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“Poor Planning by Music Streaming Services Does Not Constitute an Emergency”

copyright alliance

The following article was recently posted on the Copyright Alliance website and was written by CEO Keith Kupferschmid. The organization, of which MCNA is a member, represents the interests of authors, artists, musicians and many other individual creators. It is dedicated to advocating policies that promote and preserve the value of copyright.


 

“Many years ago, I had a former boss who had a variety of inspirational quotes mounted on the walls of his office that are now somewhat commonplace to see in the workplace. Phrases like: “Tough times never last, tough people do,” “The expert in anything was once a beginner,” and, of course, the ever-popular “Together Everyone Achieves More.” The other day I was reminded of one of the phrases hanging on his wall as I read through a letter from the Digital Licensee Coordinator (DLC) and its members requesting the U.S. Copyright Office indefinitely extend the time that music streaming services have to pay money they owe to songwriters under what is referred to as the Phonorecords III remand decision, decided by the Copyright Royalty Board (CRB). The phrase I recalled is:

Poor planning on your part does not constitute an emergency on my part.”

In the letter, these music streaming services—which include behemoth digital music providers like Amazon, Spotify, Apple, Google, and Pandora—attempt to explain the challenges of making adjusted royalty payments that are owed to songwriters as a result of the Phonorecords III decision and request indefinite relief from making those payments under the current six-month regulatory timeline set by the Copyright Office.

The audacity of this request—which would indefinitely delay important and necessary royalty payments owed to songwriters and composers—is shocking, to say the least. These streaming services are some of the largest, most sophisticated global technology businesses in the world. There is no doubt that they have extensive monetary and other resources at their disposal and the ability to make the royalty payments owed to songwriters.

In comparison, most songwriters, as independent creators and small businesses, are struggling to make ends meet. For the past decade or so, songwriters and composers have been battling financial ruin due in large part to their inability to get paid fair market value for the use of their musical works by music streaming services. Like many others, songwriters have also been hit hard by the pandemic, which has made their financial struggles exponentially worse, wreaking havoc on many songwriters’ careers. Now, with inflation raging, songwriters face yet another challenge—as every day that goes by means the value of withheld royalties they are owed by the music streaming services continue to drop. The payments owed to them have already been delayed for many years. Further delay would be tremendously unfair to songwriters and composers and only serve to further compound their hardships and result in more songwriters and composers prematurely terminating their careers.

To be clear, this is not a recent occurrence. It’s not like these streaming services did not know they would have to pay songwriters. Indeed, from the day the DC Circuit vacated and remanded the original 15.1% rate set by the CRB back in August 2020, the services have known they would have to pay adjusted rates once the CRB issued its remand decision. So, effectively, music streaming services have had years to prepare for the day when they would have to pay songwriters. Throughout this time, it would seem that they have done little if anything to prepare for that day. According to their letter, they have been “developing plans” and “scoping the range of operational and engineering work.” That sounds more like lawyer-speak than actual preparation and implementation.

To be clear, this accounting and payment of royalties is not a new responsibility for music streaming services. These music streaming services are obligated to make routine royalty payments in the United States and across the globe under a variety of different regimes. The relatively new Mechanical Licensing Collective (MLC) created and implemented its entire infrastructure from whole cloth in less than two years. It is unfathomable that these music streaming services are now claiming they can’t do the much simpler task of accounting and distributing royalties.

These services also have had ample opportunity during this time to raise concerns with the six-month window established by the Copyright Office, but they never raised concerns until now. Instead of working fastidiously to ensure that songwriters are paid or raising concerns with the six-month timeline for making adjusted royalty payments, these services devoted all their resources to stalling and delaying tactics to avoid having to pay what they owe. Now that their stalling tactics in the judicial system have been exhausted, they are trying a new delay tactic by appealing to the Copyright Office for more time.

I already mentioned the harms that would be caused to songwriters by further delay, but it’s only fair to discuss the flip side of the equation—how these services might be harmed if they were required to pay songwriters within the six-month period. Of course, there would no harm whatsoever if they actually comply with the law and meet the six-month deadline without delay. So maybe they should, as a plaque in my old boss’ office says, “stop trying to escape the responsibility of tomorrow by evading it today.”

But if these streaming services are unable to meet the six-month deadline, the law already is very clear about what happens next—the services must pay a late fee. I think everyone is familiar with late fees and has had to pay one at some point. It’s what libraries use to get their books returned on time, what credit companies impose on cardholders when they do not pay on time, and what a landlord charges a tenant if they do not pay their rent on time. In other words, late fees are a commonly used tool to get someone to do what they are obligated to do in a timely manner.

The streaming services are effectively asking that the late fees be waived. At this point in the narrative, this request should surprise no one. After procrastinating until the hour before its dark to take action, the streaming services are now worried that they might not be able to meet the deadline; and if they don’t meet it, that they will be subject to a late fee. The very purpose of the late fee is to make sure the streaming services do not delay or drag their feet. Excusing the services from paying the late fee now will only serve to undermine the very purpose of having the late fee in the law in the first place.

Lastly, it is also worth mentioning that the request made by these music streaming services would not only further delay songwriters and composers from receiving timely royalties that they are owed but would also result in an interim rule by the Copyright Office that would not be subject to public comment before it went into effect. Allowing the music streaming services to further delay the withheld payments is bad enough. But doing it in a way that precludes songwriters and other members of the public from having an opportunity to comment is contrary to the normal procedures of the Copyright Office, and would amount to rubbing dirt in the songwriters’ wounds.

Many songwriters and composers would face real and significant harms if the request by these music services is granted. Why should they be penalized for the music services’ procrastination and delay? The answer is simple—they shouldn’t be. To put it simply and in a way that would make my old boss proud, the music services’ poor planning (and delay) doesn’t constitute the emergency they would like the Copyright Office to believe exists. Consequently, the Copyright Office should firmly reject the request made by the music services in their June 1 letter.”

– By Keith Kupferschmid

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