As the Music Modernization Act Nears Passage, SoundExchange Releases the ‘Music Data Exchange (MDX)’

Will SoundExchange’s new MDX finally provide the music industry the royalty and payment solution it so desperately needs?

SoundExchange has launched Music Data Exchange (MDX), a quiet release that is likely to play a big role in the future of US-based royalty payouts.

Developed in cooperation with the Recording Industry Association of America (RIAA) and National Music Publishers Association (NMPA), the free software facilitates the exchange of sound recording, publishing data, and ownership claims between record labels and music publishers.  Basically, MDX is all about bringing more efficiency and transparency to the process of connecting recording data to publishing data.

Now that’s a great idea — and one the music industry has been struggling to accomplish for decades.

At its core, the MDX software provides a central database of real-time pre-release, metadata, and publisher rights and claiming capabilities.

MDX is likely to play a big role in the upcoming Mechanical Licensing Collective, or MLC, a government agency that will be formed after the Music Modernization Act is passed into law (and for a quick background on the MLC, go here).

According to sources close to this legislative process, SoundExchange is nearly guaranteed to run the MLC, thanks to a no-bid contract expected to emerge after the MMA’s passage.   All of which explains why SoundExchange is busy preparing the backend technology to make this all work, and getting requirements from the NMPA, a chief architect behind the MMA.

Elaborating more on the software, SoundExchange’s COO, Jonathan Bender, broke down how the collective rights management organization came up with the idea.

Unsurprisingly, the idea for the central database grew out of a Request for Proposal (RFP) issued by the NMPA in April 2016.  It’s unclear if any other licensing organization received a similar RFP.  Either way, the NMPA had sought a vendor to build a claiming portal, which is likely the precursor the as-yet-unformed MLC entity.

As specified, the portal would publish and make available for claiming certain sound recordings which music services couldn’t identify.  Publishers could use the site to search for their compositions and place claims.

Previously, streaming platforms like Spotify were using Harry Fox Agency for mechanical rights processing.  But HFA, once owned and recommended by the NMPA, was unable to properly match and pay mechanicals, leaving Spotify and other streaming platforms with billions in potential liabilities.  The hope is that the MLC effectively replaces the HFA’s intended function, but actually gets the job done this time.

The basic problem that HFA couldn’t solve was this: music services had used a large number of sound recordings without identifying the music publishers of the underlying compositions.  A portal simply doesn’t exist to effectively match song ownership, and recording rights owners aren’t required to upload publishing details before going live on platforms like Spotify.

Publishers also didn’t have a way to search for their compositions and place claims.  Accordingly, music services just didn’t know who to pay.  Sadly, that’s a mess the NMPA helped to create, but also one they are also now attempting to fix.

MDX first provides a centralized resource for data requests.

Second, it provides visibility.  Publishers can head to the site to see all new recordings and submit their shares.

Third, the central database provides a mechanism for labels to request – and publishers to respond to – information before release.

Fourth, MDX identifies claims overlaps.  It automatically adds up submissions, flagging overlapped works as ‘overclaims.’  Put in a special section on the site, publishers can see the overclaims and take steps to resolve them.

According to Bender, the first step in paying mechanical royalties is identifying the composition underlying the sound recording.  Once the link has been made, record labels can identify who receives mechanical royalties. SoundExchange aggregates sound recording data from all the major and independent labels.  It makes that data available through its ISRC Search database,

You can check out the complete interview with SoundExchange’s Jonathan Bender here.


Featured image by SoundExchange.