The Recording Academy Withholds Endorsement of the ‘Industry Consensus’ MLC Pending Further Review

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The Recording Academy has declined to lend its endorsement to an MLC bid from major publishers like Sony/ATV, UMPG, and Warner/Chappell.

Instead, the Academy, which oversees the annual Grammy Awards, has indicated that it will withhold its support pending further scrutiny of competing MLC bids.

The major music publishers’ submission to oversee the Mechanical Licensing Collective (MLC) faces competition from a rival group of indie songwriters and technologists known as the American Mechanical Licensing Collective (AMLC).  That group has argued that major publishers are seeking to exploit the MLC to claim billions in ‘black box’ royalties that belong to indie songwriters.

According to the language of the Music Modernization Act, now signed into law, the elected MLC will have roughly one year to clarify a tranche of unidentified royalties.  If unidentified, the first tranche — which is estimated at more than $1 billion — will be liquidated based on publishing market share, regardless of who the actual rights owners are.

That payout scheme has been criticized as heavily advantageous to major publishers, and extremely unfair to smaller rights owners.

Initially, the influential Recording Academy appeared to wholeheartedly back the major publishers’ MLC submission.

But the Academy’s name was notably absent from the publishing group’s formal proposal with the U.S. Copyright Office.  Instead, the group has opted to withhold its endorsement for now, while studying the nuances of both proposals.

“The Recording Academy has an obligation to its songwriter members to study both submissions for the new Collective carefully and with due diligence,” Daryl Friedman, the Recording Academy’s Chief Industry, Government and Member Relations Officer emailed Digital Music News this afternoon (April 22nd).

“Therefore, we could not exclusively endorse either entity prior to studying their full proposals.  The Academy will file comments with our recommendations on April 22 in accordance with the procedure set forth by the Copyright Office.”

It should be noted that the email was also sent on April 22nd (Monday), ostensibly prior to the Academy filing its official comments with the U.S. Copyright Office on the same day.  That open comment section is being closed on April 22nd, and at the time of writing, we have not seen the Recording Academy’s comments on the various proposals.

(It should be noted that these are open submissions with the U.S. Copyright Office, meaning that anyone with an interest in the outcome can submit a comment.)

Late last week, sources to Digital Music News noted that the Recording Academy’s name was missing from the official MLC submission of the major publishers.

David Israelite, who heads major publishing trade group NMPA, did not respond to a request from Digital Music News for comment.  Charlotte Sellmyer, Senior Vice President of External Affairs at NMPA, also declined to respond.

The Recording Academy’s pullback comes as a blow to the NMPA and its major publishing constituents.

The Academy is easily one of the most influential trade groups in the music industry, and certainly the most visible with the Grammys.  The group’s pullback could deflate earlier claims by the NMPA that its MLC proposal solidly represented an ‘industry consensus,’ a talking point used heavily by Israelite and others.

“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.

Indeed, Israelite argued that the NMPA’s MLC submission was so heavily supported that a bidding process involving the AMLC was completely unnecessary.  Those claims now seem unwarranted given the Recording Academy’s position.

The AMLC has countered Israelite’s claims by noting that the real ‘consensus’ comes from smaller songwriters and publishers, a group that easily overpowers the smaller cadre of major publishers and their allies.

Other MLC supporters remain, including the influential Songwriters of North America (SONA).  But even SONA is experiencing some fallout: just last week, SONA founding member Hélène Muddiman broke ranks with the organization to support the AMLC.

“Please remember that the majors have done direct licenses with streaming platforms, so it is unlikely that very much of this [black box] money belongs to major publishers or their writers,” Muddiman wrote.  “Rather, it belongs to indie and foreign copyright holders, who were never licensed or whose metadata was corrupted or incomplete.”