US Copyright Office Empowers Mechanical Licensing Collective to Oversee Royalties

Copyright Office Gives Industry-Favored Group A Key Role In Overseeing Royalties
– Daily Journal

Manatt’s Jordan Bromley, leader of the firm’s entertainment transactions and finance group, spoke to the Daily Journal on the U.S. Copyright Office’s decision to give the newly established Mechanical Licensing Collective (MLC) the power to oversee the distribution of mechanical rights royalties.

This reordering was mandated by the Music Modernization Act, passed late last year, according to the Daily Journal. The U.S. Copyright Office sought to gather opinions from industry leaders on who should be charged with collecting and redistributing royalties owed to artists for their works’ mechanical rights, which grant music services the right to play their songs.

Bromley said the selection of the MLC would be celebrated by many within the music industry.

“We were all pushing for the [NMPA MLC]” he said. “They have an ability to deal with the volume, and they were behind the Music Modernization Act’s passage in the first place.”

An entity formed by a competing collection of publishers called the American Music Licensing Collective, or AMLC, unsuccessfully challenged the MLC’s winning bid. It had argued that the MLC proposal did not thoroughly address the distribution of royalties to independent, copyright-owning musicians and songwriters— often referred to as “black box income,” according to the Daily Journal.

"The AMLC's edge was in this undetermined amount of black box income, and the concern that since the NMPA controlled the market share, they would somehow be able to game the system to make more money," Bromley said.

He added that the AMLC’s argument was not compelling, and their figures for undistributed black box income could be “massively overinflated.” The MLC will establish an unmatched and unclaimed royalties committee dedicated to matching song owners with their mismatched royalty share, Bromley said.