Music execs launch bid for industry oversight following passage of Music Modernization Act

• The newly created American Music Licensing Coalition wants to become the the licensing organization prescribed by the Music Modernization Act
• The AMLC could be competition for the National Music Publishers Association
• The group has concerns over how unpaid royalties will be handled

A new music industry coalition, with some Nashville ties, has formed in hopes of landing the lucrative licensing work that will be needed, thanks to the passage of the Music Modernization Act in October.

The creation of a new organization to handle digital licensing for songwriters and publishers was a chief tenet of the new law. The new organization, which according to the law must be governed by publishers and songwriters, will be responsible for identifying copyright holders and paying them the royalties they are due when their songs are streamed on Apple Music, Spotify and other streaming services. 

The National Music Publishers Association and Nashville Songwriters Association International have encouraged members to apply to serve on the board of directors of the new organization.

But a new nonprofit organization called the American Music Licensing Coalition also wants the work and intends to submit an application to the federal government to become the licensing organization handled under the law.

More groups seeking to land the work could also emerge. At stake is control over a new licensing organization that will oversee hundreds of millions of dollars in songwriting and publishing royalties each year.

The AMLC is comprised of songwriters, artist managers, music publishers, attorneys and technology company executives.

The AMLC sent out a press release on Friday officially announcing its creation and outlining its guiding principles, which ensure all songwriters — from the kid writing songs in their bedroom to the professional working for a major publishing corporation — are paid what they have earned from the streaming companies.

"We believe the world's most efficient and effective identification and matching/mapping system must be created to ensure every owner is paid every cent (or fraction thereof) of their royalties," the group announced in a press release.

In response to the AMLC bid for the work, National Music Publishers Association President and CEO David Israelite said his group is "encouraged by the many other individuals seeking to submit their own applications and are pleased by the overwhelming interest" from different corners of the music industry.

"The NMPA, which represents the entire U.S. music publishing industry, in concert with the major U.S. songwriter organizations who helped to pass the Music Modernization Act are currently overseeing an industry-wide consensus submission to the Copyright Office to form the (licensing commission) created by the bill," Israelite said.

Unclaimed royalties are a concern

In announcing its formation and guiding principles, the AMLC highlights a point of contention in the music industry: A so-called "black box" of unclaimed royalties.

Under the new law, the new collective will be responsible for identifying and paying out royalties to songwriters and publishers. But a significant amount of money is expected from unclaimed digital mechanical royalties.

According to the new law, unclaimed royalties will sit in the black box for three years and then be distributed based on publishing market share. That positions major publishing companies to receive the bulk of the unclaimed royalty revenue, which some music industry estimates have put in the neighborhood of $1 billion.

"We must identify and match songs to the greatest extent possible and keep unidentified and unpaid royalties to the lowest level possible," the AMLC's press release said. "We will only endorse, hire and use the best and most efficient technology and companies for identification, matching, conflict resolution, distribution of timely payments and maintenance of a database with the most up-to-date current and accurate information."

The AMLC also unveiled its board of directors, which includes Nashville executives John Barker from ClearBox Rights and Brownlee Ferguson from Bluewater Music Publishing.

The board also includes of songwriter Stewart Copeland, who is a founding member of The Police; songwriters Rick Carnes, Phil Gladstone, David Wolfert, Benji Rogers and George Howard; attorney Henry Gradstein; publishing executive Larry Mestel; independent publisher Ricardo Ordonez; TuneCore founder Jeff Price; and  independent publisher Lisa Klein Moberly.

Barker: judge us by our guiding principles

Barker has emerged as a leading advocate for copyright reform in Nashville. Barker said he has issues with the black box and how unpaid royalties will be distribute — especially the accumulated unclaimed royalties, which will be divided up based on market share after just one year.

Barker said stakeholders should study the AMLC's guiding principles, which are spelled out on the new group's website at www.songrights.net.

"The AMLC board is more than just the members who are the board," Barker said. "It is careful consideration of our guiding principles. So if anybody has a problem with the AMLC and our guiding principles, then I want to have that pointed out."

The choice for which entity handles the licensing will be made by the U.S. Register of Copyrights in mid-2019. The Music Modernization Act takes effect Jan. 2020.

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Digital licensing has led to lawsuits

Digital licensing for songwriters and publishers has been a source of contention in recent years. Prior to the passage of the Music Modernization Act, the job of identifying and paying rights holders fell to the streaming companies.

But sometimes Spotify and other services would use a song without proper licensing, leading to expensive class action lawsuits and settlements. Motivated by those settlements, the streaming companies backed the Music Modernization Act.

The streaming companies are still responsible for paying for the administrative work of licensing the songs, but the onus will fall to the new collective.

Reach Nate Rau at 615-259-8094, nrau@tennessean.com and on Twitter @tnnaterau.