Now that the Music Modernization Act (MMA) is law, who should be implementing it?
Maybe passing the Music Modernization Act into law was the easy part.
Now, attention has shifted towards critical implementation details, with major publishers arguing that a selection process is unnecessary to fulfill the duties of the Mechanical Licensing Collective, or MLC.
The MLC, outlined in the language of the MMA, is the government-appointed organization that will track, collect, and administer the mechanical streaming royalties collected from services like Spotify and Apple Music.
The National Music Publishers’ Association (NMPA), which represents the largest music publishers like Sony/ATV and Universal Music Publishing Group, has argued that this should be a no-bid contract, given that the group’s self-titled ‘MLC’ has already achieved overwhelming industry consensus.
But the AMLC, or American Mechanical Licensing Collective, feels that they have better technology and expertise, as well as broader support from indie songwriters and publishers. The group has argued that they will get more songwriters paid, while accusing the NMPA of seeking to claim payouts that don’t belong to its members.
Initially, NMPA president David Israelite snubbed the AMLC and downplayed the possibility of a competitive bidding process.
Perhaps a bit presumptuously, the NMPA named their royalty solution the ‘MLC,’ and declared themselves the ‘industry consensus’ solution called for by the MMA.
“No matter how you want to identify what the majority of music works means, the number of songs, the number of owners, the amount of money collected, the Billboard charts — anyway you cut it, these endorsements far exceed the majority status,” Israelite declared to Billboard earlier this month.
That was a not-so-subtle jab against the AMLC, which has also claimed to enjoy majority status given its support for the independent sector, which may be a larger group of individual creators. Meanwhile, the AMLC has been in active discussions with the U.S. Register of Copyrights, setting the stage for a competitive face-off next month at the U.S. Copyright Office.
Accordingly, the NMPA is rallying its troops.
In a letter issued this week to NMPA members, Israelite urgently requested support for the group’s MLC contender. The letter notes ‘industry consensus’ support, but still ‘urgently’ pushed for members to publicly support the bid.
Interestingly, the letter also describes the self-titled MLC as an ‘industry consensus bid,’ which suggests that a formal bidding process involving two — or more — contenders is ahead. The deadline for MLC submissions is during the latter part of March.
Separately, the NMPA-led MLC is now referring to themselves as a ‘submission,’ a major shift from an earlier stance that a competitive bidding process was unnecessary.
Here’s the full letter, shared with Digital Music News (bold added by NMPA).
Dear NMPA Member,
We urgently need your help with two important matters.
First, our records indicate you have not yet endorsed the industry consensus bid to establish the Mechanical Licensing Collective (MLC) being led by NMPA, NSAI and SONA. We ask that you will join the over 100 music publishers and thousands of songwriters who have already provided an endorsement. You can do so by simply responding to this e-mail with a YES.
We would greatly appreciate adding your company name and logo to our list of endorsers, which can be found here: https://www.songconnect.org/endorse/. In the coming weeks, we will also be sending you a formal letter of support which will be included in our submission. Our goal is to have every NMPA member company formally and exclusively endorse our submission so that the Copyright Office designates our proposal to operate the Collective.
Second, we also need you to you direct your songwriters to this website run by our partners NSAI and SONA, the two leading songwriter advocacy organizations in the United States, to sign a petition in support of our industry-wide effort: https://www.supportthemlc.com/
Passing the MMA with a unanimous Congressional vote was a historic achievement, but we now must ensure that the MMA works as intended and provides all the benefits that you deserve. We can only do that with your help.
Thank you for your support.
Best,
David
The MLC is certainly capable of beating the AMLC in a fair competition. But they can’t skip over the competition part. They have to demonstrate why they’re the best. They gotta earn this gig.
Perhaps not the perfect analogy, but this is somewhat like using the potheads and user shlubs who were busted for possession to get the cannabis law changed. Even though the majors won’t be involved USING the MLC, when there are sizeable unclaimed monies being distributed, it’s like big tobacco and big pharma stepping up to make certain everything are “right” for you little guys. Sure.
That’s the MLC’s biggest challenge. They have to demonstrate a commitment to paying those unclaimed royalties to as many rightful owners as possible, big or small, NMPA-affiliated or independent, and ensure that the black box will be as small as it can possibly be before it gets liquidated based on market share. The fact that David Lowery is on the committee helps their cause, but I think it will take more than that. And remember… the NMPA members will benefit from those matching efforts just as much as everyone else. They’d rather get their money now than wait for three years. That strikes me as being a pretty good incentive.
One issue on that point is a very tight timeframe for the MLC to distribute monies unclaimed mechanicals from the beginning of streaming (an amount estimated at $1.5 BLN from what I understand). Need to double-check the bill, but I believe MMA language calls for distribution after one year, if unclaimed the money pot gets distributed by existing market share. Basically a massive payout to entities that do not own rights to the music being paid on (i.e., Sony/ATV, UMPG, Warner/Chappell, etc.)
I’ll have to double-check the bill as well. That’s unfortunate if true. I think both MLC and AMLC would struggle to make a significant dent in liquidating the money to the proper owners if they only have a year to do it.
If any NMPA folks are still reading this, I do have some advice… Try to seek some non-NMPA endorsements as well. As many as you can.
I once heard somewhere that the top 1% wealthiest people in the country have more wealth than the bottom 90%. I think a similar disparity may hold true here. There are tens of thousands of publishers out there, and the NMPA only represents a few hundred maybe? I wouldn’t get too comfortable thinking the high market share of the NMPA affiliates’ usage means the NMPA represents then entire music industry. When the MLC is established, it has to be for everyone. The full 100%, including the 90% at the bottom. If you don’t win over the long tail, you may have a tough fight ahead.
This is some pretty shady framing being done in this article. The coalition MLC never said that there shouldn’t be a “competition.” It’s in the law. The Copyright Office will look at all the submissions and make a decision. David Israelite saying that he believes the coalition submission has the largest market share and thus should be the choice is not the same thing as saying that no one else should bother submitting.
Also, it is very possible that publishers, major or indie, will make direct deals and still choose to use the MLC to collect their money. In fact it will likely be cheaper for them to do so.
I believe the law gives a 3 year window before unclaimed funds are distributed. I think?