I Was Interviewed By The Congressional Budget Office Regarding The Music Modernization Act, And Now I’m Even More Concerned For DIY Musicians
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.”
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.
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.
HAAWK Expands Offerings; Acquires TuneRegistry And RoyaltyClaim
I am thrilled to continue the journey of empowering DIY musicians and independent rights-holders as part of the HAAWK family.
HAAWK has acquired TuneRegistry and RoyaltyClaim. Read the story on Billboard this morning.
Google To Enable DIY Musicians To Capture Their Mechanical Royalties
Today, I’m happy to say that after weeks of discussions, Google has come onboard to
Royalty Claim to make it possible for DIY music creators to get DIRECT LICENSING DEALS with Google Play Music and YouTube.Read more in Royalty Claim’s Facebook post.
CreativeFuture Releases ‘The DIY Musician’s Starter Guide To Being Your Own Label & Publisher’ Written By Dae Bogan
Over the last 10 years, I’ve had the honor of working with and supporting many DIY musicians in the development, launch and growth of their music careers. As an artist manager, indie label owner, music publisher, music retail executive and music tech entrepreneur I’ve directly contributed to the creation, promotion, release, administration and monetization of hundreds of releases.
It is from these experiences working with DIY musicians (and indies) and through my advanced education having earned a master’s degree in music business that I operate today as an entrepreneur, educator and advocate for DIY musicians.
I try to assist DIY musicians make sense of the music business through articles and insight, workshops, courses, webinars and now a short ebook.
I am excited to present The DIY Musician’s Starter Guide to Being Your Own Label and Publisher
The DIY Musician’s Starter Guide to Being Your Own Label and Publisher was written to (1) help DIY musicians become better advocates for themselves by demystifying some of the confusing concepts behind how the digital music industry operates, (2) to address and offer solutions to many of the challenges that DIY musicians face in their careers, and (3) to educate DIY musicians on the processes with which they must become familiar to increase the possibility of being properly compensated for the
use of their music across the digital music ecosystem.
In this guide, you will learn about the basics of music copyrights and the business implications of the difference between compositions and sound recordings. You will learn what it means to be your own label and publisher and the four different hats you wear in the world of music royalties. You will also gain practical knowledge and steps
for asserting your rights and capturing the royalties that your music earns across the digital music industry.
Get it FREE here.
The (Not Quite) Definitive Guide To The Exploitation Of Music Royalties
There’s been a lot of talk lately about music royalties; those pesky micro-pennies that add up to something worth fighting over after millions and billions of streams.
With the music industry seeing revenue growth powered by streaming, coupled with shrinking per-stream royalty rates caused by a combination of horrible statutory royalties, unsustainable subscription models, and more content than ever before splitting up the pie, music royalties have never been more scrutinized in modern music history, IMO.
In the United States alone, there are several legislative measures being proposed that directly address music royalties — Fair Play Fair Pay Act (artist royalties), Songwriter Equity Act (songwriter royalties), AMP Act (music producer royalties), CLASSICS Act (legacy artist royalties) — with powerful proponents (music rights organizations, music creators’ rights advocacy groups, and music industry trade associations) and even more power opponents (digital media and Internet company coalitions, broadcaster lobbying organizations, and in some cases, DSPs themselves) on both sides.
Nevertheless, this is an interesting time for music royalties.
Technologists and music licensing experts have come together to create a variety of offerings to music creators and rightsholders to help them exploit their music royalties. Whether you want to find unpaid royalties, get a loan against future royalties, sell your royalties or allow music fans to invest in your music royalties, there’s a platform for that.
Here’s a (not quite) definitive guide of music royalties tools and services (A-Z):
FIND & CLAIM UNPAID MUSIC ROYALTIES
- Paperchain (Revenue Share) – Enriching the music supply chain. Paperchain solves the problem of unpaid royalties in the music industry. Paperchain empowers music copyright owners with products and services to solve the problem of unpaid royalties.
- Royalty Claim (Free/Subscription) – Search, Find, and Claim Millions of Unclaimed Royalties and Music Licenses. The Royalty Claim Platform is powered by data made available through the ongoing research of the Royalty Claim Initiative, its researchers and data scientists, and valued music industry partners.
GET ADVANCES & LOANS AGAINST FUTURE MUSIC ROYALTIES
- Sound Royalties (Flexible Repayments Terms) – Next-generation royalty financing. Retain your music rights. Keep your royalties.
- Lyric Financial (Flexible Repayment Terms) – Advances, Loans, and Financial Solutions for the Music Industry
- Royalty Advance Funding (Interest Loan) – Royalty Advance Funding has funded hundreds of established music royalty earners including songwriters, composers, publishers, producers, and their successors.
SELL, BUY OR INVEST IN MUSIC ROYALTIES
- Royalty Exchange (Ownership & Dividends) – Your online marketplace for buying and selling royalties.
- SongVest (Dividends) – The Stock Market of Music. For the first time ever, both investors and fans can own and get paid by the music that they love.
- Perdiem (Dividends) – Investment platform for creatives. Start your own record label and build your brand in music.
Featured Photo by Fabian Blank on Unsplash
[Infographic] Royalty Claim Launch Month Review
We’re excited to share this infographic representing a review of Royalty Claim‘s launch month.
Highlights from the infographic:
• The Royalty Claim Initiative has ingested nearly 60 million records of entitlements currently available for search and claiming in the Royalty Claim Platform.
• Over 350 music creators and music industry companies from 16 countries have joined Royalty Claim.
• Users have conducted over 4,500 searches and have created over 600 claims resulting in a 13% “find rate.”
We have a ways to go, but we are thrilled to see that so many music creators and rightsholders are feeling just a bit more empowered with data.
View the infographic here.
Microsoft Is Shutting Down Groove Music – Here’s Everything You Need To Know About Claiming Mechanical Royalties Before It’s Too Late!
Microsoft is shutting down Groove Music. Here’s everything you need to know about claiming mechanical royalties before it’s too late!
Have You Searched The Royalty Claim Database? What Are You Waiting For?
Royalty Claim Announces Unclaimed Neighboring Rights Database – Launches With Nearly 1 Million Records
Neighboring rights is becoming a hot ticket music rights issue as download decline (and thus, mechanical royalties) and Internet streaming soars. However, the fact that US music creators and rights owners get the short end of the stick in terms of the global view of neighboring rights protections and financial reward, it is more important than ever of US stakeholders to see where and how their music is performing around the world. Neighboring Rights Agencies have boomed over the last several years to address this issue, but they’re still highly selective and most work with a few dozen performers, if any at all.
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