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New American collecting society announces initial partners, including HFA

By | Published on Wednesday 27 November 2019

America’s all-new mechanical rights collecting society, the MLC, has announced the appointment of a number of partners to help it set up a new system for processing the mechanical royalties paid to publishers and writers by streaming services. At least one those partners has already been criticised by some in the songwriting community.

The new society was instigated, of course, by last year’s Music Modernization Act which sought to address issues with the way the mechanical rights in songs are licensed in the US. The lack of a collecting society in America able to issue a blanket licence to streaming services for those mechanical rights in songs had caused all sorts of issues, with songwriters going unpaid and streaming services getting sued.

By creating the MLC the US basically brings its licensing framework more in line with most other countries where there are collecting societies able to provide blanket licences for both the performing and mechanical rights in songs – both of which are exploited by the streaming services.

While many publishers nevertheless license their Anglo-American repertoires through direct deals in some markets, the societies still provide the streaming services with a mop-up licence covering any gaps not covered by their direct deals.

So that’s a good thing. Although many of the collecting societies offering that mop-up licence elsewhere in the world have faced the same issues that the streaming services – and their agents – faced under the old system in the US.

Which is, how do you know what songs are contained in what recordings, and how to you work out who controls what stake of each song in each country? Tackling that challenge means building a shit hot database and then having some nifty tech and a team of savvy musical detectives to match new recordings to the songs they contain.

Societies around the world have met that challenge with mixed success. The MLC must build a system capable of doing all that from scratch. Starting anew does actually have some benefits, but it is – nevertheless – a big ask.

As the chair of the MLC board, Alisa Coleman, said yesterday: “Creating a single platform capable of handling a blanket mechanical license that will pay royalties to all songwriters, composers, lyricists, and music publishers is a monumental effort that has never before been undertaken in the United States”.

Coleman’s board hopes that the people and companies it has now hired will be up to the job. That includes Richard Thompson, who formerly worked with Kobalt and chaired the music data standards organisation DDEX, who becomes the MLC’s Chief Information Office. Thompson has already been consulting for the new society since February.

“To help guide this initiative, the board takes great pleasure in formally appointing Richard Thompson as CIO”, Coleman added. “Richard’s impressive experience in building the technology behind Kobalt, as well as his past role as chair of DDEX and his participation in the international music metadata standards group for nearly a decade, make him the ideal person to drive the development of the MLC’s platform”.

The external companies hired to help get the MLC’s operations up and running include consulting firm Prophet, tech outfit ConsenSys and music licensing set up the Harry Fox Agency. It’s the latter that is likely to prove controversial.

Under the old licensing system in the US labels and – in the streaming domain – digital platforms hire agencies to work out what songs have been used and who owns those songs, and to then get the right copyright owners paid according to the rules of the compulsory licence that covers mechanicals Stateside. HFA is one of those agencies, previously owned by the music publishing sector’s trade body, but since 2015 in the hands of private equity.

Among HFA’s clients is Spotify. Which is to say, the streaming service sued for billions for failing to properly identify all the songs streaming on its platform, meaning that loads of works went unlicensed. So, arguably Spotify’s failure in that domain was really HFA’s failure.

That is something noted by activist songwriter David Lowery, whose lawsuit against Spotify over unpaid mechanicals helped provide the momentum that forced the big music publishers and the digital services to come together to create a better licensing system centred on a new collecting society.

Lowery writes on the Trichordist website: “HFA did not properly do their job leaving streaming services exposed to massive copyright infringement lawsuits (from people like me). They created the problem that led to the creation of the MLC. Now they are rewarded with the contract to run the matching of musical works and paying artists”.

“Didn’t they just fail spectacularly when asked by Spotify to do this job?” he goes on. “Didn’t the Spotify class action and the four other private lawsuits prove they were incapable of doing the job?”

The key deal done between the music publishers and the streaming services that led to the MMA was that, if the latter paid for the running of the MLC, they could no longer be sued if and when songwriters didn’t receive royalties even though their songs had been streamed. So, moving forward, the Spotifys of this world will simply hand over some data and money to the MLC and then walk away.

If it works, the MLC system is a much better way of getting publishers and songwriters paid. But if it fails, writers still won’t get their money, and won’t be able to sue the streaming firms. Which is why the likes of Lowery are rightly scrutinising what happens at the new society.

After outlining some other grievances with HFA, his Trichordist piece concludes by addressing that new society directly about its decision to hire HFA. “This company was one of the main reasons songwriters didn’t get their mechanicals for seven going on eight years”, he says. “What the fuck were you guys thinking?”