IP Law Daily Register designates Mechanical Licensing Collective, Digital Licensee Coordinator under Music Modernization Act
Monday, July 8, 2019

Register designates Mechanical Licensing Collective, Digital Licensee Coordinator under Music Modernization Act

By Thomas Long, J.D.

Mechanical Licensing Collective, Inc., will administer blanket license created by the MMA and distribute collected royalties to songwriters and music publishers, and Digital Licensee Coordinator, Inc., will represent digital music services in the administration of the license.

Pursuant to the Musical Works Modernization Act, title I of the Orrin G. Hatch–Bob Goodlatte Music Modernization Act (MMA), the U.S. Copyright Office has designated a mechanical licensing collective (MLC) and a digital licensee coordinator (DLC) to perform certain functions relating to the compulsory license for digital music providers to make and distribute digital phonorecord deliveries. According to a Federal Registernotice (84 Fed. Reg. 32274, July 8, 2019), the Register of Copyrights has chosen Mechanical Licensing Collective, Inc., as the mechanical licensing collective and Digital Licensee Coordinator, Inc. as the digital licensee coordinator. Both entities will be subject to a redesignation process commencing in January 2025.

Title I of the MMA modified the existing mechanical license for reproduction and distribution of musical works in phonorecords, codified in Section 115 of the Copyright Act. The license previously was obtained on a per-work, song-by-song basis. The MMA established a new blanket license for digital music providers to engage in permanent downloads, limited downloads, and interactive streaming. The MMA directed the Register to designate a nonprofit entity as the MLC to administer the blanket license and distribute collected royalties to songwriters and music publishers. The MLC is tasked with developing and maintaining a comprehensive database of musical works and sound recordings. The MMA also authorized the designation of a nonprofit DLC, which will represent digital music services in the administration of the license and in the determination of the administrative assessment fee paid by providers for the costs of establishing and operating the MLC.

The Office solicited proposals from entities seeking to be designated as the MLC or DLC, as well as public comments. In response, the Office received over 600 comments from music industry stakeholders, including numerous copyright owners who endorsed one or more of the entities seeking designation. The Register designated the MLC and DLC based on this feedback and the statutory criteria.

Selection of MLC. According to the Office, Mechanical Licensing Collective, Inc. (MCLI) provided a detailed outline of its proposed organizational structure, business plan, and overall activities, describing its submission as the ‘‘music industry consensus proposal’’ and contending that its selection would facilitate cooperative efforts across the industry. While both MCLI and another candidate met statutory requirements, the Office decided that MCLI was the only applicant that had the endorsement of and substantial support from musical work copyright owners. In addition, MLCI made a better showing as to its prospective administrative and technological capabilities, the Office said.

Selection of DLC. The Office received just one proposal, by Digital Licensee Coordinator, Inc. (DLCI), for designation as the DLC. DLCI’s founding members are five of the largest digital music providers—Spotify USA Inc., Apple Inc., Amazon Digital Services LLC, Google LLC, and Pandora Media, LLC. The Register determined that DLCI meets each of the statutory criteria required of the digital licensee coordinator, and that each of its individual board members are well qualified to perform the statutory functions.

Administrative assessment. In related news, the Copyright Royalty Judges have adopted regulations governing proceedings to determine the reasonableness of, and allocate responsibility to fund, the operating budget of the MLC (84 Fed. Reg. 32296, July 8, 2019). Additionally, the Judges announced the commencement of a proceeding to determine the initial administrative assessment (84 Fed. Reg. 32475, July 8, 2019). The MLC and DLC must, and other eligible participants may, file a Petition to Participate and an accompanying $150 filing fee by July 23, 2019.

MainStory: TopStory Copyright TechnologyInternet FedTracker IP

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