MLC Support Letter
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U.S. COPYRIGHT OFFICE LIBRARY OF CONGRESS Designation of Mechanical Licensing Collective and Digital Licensee Coordinator Docket No. 2018-11 EXHIBITS 11 TO 11-X TO THE DESIGNATION PROPOSAL OF MECHANICAL LICENSING COLLECTIVE PRYOR CASHMAN LLP Frank P. Scibilia Benjamin K. Semel 7 Times Square New York, New York 10036-6569 Attorneys for Mechanical Licensing Collective EXHIBIT 11 Before the U.S. COPYRIGHT OFFICE LIBRARY OF CONGRESS Washington, D.C. In the Matter of: Docket No. 2018–11 DESIGNATION OF MECHANICAL LICENSING COLLECTIVE AND DIGITAL LICENSEE COORDINATOR DECLARATION OF DAVID M. ISRAELITE 1. My name is David M. Israelite. I am President and Chief Executive Officer of the National Music Publishers’ Association (“NMPA”). I submit this declaration in support of the submission of Mechanical Licensing Collective (“MLC”) to be designated as the mechanical licensing collective pursuant to the Music Modernization Act (the “MMA”). About NMPA 2. For more than a century, NMPA has served as the leading voice representing all American music publishers and their songwriting partners before Congress, in the courts, in the music, entertainment and technology industries, and to the listening public. NMPA’s membership includes music publishers affiliated with a record label or a larger entertainment company (so-called “majors”) as well as independently- owned and operated music publishers (so-called “independents” or “indies”) both large and small, of all catalog and revenue sizes. Taken together, compositions owned or controlled by NMPA members account for the vast majority of musical compositions licensed for mechanical uses in the United States, including reproduction and distribution in the form of interactive streams, downloads and physical phonorecords (i.e., “covered activities” under Section 115 of the Act). Every commercially relevant music publisher of which we are aware is a member of NMPA. 3. NMPA’s primary objective is to protect and enhance the value of the intellectual property rights of musical work copyright owners, and to shape a business environment that will foster their creative and financial success. We seek to do so through legislative, litigation and regulatory efforts, and industry negotiations. We played an instrumental role in the negotiations and legislative efforts that led to the creation and passage of the MMA. We have also presented the position of copyright owners in all Section 115 royalty rate-setting negotiations, proceedings and related hearings, including most recently the Phonorecords III proceeding to determine the rates and terms for the making and delivery of phonorecords, including in covered activities subject to the blanket licenses to be obtained from the mechanical licensing collective. About MLC 4. MLC was created by musical works copyright owners, including songwriters and major and independent music publishers, with the assistance of their trade groups NMPA, the Nashville Songwriters Association International (“NSAI”) and Songwriters of North America (“SONA”), acting under the authority of their copyright owner boards and members. 5. MLC was created with the input of other experienced professionals and stakeholders across the music industry, including other songwriter groups, major and independent music publishers, performing rights organizations, digital streaming services, and technology vendors. MLC is the product of collaboration between and among constituencies with unique interests, who came together to create an entity that is uniquely 2 situated to carry out the collective’s responsibilities and to solve the challenges of mechanical licensing in the digital space. 6. MLC’s submission for designation is the result of an open process that included input from all of these constituencies. It is, in my view, the most comprehensive, competitive, transparent and representative plan to execute successfully the statutory missions of the collective. MLC Board and Committee Member Selection 7. As required by the MMA, MLC’s board of directors includes ten voting members that are representatives of music publishers to which songwriters have assigned exclusive rights of reproduction and distribution of musical works with respect to Section 115 covered activities, and four professional songwriters who have retained and exercise exclusive rights of reproduction and distribution with respect to Section 115 covered activities with respect to musical works they have authored. 8. The individuals selected to MLC’s initial board and statutory advisory committees were chosen in an open, competitive process. The music publisher board and committee members were selected by music publishers, and the songwriter board and committee members were selected by songwriters. 9. The music publisher board and advisory committee members were selected by a panel comprised of individuals who are extremely well-respected in the music publishing community, each of whom is associated with an independent music publisher: Caroline Bienstock, the CEO of Bienstock Empire, Inc., and a board member of the Association of Independent Music Publishers (“AIMP”), NMPA, ASCAP, and the Songwriter’s Hall of Fame; Teri Nelson Carpenter, the president and CEO of Reel Muzik 3 Werks, LLC and the National Chair and President of the L.A. Chapter of AIMP; Julie Lipsius, the owner of Lipservices publishing who also served on the board of AIMP; Kenny MacPherson, the founder and President of indie publisher Big Deal Music and who is widely considered a passionate advocate for the rights of songwriters; John Ozier, the General Manager, Creative at ole (and soon to be at Reservoir), who is himself a songwriter who has penned multiple top ten hits; and Matt Pincus, the founder and former CEO of Songs and a leading voice of the independent publishing community and in defining best practices in the evolving digital music business. 10. The music publisher board and committee member selection panel searched for, selected, and carefully vetted all of the candidates to ensure that the candidates selected to serve on the board (a) have the requisite expertise and experience to govern the collective; (b) individually and together faithfully reflect the entire music publishing community; and (c) are motivated to serve on the Board and understand and do not underestimate the serious responsibilities entrusted to them. 11. The individuals that comprise MLC’s initial board and advisory committees are a highly qualified and varied group that together bring to the enterprise years of relevant experience, including technological and operations experience and experience in creating musical works, licensing them (including in the digital space), collecting revenue, identifying the relevant royalty payees, and distributing royalties and accounting to those payees. They include a diverse group of songwriters and represent a wide range of publishers, both large and small, some of who are members of NMPA or AIMP and some of who are not members of any industry trade organization. 4 MLC Is The Only Entity That Satisfies The Statutory Endorsement Requirement 12. MLC is the only entity that is endorsed by and that enjoys substantial support from musical work copyright owners that represent the greatest percentage of the licensor market for uses of such works in covered activities over the preceding three years, as required by the MMA. 13. As of the date of this declaration, 132 musical work copyright owners (the “Supporting Copyright Owners”) owning the U.S. mechanical rights to millions of works have confirmed that they exclusively endorse MLC to be the collective, and have pledged to provide substantial support to MLC. (Many have already provided substantial support and pledge to continue to do so.) Such endorsement and support is documented in the letters annexed as Exhibits A through W hereto. These letters include individual letters of endorsement and support from a diverse group of 22 musical work copyright owners, including major and independent music publishers of all sizes, as well as a group letter of endorsement and support that includes an additional 110 musical work copyright owners. 14. We have confirmed that the Supporting Copyright Owners represent the vast majority of the licensor market for uses of musical works in covered activities in the U.S. during the preceding 3 full calendar years, i.e., from 2016 through 2018 (the “Covered Period”). That is, the Supporting Copyright Owners together received the vast majority of total mechanical royalties for uses of musical works in covered activities in the U.S. during the Covered Period. This is, of course, more than the plurality that is required of the collective. 15. We confirmed this by first examining industry information, including revenue information that NMPA collects from its members on an annual basis, and publicly 5 available data. That data demonstrates that the Supporting Copyright Owners represent between 85% and 90% of the licensor market for all uses of musical works during the Covered Period. 16. Billboard Magazine , for example, calculates and publishes on a quarterly basis the top ten music publishers by overall industry market share. While the publishers in the Billboard quarterly top ten rankings did not remain static during the Covered Period, NMPA verified that during the Covered Period, with one exception, every music publisher that ranked in the Billboard top ten by overall industry market share is a Supporting Copyright Owner. 1 For example, as reported by Billboard in its Q4 2018 report, the top ten publishers by market share during that quarter were all Supporting Copyright Owners and they had a combined market share of 87.86%. Using Billboard’s market share calculations, the combined industry market share of Supporting Copyright Owners appearing in the Billboard top ten during each of the twelve calendar quarters of the Covered Period was relatively consistent with the Q4 2018 figure, as follows: 2016 Q1 87.62% 2016 Q2 89.43% 2016 Q3 87.17% 2016 Q4 87.10% 2017 Q1 84.68% 2017 Q2 88.00% 2017 Q3 85.10% 1 The lone exception appeared one time (in Q1 2017) and represented just 1.35% of the market during that quarter.