to be a rather large chunk of cash sitting at the digital music services.  As Artist Rights Watch posted,  Variety’s initial story read:

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 updated the post (you might call it a “correction”) to read:

The DSPs are holding some $1.5 billion in unmatched mechanical royalties [ADDED — that total is the sum of all Notice of Intent (NOI) filings currently parked at the U.S. Copyright office, and is climbing.] If the MMA passes, that money would be passed through to the MLC which would match it to the songwriters and publishers.

Both these statements are rather odd.  If there’s $1.5 billion in unmatched royalties at services, one must ask what is it doing there?

On the other hand, if the “correction” is correct, the $1.5 billion sum includes, I guess, royalties payable for the NOIs at the Copyright Office.  Not clear from Variety, but this reference must be to the “address unknown” mass NOIs (since Variety refers to “at the Copyright Office” and I think that’s the only NOI that would get filed “at the Copyright Office”).  (See my post on Big Tech’s mass NOI loophole from the ABA Entertainment and Sports Lawyer.)

This “correction” is also very strange to me because the mass NOIs are royalty free–that (and escape from liability) is the whole point of the loophole.  I think we have probably bored everyone with many posts on just what a joke these filings are.   Everyone from Ed Sheeran to the Neville Brothers are subject to these NOIs, and I’m told that at least Ed Sheeran is getting paid under a voluntary agreement.  Having said that, I would be very surprised if there were anywhere near 1.5 billion NOIs filed at the Copyright Office, although there may certainly be tens of millions or maybe over 100 million.  I’m willing to be educated otherwise, but that 1.5 billion number just doesn’t scan to me.  (You can look these up on SX Works’ handy NOI Lookup, the best tool for finding out if you have one filed on your song.)

The only way I can think of that both Variety’s original statement and the correction could be true would be if there were a voluntary retroactive unmatched payment by the digital services as part of the deal for the Music Modernization Act.  Even so, $1.5 billion is awfully generous, even for the biggest companies in commercial history.  But then, if it is a voluntary payment, how would you ever know if it isn’t also voluntarily disclosed?

So I’m looking forward to seeing if there’s a further correction.  It could just be confusion on the part of Variety or their source.  Time will tell.  But the entire exchange shows that the Copyright Office should never have allowed Spotify, Amazon, Google et al to get this started.  Strangely enough, Apple seems to get by just fine without using “address unknown” NOIs.

Rule Takers vs. Rule Makers: Congress Should Support Startups in the Music Modernization Act

July 24, 2018 1 comment

If you read the current version of the Music Modernization Act, you may find that it’s more about government mandates that entrench incumbents than a streamlined blanket compulsory license that helps startups climb the ladder.  Yet in the weeds of MMA we find startups dealt out of governance by rule makers and forced as a rule taker to ante up payments by their competitors in a game that the bill makes into the only game in town.

Billboard reports that Senators Cornyn and Cruz suggested a fix for this flaw—allow private market competition alongside the MMA’s government mandate.  (Vaguely reminiscent of the “Section 115 Reform Act” from the 109th Congress in 2006.)

Let’s review why this fix is necessary and how it could balance the roles of rule makers and takers.

It’s necessary because the problem doesn’t come from songwriters.  It comes from the real rule makers—Amazon, Apple, Facebook, Google and Spotify.  And startups know which side butters their bread. 

Public discussion of MMA has focused on the song collective and the compulsory blanket license for songs, but the mandated digital services collective is more troubling given the size of the players involved.  MMA calls the services’ collective the “digital licensee coordinator” or the “DLC”. Rule taker startups are governed by the rule maker DLC but have no say in the DLC’s selection.  

Like Microsoft’s anonymous amici, startups know their place.  Especially against Google, Amazon and Facebook, whose monopoly bear hug on startups includes hosting, advertising and driving traffic.

The MMA authorizes these aggressive incumbents to effectively decide the price to startups for the “modernized” blanket license.  Why?  Because the MMA requires users of the license to pay for the lion’s share of the “administrative assessment,” the licensees’ collectivized administrative cost payment that the CBO estimates will be over $222 million for 8 years.

Senators Cruz and Cornyn object to MMA’s delegation of the government’s authority to one collective for songwriters and one collective for digital services—with an antitrust exemption.  Why only one game in town? Rather than have the DLC run by the usual suspect monopolists, why not allow competition?

This is important–if startups can’t afford to buy-in to the license, it does them no good, and their biggest competitors decide the price of that license through the DLC. 

Both collectives are to be approved by the Register of Copyrights, but MMA puts the Register in the unenviable position of being constrained to appoint certain types of entities by statutory mandate.

Here’s the mirror image language from the MMA instructing the Register on selecting both the song collective and the DLC:

“[The Register must choose an entity that] is endorsed by and enjoys substantial support from [digital music providers/copyright owners of musical works] that together represent the greatest share of the [licensee/licensor] market for uses of [musical/such] works in covered activities, as measured over the preceding 3 full calendar years;”

Startups–who are potential music users most in need of the statutory blanket license–need not apply to be the DLC. 

That clause alone justifies the Cornyn/Cruz solution.  

There is another toad in the weeds:  The allocation of the “administrative assessment” to each music user of the blanket license.  In a clause fraught with moral hazard, MMA authorizes the DLC to “equitably allocate the collective[’s] total costs across digital music providers…but shall include as a component a minimum fee for all digital music providers.” Plus, the DLC also gets to set the “dues” payment for each of its “members.” Plus startups pay royalties to the song collective.

Rule makers set a lot of payments. But curiously no one can tell a startup today the hard cost of their blanket license tomorrow.

If a startup wants the MMA’s blanket license, the DLC can compel it to pay a share of the assessment at a price determined by the DLC—as well as a membership fee.  These mandatory payments are enforced by the DLC and are required for any music user to get a blanket license.  If this sounds cumbersome and bureaucratic, that’s because it is.  But absent the Cornyn/Cruz amendment, the bill gives rule makers control of the only game in town.

Crucially, there currently is no budget for even the first administrative assessment or the membership fee—for the biggest change to the Copyright Act in 100 years.  That comes later—perhaps years later after appeals.   When asked by Chairman Grassley, DiMA was unable to come up with a number and referred to the CBO’s cost estimate of all things.  The ante for a startup with 0.5% market share would be $1.11 million before royalties.  Yet—if a startup fails to pay the DLC, they can lose the blanket license even if current on royalty payments. 

Senators Cornyn and Cruz are rightly skeptical. 

“Modernization” should make licensing easier, level the playing field for startups and protect them from famously predatory  competitor incumbents—as well as copyright infringement lawsuits from the rule takers. 

These are all good reasons for the private market solution.  Competition at least gives startups a hope for the pursuit of fair treatment.

A wise member of the Texas Congressional delegation once told me Big Tech gets to climb the ladder to the American Dream like everyone else. What they don’t get to do is pull the ladder up behind them after getting to the top.

Expanding competition rather than mandating an exclusive collective could keep that ladder available to everyone. 

@helienne Lindvall on MMA Safe Harbor

July 16, 2018 Comments off

It must be said that Music Modernization Act safe harbor was released the same time as CISAC released an economic impact study of the DMCA safe harbor.  We think of DMCA as being worse because we’ve lived with it for decades–in decades how will we feel about the MMA safe harbor and is anyone feeling lucky?

Content Creators Coalition & MusicAnswers Applaud the Revision and Passage of the Music Modernization Act by the Senate Judiciary Committee — Artist Rights Watch

June 28, 2018 Comments off

PRESS RELEASE

[Washington, D.C.] – The Content Creators Coalition and MusicAnswers released today the following statement on the Senate Judiciary Committee’s vote in support of the Music Modernization Act.

C3 and MusicAnswers applaud the Senate Judiciary Committee’s vote to advance the Music Modernization Act, while incorporating key changes we had urged to make the legislation stronger, more transparent, and more equitable.

The MMA will strengthen the music ecosystem and all its participants, including songwriters, publishers, performing rights organizations, artists, record companies, music services and fans. It ensures digital music services will pay fair royalties for every song they stream, establish a better standard for determining royalty rates, and eliminate some out-of-date provisions of the PRO consent decrees. In return, digital music services get certainty, legal protection, and new streamlined tools to bring more music to more people at lower cost.

It’s a reasonable bargain, and, therefore, we have consistently and publicly supported the basic construct of the legislation.

We are especially grateful that the Senate Judiciary Committee, led by Chairman Chuck Grassley (R-IA) and Ranking Member Dianne Feinstein (D-CA), was willing to engage with our organizations on ways to improve the bill and include in the Managers Amendment approved today key protections for creators and the public.

As a result, the MMA now provides greater transparency, including rigorous audits to make sure that royalties are flowing to the correct parties, a commitment to educating all music creators about their rights and the royalties due them collected under the new Music Licensing Collective (MLC), a requirement to study and follow best practices in order to find the proper owners of unclaimed royalties, and increased clarity regarding who owns the data generated by the new system.

While we support the legislation and are proud of the changes we have achieved as artist and songwriter advocates, we continue to have concerns about three key issues: whether the entity that is designated as the MLC is being foreordained by the bill and precludes competition with the MLC; the composition of the Board of Directors of the MLC, which is unduly tilted towards major publishers; and the methods used to distribute royalties from works where even using best practices the authors could not be identified.  We urge the full Senate and the House to consider further improvements to those flawed provisions and we call on the Copyright Office to ensure in implementation of the final legislation that no stakeholder group can dominate the MLC and that all royalties are distributed in a fair and equitable and non-self-interested manner.

The process leading to this moment has been strong in many ways. But it has also included its fair share of divide-and-conquer tactics and efforts by powerful incumbent forces to crowd out grassroots organizations like ours and to divide the music community within itself.  We believe that we are strongest when we respect and support each other – a lesson too many in our business still have yet to learn.

We are deeply appreciative of the partnership c3 and MusicAnswers have forged. Together, we represent thousands of writers, producers, performers, and music business professionals, and over the past few weeks we have worked steadfastly to pursue improvements in the MMA. We look forward to future collaboration and welcome the involvement of other collaborative groups and individuals.

via Content Creators Coalition & MusicAnswers Applaud the Revision and Passage of the Music Modernization Act by the Senate Judiciary Committee — Artist Rights Watch

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