Keeping Our Word.
A few months ago we promised we would keep you informed as the Music Modernization Act (MMA) inches towards implementation. In light of the events of the past few weeks, we think an update is in order.
As you probably know, the MMA creates a Music Licensing Collective (MLC), an entity that will handle royalties from digital music companies. Currently, there are two candidates vying to be the MLC: one assembled by the National Music Publishers Association (NMPA) and one known as the American Music Licensing Collective (AMLC), an ad hoc group of writers and music business professionals.* (Additional groups may announce before the March 21 deadline to submit.)
The NMPA is doing a lot of chest-beating about its Monday announcement of a slate of publishers and writers to fill the various boards of its MLC. In its announcement, the NMPA asserted that its supporters are endorsing it as the one and only organization that should be selected by the Copyright Office to become the MLC. (That selection will be made no later than July 11.)
It’s important to note that almost none of the royalties of the NMPA's big publishers will run through the MLC; they all have direct deals with digital music companies. So the vast majority of royalties the MLC will handle are those of independent writers, artists, and publishers.
The AMLC is basing its candidacy on three claims: experience with independent writers and publishers whose royalties will form the bulk of those flowing through the MLC, superior business and technological expertise, and a promise to exhaust every possible means to locate and pay the right people — those whose music actually earned the unclaimed royalties.
This last point is an important one, since the MLC will be handling more than a billion dollars of royalties that, at first, will be unclaimed. The MLC is supposed to develop systems to help independent writers and publishers claim their works and their money from this "black box" of royalties. But here's the thing: the fewer claims are made, the more money is left over. And what happens to that leftover money? It goes to publishers based on their market share.
The result of all this is that the biggest publishers — those that control the NMPA (and whose royalties are not likely to flow through the MLC) — may be in a position to get the biggest payout from the black box. Maybe that explains why the NMPA is so fiercely promoting its group as the one and only organization that should be in charge of the MLC.
Putting the fox in charge of the hen house raises obvious questions about how this is all going down, and why few have mentioned this rather obvious conflict of interest. One wonders why our PROs and some songwriter groups are all lining up exclusively behind the NMPA, especially when the AMLC seems to offering a reasonable, responsible, and un-conflicted alternative.
We suppose the NMPA and its cheerleaders are hoping that by creating enough noise, they will drown out and eventually extinguish the voices of the AMLC. For now, music creators may be wise to ignore calls for "unity" and the appeals to back a self-proclaimed winner. Competition can only make the MLC candidates stronger, and, remember, only the Copyright Office can decide which proposed MLC is best suited to the task. (By the way, the Copyright Office has made it abundantly clear that interested parties may endorse more than one MLC candidate.)
This is a time for thoughtful people to look with a sober eye on how the Music Licensing Collective is being organized, which contending group will best serve the needs of small, independent writers and publishers, and what steps will fulfill the MMA’s exciting promise.
We’ll continue to keep you up-to-date on this crucial situation.
The MusicAnswers Team
** Full disclosure: Two of our founders have agreed to serve as independent observers at the AMLC, should that organization be chosen to be the MLC. That said, the whole purpose of being independent observers is to call things as we see them, and we will continue in that role, regardless of which organization is chosen by the Copyright Office.