Christian L. Castle, Attorneys -- Austin, Texas

Austin Music Lawyer

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Copyright Royalty Board Posts Deadlines and Final Rules for MLC Assessment Proceeding

If you want to participate in the negotiation of the “assessment” for the operating costs of the Mechanical Licensing Collective, the clock is ticking—July 23, 2019 is your deadline to file.

There was no advance commitment or agreement on the budget or business plan for the Mechanical Licensing Collective (MLC) under Title I of the Music Modernization Act. Recall that a major selling point of the MLC was that the services using the compulsory license for streaming mechanicals would pay for the startup and operating costs of the MLC, including the elusive global rights database that has been tried so many times before at great expense.

It now appears that the clock is ticking on a voluntary agreement before the parties have to go before the Copyright Royalty Judges to be told what the budget (or the “assessment”) is to be.  The Copyright Royalty Board has beat the July 8 deadline for noticing the proceeding and has posted the notice and the rules for the hearing.

The “Notice announcing commencement of Initial Administrative Assessment proceeding and requesting Petitions to Participate” can be found here:

The regulations require the participation of the MLC and the Digital Licensee Coordinator (DLC) in the proceeding and permit the participation of copyright owners, digital music providers, and significant nonblanket licensees. 37 CFR 355.2(c)–(d).

The Judges hereby announce commencement of the proceeding, direct the MLC and the DLC to file Petitions to Participate, and request Petitions to Participate from any other eligible participant with a significant interest in the determination of the Initial Administrative Assessment…

Any participant that is an individual may represent herself or himself. All other participants must be represented by counsel….

Petitions to Participate and the filing fee are due on or before July 23, 2019.

The CRJ’s rules relating to the proceeding can be found here and have some relevant language relating to who can participate in the negotiation of the administrative assessment negotiations in addition to the MLC and DLC:

[T]he Judges believe that the views of other participants may be helpful, and perhaps essential, for the Judges to determine whether good cause exists to exercise their discretion to reject a settlement. The Judges, therefore, have modified [the regulations for the settlement negotiations and proceeding] to clarify that participants other than the MLC and DLC may participate in settlement negotiations and may comment on any resulting settlement.

This proceeding is relevant for both copyright owners and digital services not represented by the DLC.  Copyright owners will have to pay to ingest their metadata into the new global rights database when it is built. As I noted in a 2018 Newsmax post, all digital services will have to bear an allocation of the startup and operating costs before they can take advantage of the compulsory license—in addition to an unknown membership fee in the DLC. And then there’s the songwriter royalties, of course..

Both costs are unknown until there’s a voluntary agreement between the MLC and the DLC (all others being excluded from those negotiations) or the CRJs becomes final with all appeals exhausted. 


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