MLC’s Billion Dollar Black Box Under Scrutiny by US Copyright Office

The MLC and Compulsory Licencing: A Critical Review

The US Copyright Office is currently evaluating the role of The MLC in administering the compulsory licence used by digital music services in the US. This licence determines how songwriters and music publishers are compensated for their music being streamed.

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Should Compulsory Licencing Continue?

There are concerns surrounding the necessity of a compulsory licence in the digital music landscape. Activist songwriter George Johnson questions the relevance of the 1909 compulsory licence in today’s music industry, advocating for market-based negotiations over government-set rates.

The National Music Publishers Association has also raised issues with the compulsory licence, proposing changes to copyright law to allow members to opt out and engage in direct negotiations with digital services.

Addressing the Black Box Problem

The MLC is tasked with managing ‘unmatched songs’, commonly known as black box income, since the Music Modernization Act (MMA). While efforts have been made to reduce the size of the black box, criticisms remain regarding the efficiency of matching songs and distributing royalties.

Concerns have been raised by industry experts, such as WordCollections, estimating that The MLC is holding close to $1 billion in black box money. The lack of transparency in how this money is managed and distributed further fuels the debate around fairness.

Transparency and Accountability

Transparency is a key issue in the evaluation of The MLC’s performance. While the society claims to be transparent, questions linger about the level of clarity provided to stakeholders, especially regarding investments made with black box funds.

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Organizations like the Artist Rights Institute highlight the need for greater disclosure in how The MLC invests the unmatched funds and the impact of these investments on the industry.

Setting Performance Goals

As the Copyright Office reviews The MLC’s role, there are calls for a performance-based evaluation. Lawyers representing songwriters argue that future performance goals should be set for The MLC, linking the re-designation of the society to meeting these objectives within a reasonable timeframe.

This approach aims to incentivize positive change and ensure accountability in The MLC’s administration of the compulsory licence.

The digital music services have also contributed to the Copyright Office’s review process, providing additional perspectives on The MLC’s performance.

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