[co-author: Michelle Cardona Vinasco]

U.S. Copyright Office Approves Mechanical Licensing Collective

There is a new federally appointed team in charge of licensing music to digital services which will result in payments to songwriters. The U.S. Copyright Office announced on July 5, 2019 that it has designated the Mechanical Licensing Collective (MLC)—which is supported by the National Music Publishers’ Association, the Nashville Songwriters Association International and the Songwriters of North America—as the new entity tasked with licensing and administering rights under the Music Modernization Act (MMA).

Behind the MMA

On October 11, 2018, the Orrin G. Hatch-Bob Goodlatte Music Modernization Act was signed into law. The MMA is a combination of three previously introduced bills and passed with unanimous consent in both the Senate and the House. Considered the first significant piece of copyright legislation to be passed in decades, the MMA has been called by some leaders in the music industry, the most important piece of legislation in a generation.

The MMA was drafted to ensure that all players in the music industry are properly compensated for their contributions. To achieve this goal, the MMA is composed of three subparts. Title I of the MMA, the Musical Works Modernization Act, creates a blanket mechanical license for the reproduction and distribution of musical works through downloading and streaming services. It forms a nonprofit entity which is tasked with issuing and administering the new blanket license and monitoring royalty payments known as the mechanical licensing collective—the MLC. The Musical Works Modernization Act also establishes a system to better facilitate royalty payments to artists. Title II, the Classics Protection and Access Act, ensures that “legacy” artists are paid royalties when their works that were recorded prior to 1972 are played on digital radio. Lastly, Title III, the Allocation for Music Producers Act, codifies a legal process for professionals including music producers, mixers and sound engineers to receive royalty payments for their contributions to musical works.

Mechanical Licensing Collective

Under Title I, the MMA authorizes the Register of Copyrights to designate the MLC. Beginning on January 1, 2021, the MLC will be primarily responsible for (i) offering and administering the blanket mechanical license; (ii) collecting and distributing royalties; (iii) identifying musical works and locating the copyright owners of such works; (iv) maintaining the musical works database, which contains information relating to musical works such as the identity of the copyright owners of such works and the sound recordings in which the musical works are embodied; and (v) administering processes by which copyright owners can claim ownership of musical works and by which royalties for unmatched works are equitably distributed to known copyright owners.

Of significance, the MLC will be tasked with distributing “black box” payments or royalty payments that have been unmatched to a songwriter. In connection with the distribution of such payments, the MLC will be required to publicize all unclaimed royalties and establish and administer a process for individual copyright owners to make ownership claims through a claiming portal. However, if the rightful copyright owners are not located within three years from when such royalties were received by the MLC, then the MLC will distribute the unclaimed sum amongst existing copyright owners identified in the MLC’s records by market share.

Two groups competed for the position of MLC and submitted a bid to the Register of Copyrights. The newly appointed MLC will now begin working on preparations for its 2021 administration by negotiating a budget with digital streaming services, which shall provide funding for the MLC, creating the musical works database, and constructing the unclaimed royalties claiming portal.