Photo Credit: Greg Rosenke
The members of the Music Creators North America (MCNA) alliance thanked members of Congress seeking to balance the Mechanical Licensing Collective (MLC) board with an equal number of music creators and corporate publishing interests.
Congress established the MLC under the Music Modernization Act (MMA) in 2018 to fulfill the licensing and royalty distribution duties related to the use of musical compositions in audio streaming, downloading, and on physical products such as vinyl and CD.
The MLC board currently consists of ten corporate music publishing representatives and just four writers who oversee MLC’s annual collection and distribution of hundreds of millions in music royalties. Since before the passage of the MMA in 2018, MCNA has advocated for a more equitable board structure for music creators.
“The MLC board of a governmentally established licensing organization handling billions of dollars in music creator royalties should in no way be weighted in favor of multi-national corporate interests, as opposed to giving an equal voice to the actual creators of America’s music culture that contributes enormous value to the US economy,” says MCNA President Eddie Schwartz. “Unfortunately as we predicted the current board imbalance is sustaining enormous conflicts of interest, remains contrary to custom and business practices throughout the entire rest of the world, and most of all, is just plain unfair.”
Here’s a peek at the specific points that the MCNA has highlighted to members of Congress to help correct the imbalance.
Ignoring Global Precedent
To MCNA’s knowledge, no other government-established music royalty collective organization in the world permits global business interests to have a greater voice in board decision-making than the local creators whose works and the royalties they produce are the entire basis of the commerce being conducted by that collective.
Defying US Precedent
n the United States, the recording artist royalty model established by Congress for the recording industry over two decades ago was used repeatedly as the example of a fully functional royalty collection organization by the music publishing community in pushing for the establishment of the MLC. While the recording royalty board is fairly and evenly divided, music publishers threatened to withdraw from the MMA legislative process if the MLC board did not include overwhelming imbalance favoring music publishing conglomerates.
The ‘Black Box’ Conflict of Interest
There are many reasons for multi-national music publisher insistence on iron-clas MLC board control. Not the least of which is that the MLC is charged with identifying hundreds of millions of dollars in unmatched and unclaimed ‘black box’ royalties and distributing them to rightful owners.
The law also provides that those royalties determined by the MLC to be permanently unmatched or unclaimed are to be distributed on a market share basis—with the vast bulk of such monies thereby flowing to the major, global music publishers who control the MLC board.
Music Creators Seek Equality, Not Advantage
The majority of the members of the MLC board have a vested interest in musical works NOT being accurately identified and matched, and royalties NOT being properly distributed to their rightful owners. This anomaly in the law was pointed out over and over again by MCNA on behalf of our independent music creator community throughout the MMA legislative process, only to be shouted down by the major music publishers and their trade association.
Reform Must Include Autonomy in Selection of Board
MCNA adds that the MLC bylaws have been constructed to ensure corporate domination of the organization, requiring the full MLC board to approve all new candidates for board seats. This governance rule effectively gives music publishers veto power over the designation of those music creators that may be selected as candidates to fill the four MLC minority board seats.
“We are advocating for these simple steps to be taken right now,” concludes the MCNA. “Prior to the MLC determining that any black box royalties are ‘permanently’ unmatchable or unclaimed by their rightful owners or co-owners, and then distributed by market share to parties we are certain do not own them.”
“The misdirection of hundreds of millions of dollars in songwriter and composer royalties is at stake over this single issue. As such, we are working with members of Congress to help them to accomplish what we believe has always been their goal—to ensure the highest possible level of fairness in this process for the individual creators and small businesses that are the bedrock of American musical culture and commerce.”
