Proposed Wording in Music Modernization Act Worries Songwriting Advocates

Geoff Mayfield

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The phrase “server fixation date and termination” might sound boring or gibberish to anyone other than an attorney or a tech reporter, but that term, from the U.S. Copyright Office’s April update on the Music Modernization Act, has become a potentially thorny issue among those hammering out rules for the new law, which takes effect in January.

At issue is a data point that the newly formed Mechanical License Collective wants to see in monthly reporting from digital music providers, as the new law sets rules for a U.S. music market that has shifted quickly from sales to streaming.

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Passed with overwhelming bipartisan support in 2018, Title I of the three-part Orrin G. Hatch-Bob Goodlatte Music Modernization Act (MMA) moves streaming from a compensation model built for piano rolls more than a century ago to a blanket license that will apply to all legal streaming services.

In an effort to untangle the issue, the Copyright Office has scheduled an ex parte teleconference for Monday among the parties who have commented on this particular detail since it posted a “Notice of proposed rulemaking” (NPRM) docket in April, the first major update since September, when the office issued a “Notification of inquiry” (NOI) to establish blanket license regulations, inviting input from all interested parties.

Invited are representatives from independent publisher Peermusic, trade groups the Recording Academy, Songwriters of North America (SONA) and Music Artists Coalition (MAC), and counsel representing the Mechanical License Collective (MLC) and the Digital Licensee Coordinator (DLC). The last two mentioned are recently formed entities manifested by the MMA.

Per its website, the MLC is a not-for-profit entity representing publishers and songwriters that has been mandated to “issue and administer blanket mechanical licenses to eligible streaming and download services in the United States,” collect royalties on those licenses and distribute them to songwriters, composers, lyricists and music publishers.

It’s also charged with creating a comprehensive and publically accessible database of all music works, a portal through which composers and publishers can keep their works up to date and processes to solve unclaimed royalties.

The DLC represents digital music providers, its board comprised of executives from Amazon, Apple, Google, Pandora/Sirius XM and Spotify. Aside from representing streaming and download services, the DLC also picks up the tab to the MLC, agreeing in November to stake $33.5 million in startup costs and annual assessment of $28.5 million starting in 2021, when the law takes effect.

The point of contention for Monday’s meeting appears about halfway through the 32-page NRPM. In a passage where the MLC described the monthly data it will require from digital providers to collect and distribute royalties is a section titled “Server fixation date and termination.” That wording worries some songwriters’ advocates, as does the MLC’s assertion that the data point was “required to determine which rights owner is to be paid where one or more grants pursuant to which a musical work was reproduced in a sound recording has been terminated pursuant to Section 203 or 304 of the [Copyright] Act,’’

Five of the 16 public comments the Copyright Office received since posting the NPRM in April specifically mentioned the “server fixation date” request, with the MLC defending that ask within its 84-page comments.

Citing the 1985 Supreme Court ruling in Mills Music vs. Snyder, the MLC states that “the date of the license to a DMP, which is one of the licenses in the ‘panoply’ that governs pre-termination uses of the derivative sound recording, is relevant in determining whether the pre-termination or post-termination copyright owner of the musical work should be paid in connection with commercial exploitations of the derivative sound recording by the DMP that occur after the date of termination.”

MLC’s comments mention songwriters’ legal rights to recapture the rights of compositions from publishers — after 35 years for songs published since 1978, or 56 years for ones published prior to 1978 — as the rationale for that request.

Ironically, preservation of songwriters’ termination rights is the very reason that the Recording Academy, SONA, MAC and composers’ attorneys push back on this requirement. As a hypothetical, they worry that if a composer recovered rights to a song in 2019 that a publisher had licensed to a streaming service in 2015, the wording of the proposed “server fixation” rule would allow that publisher to continue benefitting from plays on said service

Comments filed by the Recording Academy and jointly by Songwriters of North America (SONA) and Music Artists Coalition (MAC) cited concerns over how the wording might actually alter copyright law, with the Recording Academy stating, “At a minimum, the Academy believes that including such a substantive interpretation of the termination right will first require further examination by the (Copyright) Office.

“The legal relevancy needs to be more thoughtfully explored and adequately justified beyond the technical reasoning featured in the NPRM and the MLC proposal. Otherwise, the Office is risking misinterpreting existing statute and wrongly jeopardizing the rights of many songwriters and copyright owners.”

The Recording Academy’s concern was mirrored in comments filed by SONA and MAC, which state in part that they “seek to ensure that the termination rights of songwriters are not undermined in a technical rulemaking proceeding, and request clarification by the Office that the mere collection of server fixation and/or alternative data as suggested by the Office will have no bearing on the songwriters’ enjoyment of their termination rights. The current rulemaking process to implement the blanket license is not the appropriate forum to determine substantive rights under the Copyright Act.”

Michelle Lewis, executive director of SONA, tells Variety she is optimistic the MMA’s rule-making process and the establishment of the MLC will ultimately benefit songwriters, but is among those who takes issue with how this data particular request is framed.

“It’s sort of an end run around termination rights,” she says. “It benefits publishers who could keep their right to be paid under an existing license after a songwriter had terminated the publisher’s rights in the song. Termination rights are a part of copyright law that very few attorneys claim to be experts on, much less songwriters.

“It was unsettling to see something like this in the context of a technical proceeding to set data standards for the MLC,” Lewis adds. “SONA is really fortunate that we have an A-team of legal experts working pro bono on behalf of songwriters. It’s like having the Chicago Bulls of lawyers working for us on behalf of songwriters to get into these weeds and find these things that we would be completely clueless about.”

One of those attorneys is Dina LaPolt, co-founder of SONA, who played a key role in the framing of the MMA. “SONA fought hard for the MLC and we know that songwriters are counting on it to operate fairly and transparently,” says LaPolt. “That’s why we needed to call attention to this when we discovered it.

“The MLC shouldn’t be advocating for changes in songwriter termination rights. That was never meant to be its function and it wasn’t the role Congress intended when it passed the MMA.”

Susan Genco, MAC board member and co-president of The Azoff Company, adds, “As songwriter advocates, MAC is committed to ensuring that the MLC is transparent and neutral. It would be unacceptable for the MLC to take a substantive position on songwriter terminations. We are anxious to understand the justification for mixing procedure with termination rights under the Copyright Act.”

The Recording Academy filed its “server fixation date” objection independently of MAC and SONA. “Safeguarding the termination rights of songwriters, artists, and other music creators is an important part of the advocacy work of the Recording Academy on behalf of its members, says Daryl Friedman, Chief Membership and Industry Relations officer. “The Academy’s comments to the Copyright Office are intended to protect songwriters and ensure that the Office does not substantively change or weaken termination rights through unrelated rulemaking.”

The DLC also objected to the requested data point, based in part by operational considerations. It further asserts that some of the reporting options suggested by the Copyright Office would be unwieldy for the digital services to provide and for the MLC to process, but also questioned whether the “fixation date” would be a relevant frame of reference.

In its comments, the DLC asks, “What if the server is in the United States but the work is only authorized for performance abroad? What if the work is on a foreign server, but only authorized for streaming into the United States months after the date it was first loaded onto that server?”

One informed source tells Variety that server fixation dates would be “difficult if not impossible for some of the DSPs to provide.” As an alternative, the DLC’s comments proposed a “flexible catch-all option, allowing the reporting of a date that, in the (digital music provider’s) assessment, provides a reasonable estimate of the date that the sound recording was first distributed within the United States on its service.”

Peermusic, one of 10 publishers with a seat on the MLC Board, finds its way to Monday’s hearing because it defended the “service fixation” request in its comments: “Understanding that the introduction of the blanket license will have the ancillary effect of eliminating an index that provided for objective agreement in the often-contentious area of termination rights, the MLC and its committees set about providing an anticipatory solution.

“The ‘fix’ proposed by the MLC to avoid confusion in the marketplace and to head off disputes among copyright-owning clients of the MLC was to designate the ‘server fixation’ date as the appropriate substitute for prior individual (Notice of Intent) date.”

In an appendix to its comments, the MLC suggested two alternatives to a “street fixation” date: “the date on which the sound recording was first released on the digital music provider’s service by a sound recording copyright owner, licensor or distributor (i.e., the “street date”), or … any other date that reasonably approximates the date of first use of the recording on the digital music provider’s service pursuant to the blanket license or other applicable voluntary or statutory mechanical license.”

In the end, the handwringing over the “server fixation” language may come down to whether one pronounces “potato” with a long or short “a.” SONA, MAC and the Recording Academy are intent on preserving a songwriter’s ability to retain, while the MLC’s public comments suggest the same objective.

And, while no one will say so on the record, it’s possible that the mere composition of the MLC’s board — with 10 seats held by publishers, including the three largest, and four held by songwriters — has creators’ advocates hyper-vigilant at this stage of the rulemaking process.

Alisa Coleman, COO of ABKCO Music is chair, while the big three are represented by Sony/ATV’s Peter Brodsky, Universal Music Group’s David Kokakis and Warner/Chappell’s Paul Kahn.

Peermusic’s Ted Cohan filed his company’s aforementioned comments and will attend Monday’s teleconference. Rounding out board’s publishing seats are Big Machine’s Mike Molina, BMG’s Paul Kahn, Concord’s Evelyn Paglinawan, Kobalt’s Bob Bruderman and Reservoir Media Management’s Rell Lafargue.

Songwriters on the board include Kara DioGuardi, Oak Felder and Kevin Kadish, while the fourth seat that was held by Tim Nichols has not yet been filled. National Music Publishers’ Association EVP Danielle Aguirre, Nashville Songwriters Association International executive director Bart Herbison and Digital Media Association EVP Garrett Levin are non-voting members. Kris Ahrend, who was Warner Music Group’s Head of U.S. Legal Shared Services until year’s end, is CEO of the Nashville-based MLC while former consultant Ellen Truly is its chief marketing officer.

Rules for the MMA need to be in place by Jan. 1, when the law goes into effect, but there is not a statutory deadline for when those rules must be finalized.

The Monday meeting called by the Copyright Office will provide an informal discussion for commenters to hash out the “server fixation” kerfuffle. If your familiarity with the phrase “ex parte” is confined to TV shows like the various “Law & Order” series and “All Rise,” the prospect of such a meeting might sound sexier than it is, as the USCO regularly uses such a forum to hash out sticking points in its transparent rulemaking process.

Any party may comment when the Copyright Office posts notices for any of the industries it regulates, and in a case like the “server fixation” debate, when those comments highlight difficult to solve issues, USCO considers “requests from interested participants for informal communications with the Office to discuss targeted issues related to the merits of the rulemaking,” according to its website. These meetings happen in person during normal times; via teleconference since the outbreak of COVID-19.

Letters from USCO to schedule such meetings are posted on its web site, and within two business days after ex parte conferences, attending parties are required to file a written summary of what was discussed. Those summaries are also posted.

After the Copyright Office posted the Notification of inquiry in September, more than 600 public comments from music companies and associations, professional and amateur songwriters and even music fans poured in, including some from outside the U.S. Issues that emerged from those comments led to 10 ex parte meetings between December and March.

The “server fixation” meeting will be one of the first scheduled since USCO posted its Notice of proposed rulemaking in April, following one requested by the Recording Association of America on June 16 to discuss “the need to maintain the confidentiality of commercial agreements negotiated between individual record companies and digital music providers.”

We’ll soon learn whether the “fixation date” back and forth is a substantive debate or a difference over how one says “tomato.”

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