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Unclaimed Royalties: Best Practice Recommendations for the Mechanical Licensing Collective

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Unclaimed Royalties: Best Practice Recommendations for the Mechanical Licensing Collective united states copyright office Unclaimed Royalties: Best Practice Recommendations for the Mechanical Licensing Collective A REPORT Of ThE REgister Of cOPyRighTs July 2021 united states copyright office Unclaimed Royalties: Best Practice Recommendations for the Mechanical Licensing Collective A report Of ThE REgister Of cOPyRighTs July 2021 U.S. Copyright Office Unclaimed Royalties Best Practices ORRIN G. HATCH–BOB GOODLATTE MUSIC MODERNIZATION ACT Public Law No. 115-264, title I, § 102, 132 Stat. 3676, 3722–23 (Oct. 11, 2018) (f) UNCLAIMED ROYALTIES STUDY AND RECOMMENDATIONS.— (1) IN GENERAL.—Not later than 2 years after the date on which the Register of Copyrights initially designates the mechanical licensing collective under section 115(d)(3)(B)(i) of title 17, United States Code, as added by subsection (a)(4), the Register, in consultation with the Comptroller General of the United States, and after soliciting and reviewing comments and relevant information from music industry participants and other interested parties, shall submit to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives a report that recommends best practices that the collective may implement in order to— (A) identify and locate musical work copyright owners with unclaimed accrued royalties held by the collective; (B) encourage musical work copyright owners to claim the royalties of those owners; and (C) reduce the incidence of unclaimed royalties. (2) CONSIDERATION OF RECOMMENDATIONS.—The mechanical licensing collective shall carefully consider, and give substantial weight to, the recommendations submitted by the Register of Copyrights under paragraph (1) when establishing the procedures of the collective with respect to the— (A) identification and location of musical work copyright owners; and (B) distribution of unclaimed royalties. U.S. Copyright Office Unclaimed Royalties Best Practices ACKNOWLEDGEMENTS This report reflects the dedication and expertise of the Office of the General Counsel at the U.S. Copyright Office, in particular the team who produced it: Associate General Counsel Anna Chauvet, Assistant General Counsels Jason Sloan and John Riley, and Barbara A. Ringer Copyright Honors Program Fellow Cassandra Sciortino. Without their considerable efforts and keen understanding of the music industry this report would not have been possible. I am deeply appreciative of their tireless and thoughtful work on this project, which they were asked to undertake while simultaneously promulgating the many complex regulations necessary to implement the Music Modernization Act. I extend my gratitude to former General Counsel and Associate Register of Copyrights Regan Smith for her leadership during early stages of the project, including the public symposium and roundtables. I also thank former Assistant General Counsel Terry Hart for his contributions. Helpful proofing and citation assistance was provided by Attorney-Advisors Nicholas Bartelt, Joanna Blatchly, Mark Gray, Jalyce Mangum, and David Welkowitz, Barbara A. Ringer Copyright Honors Program Fellow Melinda Kern, and Paralegal Specialist Rachel Counts. Assistant to the General Counsel Meg Efthimiadis provided production support. I would also like to thank the many interested parties who provided written comments and participated in the public symposium and roundtables. Their broad-ranging and knowledgeable submissions were crucial to the formulation of the Office’s recommendations. Shira Perlmutter Register of Copyrights and Director U.S. Copyright Office U.S. Copyright Office Unclaimed Royalties Best Practices TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................ i I. INTRODUCTION, STUDY HISTORY, AND BACKGROUND ............................ 1 A. Overview of the MMA and the MLC’s Duties ..................................................... 1 1. Introduction to the MMA and Study Background ....................................... 1 2. The MLC’s Duties .............................................................................................. 4 a) The Public Musical Works Database ...................................................... 4 b) The Portal ................................................................................................... 6 c) Education and Outreach ........................................................................... 7 d) Collecting and Distributing Royalties .................................................... 8 3. Holding and Distributing Unclaimed Accrued Royalties ............................ 9 a) Holding Royalties for Unmatched Works ............................................. 9 b) Distributing Unclaimed Accrued Royalties ......................................... 10 4. Reporting and Transfer of Royalties to the MLC for Historical Unmatched Uses ............................................................................ 11 B. Music Data Landscape ........................................................................................... 12 1. Types of Music Data ........................................................................................ 12 2. Data Flow .......................................................................................................... 16 3. Existing Music Databases ............................................................................... 19 4. Data Sharing ..................................................................................................... 21 II. GAO CONSULTATION AND UNCLAIMED PROPERTY OUTSIDE THE MUSIC INDUSTRY ............................................................................................ 23 III. BEST PRACTICES FOR THE MLC TO REDUCE THE INCIDENCE OF UNCLAIMED ACCRUED ROYALTIES ............................................................ 27 A. Education and Outreach to Copyright Owners, Administrators, Songwriters, and Others ........................................................................................ 27 1. Content .............................................................................................................. 30 2. Methods ............................................................................................................ 31 3. Evaluating Efforts ............................................................................................ 38 B. The Public Musical Works Database, the MLC’s Portal, and Registering and Claiming Works (and Shares) with the MLC ........................ 38 U.S. Copyright Office Unclaimed Royalties Best Practices 1. Finding Information ........................................................................................ 42 2. Providing Information .................................................................................... 47 3. Songwriter Access ............................................................................................ 49 4. Audio Access .................................................................................................... 51 5. Additional Functionality ................................................................................ 52 C. Data Quality ........................................................................................................... 54 1. Completeness, Accuracy, Currency, Conflicts, and Authoritativeness ............................................................................................. 56 2. Data Bifurcation ............................................................................................... 63 3. Standard Unique Identifiers ........................................................................... 64 4. Third-Party Data Sources ............................................................................... 66 5. Transparency .................................................................................................... 71 D. MLC Matching Practices....................................................................................... 71 E. Holding and Distributing Unclaimed Accrued Royalties ................................. 84 1. Holding Period ................................................................................................. 86 2. Market Share Calculation ............................................................................... 95 3. Advance Notice .............................................................................................. 102 4. Transparency .................................................................................................. 104 F. Ensuring Effectiveness .......................................................................................... 108 1. Measuring Success ......................................................................................... 108 2. Transparency .................................................................................................. 115 IV. CONCLUSION ............................................................................................................. 117 APPENDICES: Appendix A: Federal Register Notices Appendix B: Commenting Parties and Symposium and Roundtable Participants Appendix C: Acronym Glossary U.S. Copyright Office Unclaimed Royalties Best Practices EXECUTIVE SUMMARY Passage of the Orrin G. Hatch—Bob Goodlatte Music Modernization Act (“MMA”) in 2018 substantially modified the compulsory “mechanical” license for making and distributing phonorecords of nondramatic musical
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