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350+ American songwriters and managers support Copyright Office proposal regarding MLC’s policies for US streaming royalties

By | Published on Monday 9 January 2023

Music Licensing Collective

A plethora of American songwriters and managers signed an open letter last week supporting a US Copyright Office proposal which would force a change to the royalty distribution policies of collecting society the MLC.

That proposal relates to the good old termination right under US copyright law and the workings of the compulsory licence that covers the mechanical copying of songs in the US, and – specifically – a technicality regarding how those two things interact.

The termination right allows songwriters who assign their copyrights to another party, such as a music publisher, to terminate that assignment and reclaim their rights after 35 years.

Meanwhile, the compulsory licence means that anyone can make mechanical copies of any songs within America at rates set by the US Copyright Royalty Board. Since the 2018 Music Modernization Act, the Mechanical Licensing Collective – or MLC – has managed and administrated that compulsory licence in the streaming domain, basically providing streaming services with a blanket licence covering all songs at the CRB-set rates.

The technicality of interest is a ‘derivative works exception’ to the termination right. This says that a so called derivative work created when a publisher owns a song copyright is not subject to any subsequent termination by a writer.

So, in practical terms, if a song is sampled in another track or synchronised into a film, and the publisher receives an ongoing royalty from that sample or sync, that arrangement would not be affected by the termination.

Since it got itself up and running, the MLC has seemingly applied that exception to the mechanical rights compulsory licence in a very specific way. It means that streaming royalties are paid to whoever was in control of a song copyright when any recording of that song was first uploaded to a streaming service, rather than whoever is in control of the copyright at the point the track is streamed.

According to Billboard, that means that – even after a writer has terminated an old copyright assignment and reclaimed the rights in their songs – any mechanical royalties due from the streaming of existing recordings of those songs will continue to go to the old music publisher. Which doesn’t seem especially fair. And the Copyright Office agrees.

Back in October it proposed a new rule that would force the MLC to pay mechanical royalties to whoever is in control of a copyright at the point a song is streamed. Or in the words of the Office itself, this new rule “intends to clarify that the appropriate payee under the mechanical blanket licence to whom the MLC must distribute royalties in connection with a statutory termination is the copyright owner at the time the work is used”.

A consultation on that proposal closed last week. As that happened, an open letter organised by the US Music Artists Coalition and signed by more than 350 artists and songwriters – and managers and lawyers who work with artists and songwriters – backed the Copyright Office’s proposal and urged the government agency to get that new rule in place as soon as possible.

The letter – signed by Tom Morello, Meghan Trainor, Sting, Sheryl Crow and John Mayer, among many others – read: “We stand together in support of US Copyright Office’s rule and believe that anything contrary would undermine the clear Congressional intent to allow songwriters, after an extended period of time, to reap the benefit of the songs they create”.

“It is simple, a songwriter who validly terminates a prior grant is the correct recipient of royalties collected by the Mechanical Licensing Collective. A publisher whose grant was terminated – and has received the benefit of the songwriter’s work for decades – is not the proper or intended recipient of these royalties. Any view opposing the USCO’s rule is a vote against songwriters”.

The music publishers in the US insist that they don’t object to the goal of the Copyright Office’s new rule, but have argued that that goal would be better achieved by US Congress clarifying matters through an actual amendment to copyright law, rather than via a proclamation from the government agency.

The new rule, the National Music Publishers Association says, could result in litigation which a more formal amendment to copyright law could avoid. If nothing else, it adds, the new rule should not be applied retroactively on royalties already paid out by the MLC.

The NMPA said all of that in its formal response to the Copyright Office proposal. Though its CEO David Israelite stressed in a statement to Billboard last week that: “We strongly support songwriters receiving all mechanical royalties after a termination and have been working towards crafting legislation to ensure that outcome for years alongside the major songwriter groups”.

The trade group’s formal response to the proposal, he added, reflected “our support for the Copyright Office’s proposed rule and offers ways to make that rule even more robust and less susceptible to legal challenges”.