Expert Comments

International songwriter groups join MCNA in opposing the freezing of mechanical royalty rates in the US

Music Creators North America, the Songwriters Guild of America and the Society of Composers & Lyricists have been joined by nine domestic and international groups representing the interests of half a million songwriters and composers in filing comments before the US Copyright Royalty Board.

The groups express strenuous objection to the proposed adoption by the CRB of private agreements negotiated by the three major record labels/music publishing conglomerates that would once again freeze mechanical royalty rates for physical product, downloads, bundles and ring tones for another five years (more than twenty years and counting in the aggregate). All other songwriter groups are invited to join in this effort!

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The comments concluded with the following recommendations:

In light of the foregoing, and with likely hundreds of millions of dollars of music creator income at stake for the future rate periods under consideration in Phonorecords IV, the independent music creator signatories to these Comments respectfully submit the following recommendations in regard to this Rulemaking:

For the reasons stated throughout these Comments, we urge the CRB to decline to adopt the settlement agreement as a basis for statutory rates and terms. Adoption of the settlement and the rules as proposed would represent a miscarriage of justice, placing the imprimatur of the CRB on a negotiation and settlement process that was unfair, non-transparent, and may have been conducted under circumstances that were anything but reasonable pursuant to (and setting crucial precedent for) the required “willing buyer-willing seller” standard.

We further urge that the CRB publish for comment at the earliest possible time the full text of the settlement agreement as submitted by the Settling Parties, and the MOU referenced in the March 2 Notice. As Congressman Lloyd Doggett of Texas wrote to the Librarian of Congress and the Register of Copyrights on July 18, 2021, “it seems appropriate that every songwriter who will be affected by the outcome of this proceeding, from San Antonio and Austin, Memphis, to Detroit and beyond, should have the opportunity to read and comment meaningfully on the actual settlement agreement posed for adoption, and the related MOU referenced.” (1)

We urge that at minimum, new royalty rates be made applicable to Subpart B uses pursuant to Phonorecords IV, adjusted to reflect changes in the CPI since 2006 as a starting point, and further adjusted according to changes in the CPI each year thereafter (with a permanent floor of 9.1 cents and corresponding per minute rates for physical phonorecords and permanent downloads). Precedent and support for such a prospective adjustment methodology can be found in §805 of the Copyright Act (2) as well as in the CPI-based mechanical royalty rate adjustments applied during the period January 1, 1990 through December 31, 1997 (3) and recent §114 decisions, among other sources. Moreover, at a minimum, it seems that NFTs should also be excluded from the “music bundles” contemplated by Subpart B. If the Settling Parties wish to establish different rates through private agreements for themselves, that is their prerogative. Nonparticipants in such settlements and agreements, however, should not be tied to such settlements and agreements (especially ones not negotiated at arm’s length) by the CRB.

We urge that the CRB recommend the undertaking of a study by the US Copyright Office to improve the ability of independent music creators and music publishers to more fully participate in CRB proceedings at reasonable cost. The current inability of all but the major music publishers and their affiliated music publisher and music creator groups to effectively participate in CRB proceedings due to the costs of such participation must be effectively addressed. Until then, it is incumbent upon the CRB to help level the playing field by taking into account the interests and predicaments of the independent music creator community, whose Constitutional, creative and economic interests the US Copyright Act is primarily intended to protect pursuant to Article I, §8 of the US Constitution.

2 805. General rule for voluntarily negotiated agreements
Any rates or terms under this title that—
(1) are agreed to by participants to a proceeding under section 803(3),
(2) are adopted by the Copyright Royalty Judges as part of a determination under this chapter, and
(3) are in effect for a period shorter than would otherwise apply under a determination pursuant to this chapter, shall remain in effect for such period of time as would otherwise apply under such determination, except that the Copyright Royalty Judges shall adjust the rates pursuant to the voluntary negotiations to reflect national monetary inflation during the additional period the rates remain in effect [emphasis added].


(Image: Franz van Duns, CC BY-SA 4.0, via Wikimedia Commons)

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