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The US Copyright Office Starts the Process for Selecting the Mechanical Licensing Collective (MLC)

Posted on May 09, 2018
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US Copyright Office Establishes Process for Mechanical Licensing Collective

The US Copyright Office is seeking feedback as it determines who will oversee the MMA’s Mechanical Licensing Collective (MLC).

Now that the Music Modernization Act (MMA) has become law, attention is shifting towards the all-important Mechanical Licensing Collective (MLC).  The MMA-ordained agency will oversee the collection and administration of streaming mechanical licenses from major streaming providers like Spotify and Apple Music.

As first reported on Digital Music News, at least two organizations will be vying to fill the responsibilities of the Mechanical Licensing Collective.  That includes the American Mechanical Licensing Collective (AMLC), which includes former Police drummer Stewart Copeland, superstar songwriter Rick Carnes, and music blockchain entrepreneur Benji Rogers.

A group led by the National Music Publishers’ Association (NMPA) and SoundExchange is also expected to submit a formal bid to head the MLC.  The NMPA group, which would include major music publishers, has already been accused of attempting to sabotage the AMLC by threatening early board members.  Separately, Billboard is now reporting that the NMPA-led group is threatening potential tech partners not to offer bids to the AMLC.

Bids from other organizations may also surface.

The Copyright Office has now placed a request for information for designating members of the MLC and the Digital Licensing Coordinator (DLC).

In the December 21st edition of the Federal Register, the Office issued guidelines for submitting applications.

Parties can submit written proposals until March 21st, 2019.   The public has until April 22nd, 2019 to issue written replies on submissions and related issues.

For short comments, people can type in the ‘Comment’ field of the form or submit an attachment.  The ‘Comment’ field has a 5,000 character limit.  Longer comments must be submitted in a separate file in one of the following formats – RTF, PDF, Microsoft Word, WordPerfect, or ASCII text.

For uploading comments, the document must include the name of the submitter and the organization they represent (if any).  In the regulations.gov comment form, they must also enter the ‘First Name,’ ‘Last Name,’ and, if applicable, the ‘Organization Name.’

Organizational commenters must provide the first and last name of an authorized representative of the organization.  They must also check the box labeled ‘I am submitting on behalf of a third party’ and provide the name of the organization in the ‘Organization Name’ field.

Individual commenters not representing an organization may leave the box unchecked.  They must provide their first and last names.  If desired, they can provide contact information by checking the box labeled ‘I want to provide my contact information.’

The MMA gives the Copyright Office until July 8th to select an applicant group to form the MLC.

Groups making submissions will have to submit their business plans and budgets.  This includes their estimated total number of employees as well as work outsourced to vendors.  This will also include the names and resumes of any key employees the proposed MLC may have engaged to design and operate the required functions of the MLC.

The Copyright Office has also asked for opinions on the collection and distribution of royalties, including unclaimed accrued royalties.

These include:

  • Efficient and effective payment methods, including addressing tax and other regulatory documentation for various payees and entities.
  • Planned approaches with respect to the collection and distribution of royalties collected through bankruptcy proceedings.
  • Information about the proposed MLC’s approach to scheduling royalty payments to identified copyright owners, including whether the entirety of unclaimed royalties is intended to be distributed simultaneously.
  • Views regarding whether the proposed MLC may consider holding reserve funds to address claims that may only reasonably be identified after the statutory holding period, and what if any criteria might be used to implement any such reserve practices.
  • Any policies that the proposed MLC intends to implement with respect to undertaking a fair distribution of unclaimed royalties.
  • Any other considerations that may be relevant with respect to the distribution of claimed and unclaimed accrued royalties.

In addition, the Copyright Office has also outlined the duties and functions of the MLC.

  • The MLC must be a single nonprofit entity created by copyright owners and endorsed by musical work copyright owners.
  • It must possess the administrative and technological capabilities necessary to carry out a wide array of responsibilities in administering blanket licenses.
  • This administrative role includes accepting or rejecting notices of licenses, and exercising authority to terminate licenses when the licensee is in default.
  • The MLC has 30 days to reject a notice in writing, listing with specificity why such notice was rejected, either because it does meet the statutory requirements or applicable regulations, or if the digital music provider has had a blanket license terminated by the collective within the past three years.
  • The MLC will also accept notices of non-blanket activity, that is, a notice that the licensee has been engaging in making digital phonorecord deliveries of musical works without using the blanket license, from significant nonblanket licensees.
  • For digital music providers that are blanket licensees, the MLC will receive reports of usage, and collect and distribute royalties for covered activities.

A key aspect of the MLC’s collection and distribution responsibilities includes identifying musical works and copyright owners, matching them to sound recordings (and addressing disputes), and ensuring that a copyright owner gets paid as he or she should.

To that end, the MLC will maintain a free, public database of musical work and sound recording ownership information.

Thus, the Copyright Office has also asked for feedback on the creation of a database of musical work and sound recording ownership information.

These include:

  • Establishing and maintaining the required musical works database.
  • Administering the blanket license and collecting relevant notices.
  • Usage reports and administrative assessments from digital music providers.
  • Administering a process by which copyright owners can claim ownership of musical works (and shares of such works).
  • Distributing royalties generated from unidentified works equitably.
  • Collecting and processing royalty payments to musical work copyright owners.

To this end, the Office has requested a business plan, including a statement of purpose or principles, proposed schedule, and available budgetary projections.  This would serve for the establishment and operation of the proposed MLC for the first five years of its existence.

In addition, the MLC Board will consist of 14 members and 3 nonvoting members.

Ten voting members will serve as representatives of music publishers.  Four voting members will have previously served as professional songwriters.  One nonvoting member shall represent a nonprofit trade association of music publishers.  Another shall serve as the digital licensing coordinator (DLC).  The final nonvoting member shall represent a nonprofit trade association advocating for American songwriters.

You can issue a comment here.

 


Featured image by Ken Lund (CC by 2.0).