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I Was Interviewed By The Congressional Budget Office Regarding The Music Modernization Act, And Now I’m Even More Concerned For DIY Musicians

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I just spent the last hour giving a copyright law and music publishing crash course to a Principal Analyst at the Congressional Budget Office who’s tasked with determining the economic impact of the revised Music Modernization Act (which, by the way, now includes the Musical Works Modernization Act (which is an update to the originally proposed MMA, affecting songwriters and publishers), AMP Act (affecting producers and engineers) and CLASSICS Act (affecting recording artists of Pre-1972 records)) on states, DSPs and music creators.

He emailed me yesterday and asked to speak with me about the magnitude of the unclaimed royalties market, although we ended up discussing much more than that. Apparently he had discovered a presentation that I gave at the Music Industry Research Association’s MIRA Conference last year titled “The State of Unclaimed Royalties and Music Licenses in the United States.”

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Email from a Principal Analyst at the Congressional Budget Office

At the top of the one hour call he began by stating that he’s had to learn copyright and music publishing in 2 days (2 days!!!). The guy who’s going to contribute to a recommendation to Congress that will impact whether or not 3 different bills will be enacted and change our copyright law has spent only 2 days learning about the complex web of regulations and customs that govern an entire industry and its millions of constituents. I guess this is how legislation is vetted; economically.

The good news is he had a lot of great questions and had did a significant amount of research prior to our call. To be fair, I meet plenty of music industry professionals who have (or at least demonstrate) less knowledge of what’s going on in the world of music rights administration and music publishing than this gentleman; and they’ve spent years in the industry! It is refreshing to know that the government does inquiry with non-lobbyist from time to time when considering the impact of proposed legislation.

At any rate, he was open to hearing my advocacy on behalf of music creators (specifically songwriters, music producers, and recording artists of Pre-1972 records) as well as my substantiated opposition to some features of the revised MMA (generally those features that would disproportionately benefit music licensees (primarily, DSPs) and major publishers while leaving DIY music creators to fend for themselves).

[This paragraph was omitted on 4/20/2018 as a result of a clarification that I received for Title 3 of the MMA]

Another issue I have is with the ownership of the unclaimed mechanical royalties fund(s). The Musical Works Modernization Act (Title 1 of the MMA) would, for the first time, codify the existence of a mechanical royalties black box in the United States. The current US Copyright Act does not give copyright owners a right to earn or collect mechanical royalties if their musical works are not registered with the US Copyright Office.

Here’s an excerpt from one of my articles on the matter:
After the NOI has been filed, it is then the copyright owner’s responsibility to become aware of and locate the NOI, and then take action in order to receive mechanical royalties. The law states, “To be entitled to receive royalties under a compulsory license, the copyright owner must be identified in the registration or other public records of the Copyright Office.” (17 USC 115(c)(1))
The law also makes it clear that the licensee is not required to pay mechanical royalties until after the copyright owner has been identified. “The owner is entitled to royalties for phonorecords made and distributed after being so identified…” (17 USC 115(c)(1)) What’s worse, the law does not require the licensee to pay retroactively for mechanical royalties earned before the copyright owner is identified. “…but is not entitled to recover for any phonorecords previously made and distributed.” (17 USC 115(c)(1))

However, intermediaries (e.g. Harry Fox Agency, Music Reports, Loudr) that process NOIs (Notice of Intent to Obtain a Compulsory Mechanical License) on behalf of their DSP clients do encourage their clients to set aside unattributed mechanical royalties into an escrow account (the so-called “black box”). The royalties sit there until the copyright owner raises his/her/their hand to collect the earnings or until the entity decides to disburse or absorb the uncollected funds.

Generally, this is a “good faith” policy.

Now, since the MMA will codify the black box as a matter of law, this private sector matter will become a government matter. The question, then, is will federal government or state governments have the right to maintain the unclaimed royalties black box?

Currently, unclaimed property laws enable states to receive and hold unclaimed property (such as money) when the property owner can not be reached. For example, California’s Unclaimed Property Law requires corporations, businesses, associations, financial institutions, and insurance companies (referred to as “Holders”) to annually report and deliver property to the California State Controller’s Office after there has been no activity on the account or contact with the owner for a period of time specified in the law – generally (3) three years or more. I’ve had a few refunds from services that I used and cancelled when I moved from one place to another. I did not provide the service with a forwarding address, so my refund became unclaimed property and ended up with the California State Controller. By searching the CSC’s database, I was able to find and then claim the property (pictured below).

If your property goes unclaimed too long (each state has their own statute of limitations), the state has the right to liquidate the property (e.g. sale an unclaimed vehicle) and absorb proceeds as miscellaneous revenue to the state’s budget [lawyers, correct me in the comments if I’m wrong].

Because states unintentionally (benefit of the doubt) benefits from unclaimed property, I could see states with significant music industries (e.g. California (Los Angeles), New York (Greater New York City), Tennessee (Nashville), Georgia (Atlanta)) suing the federal government or the Mechanical Licensing Collective (the entity that would be granted under the MMA to administer a new blanket licensing system along with a centralized database of musical and sound recording copyrights to match works with usage reports submitted by digital services) over the right to collect unclaimed royalties, especially if the black box is hundreds of millions of dollars (which I believe it is).

There are many other issues that I have with the MMA such as the proposed formation, structure (especially the imbalance of representation on its board where there would be 10 publishers and only 4 songwriters (why not 7/7?)), and governance of the MLC and similar unclaimed royalties issues related to the CLASSICS Act; among other issues. I’d be happy to discuss, but this post is already yuge!

In a word, I am all here for improving royalty rates, ensuring the fair treatment of music copyrights and moving towards a more equitable representation of music creators. However, the MMA is not quite there yet and passing it as-is, with all of its ambiguity, would be a shame. I don’t know if the music industry will have another shot to make this kind of update to the Copyright Act in the next 20 plus years (the Digital Millennium Copyright Act of 1998 was the last significant update).

We should probably get it right — now.

My Thoughts On The MMA In Light Of The CRB Mechanical License Rate Decision

In light of the CRB’s ruling today to increase mechancial royalty rates for on-demand DSPs, I would caution against passing the Music Modernization Act without first amending it to include some very necessary guarantees for DIY musicians.

Given the recent ruling to increase mechanical rates, penalize DSPs for late payments, and remove the TCC cap DSPs will be more incentivized to cling to the safe harbor components of the MMA to limit their financial responsibility to songwriters.

I also fear that the blanket license (combined with the elimination of the statutory damages provision against infringement) would hurt more DIY musicians than protect compared to the existing compulsory licensing schema where today an independent can fully self-administer his/her mechancial rights via a service like TuneRegistry or with a third-party administrator like Songtrust. Why? Because the unclaimed/unpaid (aka “black box”) royalty fund will also increase by 44%, giving major publishers a bigger windfall of market share distributed gains from a royalty pool that generally belongs to unidentified independent songwriters.

What incentive does DSPs, who must pay the rates anyway, and major publishers, who will undoubtedly control the mechanical licensing collective body, have to ensure the works of DIY musicians are properly represented and accounted to and what power do DIY musicians have to assert their limited rights?

I could be completely and utterly wrong.

However, the devil is in the details and the MMA, while it does streamline the process of mechancial licensing in the United States for DSPs it also effectively limits the warranties and representations of DIY musicians.

Every article written about MMA is generally written from the perspective of publishers and NMPA members. As an advocate for and service provider to DIY musicians, my perspective is a bit different and more nuanced.

The decision today by the CRB was a win for all songwriters. The MMA is a win for major publishers. It must be amended.

How To Get A Facebook, Instagram and Oculus Direct License For DIY Musicians & Indie Publishers

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Facebook has been undoubtedly one of the music industry’s biggest missed opportunity for monetization in recent years. With billions of users consuming millions of hours of video on Facebook and Instagram, which embodies sound recordings and compositions, the thought of Facebook rolling out monetization to independent songwriters and publishers makes us giddy!

Well, we are happy to report that that day has finally arrived! Read the story.

500 Spotify Playlists That You Can Pitch To Right Now

Several members of the Artist Managers Connect Facebook group (a global networking group of artist managers and other music industry professionals such as service providers, music tech founders, and label/publishing reps) curated a list of third-party Spotify playlists.

This amazing resource is a Google Sheet posted by AMC member Jorge Mejias with a caption:

Since I truly hate the fact that there are “PR” companies offering “Spotify Playlist Pitching” for upwards of $1K+ making false promises they know and then saying something around the lines of “it’s just how the industry is” or “Spotify playlisting is tough” or whatever-

Here is a google sheet w/ info on some of the most popular third party Spotify playlists that most of these companies are pitching to because-

1) this information is all public so I don’t feel bad giving it out & saving people some research

2) what you get out of it = how much time you dedicate to it

3) getting scammed in 2017 / not helping prevent it when you can is silly

Contact info is all out there so stop making excuses. Also the follower count on these are outdated.

*Edit* – also this is a thank you to everyone from AMC who has helped me out thus far. you rock~

*Edit2* – also please refrain from publicly posting any contact info- thank youuu!

*Edit3* – this post by no means aims to discredit companies who do properly provide pitching services. Dan put it best by saying “Would like to caveat that some of us work records at Spotify and Apple Music very transparently and based on years of repertoire and success for our artists within the platform’s respective ecosystems. ”

*Edit4* – thank you Dustin for contributing his spreadsheet

The list requires you to do a little bit of work to reach out to the curator, but the awesome thing about the list is that they’ve already done the work to identify the curator’s Spotify username and have tracked followers and genre to help you sort and prioritize.

List: https://docs.google.com/spreadsheets/d/1-jf6HkRHay43pv8f6X_VneDPuEY405YV3Ool8GVdZjs/htmlview

Go forth and pitch your music!

Let me know if you land a placement.

 

 

5 Music Business Tasks You Can Do Before The End Of 2017

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2017 is coming to an end. Here’s a quick rough rundown of some things you can (and some that you must) accomplish before the end of the year:

1. GET YOUR GROOVE MUSIC MECHANICAL ROYALTIES BEFORE ITS FORFEITED. Microsoft is shutting down Groove Music on December 31, 2017. Legally speaking, they are not required to pay mechanical royalties to songwriters and publishers who have not registered their copyrights with the United States Copyright Office. Therefore, in theory, on January 1st, 2018 Microsoft could expunge any unclaimed mechanical royalties. Royalty Claim shows you how to find your songs and begin the process of unlocking any accrued mechanical royalties.

2. GET DISCOUNTED CONFERENCE PASSES FOR 2018. If you’re thinking about going to music industry conferences in 2018, you should know that many of them offer early-bird discounts now. These savings really add up when you attend multiple conferences in one year. SXSW is currently offering lower rates that end on set dates. The next rate increase will be on Nov 17th. NAB is offering a variety of packages at more than 50% off through Nov 24th (including a FREE pass for the Exhibit floor). There are more offers out there such as Music Biz Expo with discounted rates through March and ASCAP’s “I Create Music” Expo with discounted rates through the end of the year.

3. RELEASE A HOLIDAY COVER SONG LEGALLY AND SUBMIT TO BLOGS FOR END OF YEAR EXPOSURE. It’s not too late to record and release a holiday song this season and leverage the exposure from blogs and background music services. I breakdown how to do this in my piece “5 Tips For Making, Marketing And Monetizing Holiday Music This Season”.

4. GET OR RENEW YOUR GOOGLE PLAY MUSIC MECHANICAL LICENSE. If you distribute music to Google Play Music, you may be earning mechanical royalties that you have not collected. Mechanical royalties are different from your master use royalties (paid to labels, distributors, and aggregators) and performance royalties (paid to performing rights organizations (PROs) such as ASCAP, BMI, SESAC, and GMR in the United States). Mechanical royalties are royalties paid for the distribution of the underlying musical work embodied in a sound recording — that is, the “song.” Mechanical royalties are owed to songwriters and publishers and is not paid to labels, distributors, aggregators, or PROs. To enter into a direct agreement with Google for your Google Play Music mechanical royalties, you can do one of two things: (1) Sign a direct deal with Google Play Music, whereby you will be responsible for data ingestion as well as ongoing account management. Please reach out to indiepublisher@google.com should you like more information about the direct license; or (2) Opt in via the Harry Fox Agency, whereby they will manage your content on your behalf. You can do so by logging into your HFA account at harryfox.com and click the “Authorizaions” link located in the “Licensing” box. If you do not have an HFA Online account, you can fill out a Request for Administrator Account form at https://secure.harryfox.com/public/forms/online-account/form.jsp. You do not need to be a member of HFA to pursue this option. You can easily streamline and expedite the delivery of your song registrations to Harry Fox Agency (and Music Reports Inc., Loudr, ASCAP, BMI, SESAC, SoundExchange, and many others) using the affordable music rights and metadata management platform TuneRegistry. TuneRegistry was built to empower the independent music company and DIY musicians who self-publish.

5. CLAIM / VERIFY YOUR ARTIST PAGES & SOCIAL MEDIA. Go into 2018 with a tight marketing infrastructure by making sure that you control all of your presence across the top DSPs and social platforms. Symphonic Distribution breaksdown how to claim your label/artist page on DSPs and music marketing agency View Manic can help eligible artists verify their profiles on Facebook, Twitter, YouTube, and Instagram.

***BONUS ITEM – DUE IN EARLY 2018***

6. PREPARE AND SEND FORM 1099s. Did you hire a publicist or digital marketing consultant to work your campaign this year? Did you book a photographer for a photo shoot? Hire a graphic designer to overhaul your website? Got a new music video from a production company or indie video director? If you hired freelancers or independent contractors this year, make sure to prepare and send them a Form 1099. This form is required (few exceptions) to be sent to non-employees when you’ve paid them $600 or more for services remitted. The information for the form is gathered from payments you’ve made and the contractor’s information, which you should also collect on a Form W-9. Contractors must receive the 1099 by January 31st, 2018. Read more about 1099s here and W-9s here. In the past, I’ve used Track1099 to easily generator and file 1099s. Check them out or others on the market.

 

Featured photo by aiden marples on Unsplash

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