Music Reports is now releasing a rights-matching interface designed to solve the mechanical rights streaming crisis, according to details exclusively shared with Digital Music News on Tuesday evening.
Updated, Wednesday Mar. 16th, 9 am PT: Music Reports has officially launched the matching platform at musicreports.com, confirming our information from Tuesday. Bill Colitre, Vice President & General Counsel of Music Reports, has also issued the following statement:
“Music Reports’ new claiming system is an absolute game changer for the music industry because it solves the ‘unmatched recordings’ problem—a problem that is increasing exponentially. The claiming system offers the publishing community the opportunity to bring its expertise to bear on the area it knows best: its own catalog. By providing publishers unprecedented access to match recordings and source music publishing information in this way, Music Reports is flipping a historical problem on its head and helping to ensure that every song is licensed, and every royalty is paid.”
Our original report from Tuesday, which delves into some of the context surrounding this release, follows:
The ‘claims matching interface,’ expected to be launched Wednesday morning, was first tipped to DMN by an executive close to the organization, and subsequently confirmed by Music Reports itself. In an email sent to Digital Music News, a Music Rights representative promised “the industry’s first matching and claiming system for publishers to claim and license their recordings,” with the ability to “solve one of the music industry’s largest problems of unmatched recordings.”
Earlier, sources pointed to an effort by Music Rights to ‘seize the moment of incompetence‘ at Harry Fox Agency, of HFA, a staunch Music Reports competitor in the mechanical licensing space. As the mechanical licensing agency for Spotify, HFA has been receiving heavy blame for the current Spotify royalty crisis, specifically for failing to send proper paperwork to artists, maintain a robust rights database, or create a system to fix its existing database issues.
Those accusations bubbled to the surface following a number of lawsuits, first sparked by a dispute last year by Victory Records and its rights management group, Audiam. Artist activist David Lowery subsequently tipped the cart with a massive, $150 million class action claim for unpaid mechanical royalties, itself followed by a $200 million class action against streaming service Rhapsody.
Spotify’s lawyers have been aggressively fighting to de-fang the class action, though onlookers question whether Spotify should be sued for not paying rights owners it doesn’t even know exist. In many cases, Spotify simply didn’t have a record of the mechanical rights license owner, and critically, neither did HFA. In the absence of an industry wide database of music assets, including publishing assets, Spotify’s royalty challenge looks hopelessly complex, though that doesn’t get them off the hook.
The Music Reports ‘claims database’ would offer a possible solution to that mess, at least as it relates to this specific license. More importantly, it would save Spotify from having to build the damn database: according to details tipped to Digital Music News, an out-of-court solution forged by the National Music Publishers’ Association (NMPA) would see Spotify paying a one-time penalty for the non-payments, while also creating an interface for artists that would match all mechanical royalties to their rightful owners. And, share that data back to HFA.
That deal offers an ‘out’ and a potential out-of-court solution to deflate the class action, though Spotify executives and investors are still being left with a bad taste in their mouth. At worst, Lowery’s class action has been tarred as ‘copyright trolling,’ while the music industry itself looks incompetent for not even maintaining a common, functioning rights database.
Meanwhile, the stink around HFA is starting to grow more pungent. As details of the NMPA resolution emerged, a number of industry executives wondered why Harry Fox would be exonerated, while leveraging Spotify to build its core database. HFA’s former ownership by the NMPA has also drawn criticisms of cronyism, and Apple has already started to move away from the company (and towards Music Reports). Meanwhile, the Agency’s lowball $20 million purchase by SESAC is now being viewed a bit differently: according to some insiders, the soggy price tag carried serious liability costs, the worst of which may lie ahead.