The day after Independence Day saw a surprise from the U.S. Copyright Office. In accordance with the Music Modernization Act (MMA), the Office made its designation for the Mechanical Licensing Collective (MLC), choosing Mechanical Licensing Collective, Inc. (MLCI) to manage the new blanket mechanical license and handle royalty collection and distribution as established by the MMA. Under the statute, the designation was due on July 9.

The MLCI, the group submission led by led by the National Music Publishers Association (NMPA), the Nashville Songwriters Association International (NSAI) and the Songwriters of North America (SONA), ultimately prevailed over a competing proposal known as the American Music Licensing Collective (AMLC). In making the designation, the Copyright Office concludes that the "AMLC’s goals and principles are laudable, and its submission includes a number of ideas that should be given further consideration," but that ultimately "MLCI’s planning and organizational detail provide a more reliable basis for concluding that it will be able to meet the MLC’s administrative obligations." The MLC will begin issuing the new license in January 2021.

The 88-page Final Rule released by the Copyright Office also includes the designation for the Digital Licensing Coordinator (DLC), the entity that will represent the interests of the digital streaming services that use the new blanket license. Only one candidate, which includes representatives from Spotify, Amazon, Apple, Google, and Pandora, was submitted for consideration as the DLC.

Along with their ahead-of-schedule designation, the Copyright Office cited the Recording Academy's comments frequently in its Final Rule, noting how the Academy’s input informed its decision-making process. In the final analysis of the determination, the Copyright Office buttresses its conclusion by recognizing that “the Recording Academy, a rare organization to withhold endorsement until it was able to study each candidates' proposals, weighed in on the perceived capabilities of the two proposals, ultimately endorsing MLCI ‘upon careful consideration of both submissions.’ The Academy noted that MLCI’s 'submission embodies a thoughtful, meticulous, and comprehensive approach,' concluding that it was 'best equipped to satisfy' the duties of the MMA.”

The Copyright Office then followed the Academy’s lead, concluding that “[f]or somewhat similar reasons, the Copyright Office concludes that MLCI is better equipped to operationalize the many statutory functions required by the MMA.”

Earlier, the Final Rule notes the Academy’s specific interest in ensuring that the MLC conducts robust matching of song data with unclaimed funds, highlighting that the “Recording Academy urged the Register to seek further information on MLCI’s commitments to match works and on when such commitments may reasonably be exhausted.”

The Copyright Office affirms the preeminence of reliable data matching and the Final Rule details the commitments and assurances provided by the MLCI to accomplish that goal. The Office also establishes its interpretation of the MMA that unclaimed accrued royalties may be held beyond the statutory holding period until such funds are matched to the appropriate owners. Accordingly, unclaimed royalties can be released and distributed by the MLC no sooner than January 2023, but they can also be held longer to facilitate continued matching.

The Office also calls out the importance of a game plan for outreach from the MLC to make sure that every songwriter is fully informed about the new entity and its importance. Outreach to the songwriter community was also a key issue in the Academy's recommendations.

"The Recording Academy asserts that 'without an effective outreach program, the Collective will not succeed,'" the rule reads. "While noting that both proposals contain information regarding public outreach, the Recording Academy suggests that both are insufficiently detailed with respect to clear and executable plans, and how each will measure the effectiveness of outreach. The Office questioned each candidate about specific plans and metrics in subsequent meetings."

The Copyright Office has designated entities to serve as the mechanical licensing collective and the digital licensee coordinator under the Music Modernization Act. https://t.co/8TSg9i8qfC

— US Copyright Office (@CopyrightOffice) July 5, 2019

Ultimately, the Copyright Office was satisfied by the answers provided by MLCI in response to the questions the Academy put forward for consideration. Recording Academy chief industry government and member relations officer Daryl Friedman thanked those involved in the decision making for considering the Academy's stance and input. "The Recording Academy congratulates the MLC, Inc. on its selection to run the new Collective, and thanks the Copyright Office for its diligence in its selection process that reflects attentiveness to the Academy’s comments," Friedman said. "The Academy now looks forward to utilizing its Chapters and thousands of members to assist the MLC in songwriter outreach to ensure the Collective’s success."

Today's House Judiciary Committee hearing touched on crucial copyright matters such as setting up the MLC for success, passing the #CASEAct, and more.https://t.co/yhRmxWkKVw

— GRAMMY Advocacy (@GRAMMYAdvocacy) June 27, 2019

The MLC's success is important for everyone in the music community, but especially the songwriters who deserve fair, transparent compensation for their work. With the MLCI now primed to take over this significant role in implementing the MMA, the Academy stands ready to continue to leverage its community of music creators to support building a better system for all.

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