One Year After The MMA, Challenges Remain
The Music Modernization Act created a mechanical licensing collective. Now publishers
and streaming services need to come to terms on how to build it — and settle the bill
BY ED CHRISTMAN AND CLAUDIA ROSENBAUM
PG. 20 R.I.P. GINGER BAKER PG. 22 CIRQUE BETS ON MESSI PG. 26 THE BREXIT BLUES
A
YEAR AGO, WHEN
President Donald Trump
signed the Music
Modernization Act,
publishers and streaming services
agreed on how to build a mechanical
licensing organization. Now they’re
debating how much it’s going to cost.
If digital service providers like
Spotify and Amazon Music and the
publisher-run Mechanical Licensing
Collective (MLC) created by the
MMA can’t reach an agreement on
how much it will cost to build and
operate the agency by Feb. 18, 2020,
the two sides will head to a Copyright
Royalty Board (CRB) fee-assessment
proceeding. Both sides are now pre-
paring for that, even as they adhere
to a timeline constructed to help
facilitate settlement negotiations.
The MLC will officially begin
operating on Jan. 1, 2021. In order to
make that possible, the MLC board is
requesting $37.25 million in startup
funding and a first-year operating
budget of $29 million, according to a
document the organization filed with
the CRB on Sept. 13. As mandat-
ed in the MMA, the digital music
streaming services must pay these
expenses.
Despite having agreed to cover
these costs, however, the services have
yet to sign off on the MLC’s proposed
price tag. And in a first round of
negotiations, which ended Sept. 6, the
two sides were unable to come to a
consensus, setting up the possibility
of a CRB-moderated proceeding. Na-
tional Music Publishers’ Association
president/CEO David Israelite tells
Billboard that negotiations showed
very early on that the digital compa-
nies were not serious about adequate-
ly funding the organization.
Garrett Levin, CEO of the Digital
Media Association, says, “The stream-
ing services remain unwavering in
their commitment to pay for the rea-
sonable costs of the MLC.” However,
“accomplishing the MMA’s critical
goals will require, above all else, a
meaningful commitment to transpar-
ency and accountability.”
The CRB process also will create
a formula for weighing each digital
music service’s pro rata share of the
MLC’s overall cost, as well as set a
payment schedule and a minimum
payment for each service.
The MLC, which is the most
consequential provision of the MMA,
is intended to address missing and
delayed mechanical royalties, a long-
standing problem for music publish-
ers and songwriters in the digital age.
Billboard estimates that there are $250
million worth of unpaid mechanical
royalties — so-called “black box”
funds — because it can be difficult to
match recordings with compositions
and the relevant rights holders.
To do this, the MLC will build and
maintain a public database to match
every song recording on a digital mu-
sic service to a composition and show
what portion of each song is owned by
which publisher so that it can collect
and disburse mechanical royalties.
But since the MMA became law,
several issues — such as Spotify,
Amazon, Google and Pandora’s
March appeal of the CRB rate court’s
Market
Roc Nation named BRETT and MICHAEL YORMARK co-CEOs of Unified. Tidal upped TONY GERVINO to executive vp/editor-in-chief and ELLIOTT WILSON to chief creative officer.
PHOTO ILLUSTRATION BY RYAN SNOOK OCTOBER 12, 2019 • WWW.BILLBOARD.COM 1 9