Mind the Gap: Digital Asset Management Inadequacies of the MMA and MLC

With the passing of the Music Modernization Act came a cautious, collective sigh from the music industry and songwriting community — but has its missing digital and data management doomed its success already?

Computer interface with data showing and connected to hard drives

he Music Modernization Act (MMA) provided a critical update to copyright law in the U.S., and was the result of decades of lobbying and requests for reform from the creative community. Due in large part to the prevalence and reliance on technology and digital streaming, this rapid growth and drastic evolution resulted in a 42-year long legislative lag that left the creative community behind. One of the largest components of the MMA is the large database of metadata it creates and the body to administer the blanket mechanical licenses to DSPs. This data, and its proper attribution and management, is the pinnacle of the MMA and there is just one major flaw: its existence is without ownership, management, and verification.

In response to the decrease of mechanical royalty payments to copyright owners and simultaneous converse increase of music consumption and availability worldwide, the MMA developed the mechanical licensing collective (MLC). The MLC is an independent committee of 17 appointed industry professionals that developed an operating budget; will work with a third party partner to provide administrative and matching services for DSP licensing requests; and develop a database for the metadata of copyright owners to whom the licensing and usage will be matched for correct and updated payment.

Prior to the MMA and MLC, DSPs needed to file a NOI and make a reasonable attempt to contact the owner through the US Copyright Office. It was common practice for DSPs to box-check this regulatory requirement and submit mass (millions at a single time) NOIs to the Copyright Office. This undermining of the Office and of the artist’s work, jeopardized and vastly decreased an owner’s ability to receive mechanical royalty payments. The legitimization of mechanical royalty payments is a critical duty of the MLC and MMA, but a pitfall in this practice is two-fold. The DSPs must make “good faith, commercially reasonable efforts” to identify and locate the copyright owners, which is a large expectation of a body that has not overextended itself to do so in the past.

Should the DSPs continue to be inept and unable to identify and locate the copyright owners, and should the MLC be unable to match digital usage data with the metadata in its database, the unattributed royalties will enter an interest bearing “black box” account to be distributed according to market share. The size of this black box account is reliant on several factors, including the sole discretion of the copyright owner to register with the MLC, and input the data correctly and completely; as well as the to-date unproven abilities of the Harry Fox Agency, the selected mechanical license administrator responsible for matching usages with metadata. It is yet to be seen whether HFA will assume its existing role in the system or if it will rise to the occasion with Consensys to limit the percentage of attributable royalties to usages in the black box account.

Clearly, this database, which the MLC oversees, is an incalculable asset to the music industry, and as (non-)defined in the MMA, it is currently without a single owner, manager, auditor, and cleanser. Without proper ownership of the MLC’s database, a digital asset arguably more fiscally valuable than the individual songs, there is little governance over who may gain rights to this information, nor any guiding principles, plans or procedures for how it will function in this new licensing organization.

This is a digital asset management problem and the MLC should look to ISO (International Organization for Standardization) Standards for assistance in managing the data and its rights, and developing auditing and maintenance procedures. ISO is an international asset management standard, and while its origins are in physical transportation, water utility, and manufacturing assets, it has expanded to a diverse IT space applicable to any industry. Specifically ISO 19770–1:2017, which specifies the requirements for the establishment, implementation and maintenance of an IT asset management system, including controls over modification and distribution, audit trails of changes to the digital asset, management of license terms and conditions compliance, and reconciliation of the data with data in another information system.

Regardless that it is in the best interest of creators and owners to enter their metadata correctly into the MLC database, complications and inconsistencies are going to occur, which could jeopardize the purpose of this database and MLC blanket license system entirely. In addition to the probability of human error, the MLC website refers to a “Play Your Part” process for creators and owners, publicizing and glamorizing owners “owning” the update of information . This is an uncontrolled process that is reliant on the organization of self-administered songwriters’ and creator’s data prior to the roll out of the database. The MLC does note its creation of a Data Quality Initiative (DQI), and the use of software company and frequent collaborator with SAP and user of cloud solutions, Vistex, to make its Music Maestro platform available for administrators, but there is no mention of an independent data auditing nor a quality assurance/quality control process — it seems to be of the sole discretion of the creator.

The MLC requested a large sum of $37.25 million to be paid by the DSPs per MMA legislation; but as of this writing, the cost of management, maintenance and QAQC/auditing of the MLC’s dataset is not included in this initial request for funds. It is recommended that the cost of proper digital asset and rights management be taken into account for the MLC’s operating budget and that the cost should be scaled at an escalating rate for a fixed period of time.

The accessibility of this immeasurable asset, including who can view it, who receives it and who pays for it, and the equity implications of reception and payment to ownership is a problem not addressed in the legislation nor the MLC’s operating budget. The purpose of the MLC as a collective is to promote equality in payment and representation for digital music; if it continues to stray from its missions of serving creators and closing the gap of inequality, the vision of the MMA and those who fought so hard to see it come to fruition will have been for naught.

Works Considered:

Carlisle, S. (n.d.). Music modernization act: What’s in it, why is it in there, is it a good thing? Hypebot. Retrieved October 17, 2020, from https://www.hypebot.com/hypebot/2018/11/music-modernization-act-whats-in-it-why-is-it-in-there-is-it-a-good-thing.html

Castle, C. (2017, March). Meet the new boss: Tech giants rely on loopholes to avoid paying statutory royalties with mass filings of NOIs at the Copyright Office. Christian Castle Attorneys and SxSW Entertainment & Sports Law Spring Review. https://www.sxsw.com/wp-content/uploads/2018/03/chris_castle_article.pdf

Houghton, B. (2019, September 17). MLC submits $37.25M bill to administer music modernization act to be paid by Spotify, Apple. Hypebot. https://www.hypebot.com/hypebot/2019/09/mlc-submits-3725m-bill-to-administer-music-modernization-act-paid-for-by-spotify-apple.html

ISO/IEC 19770–1:2017(en) information technology — IT asset management — Part 1: IT asset management systems — Requirements. (n.d.). ISO Online Browsing Platform. Retrieved December 18, 2020, from https://www.iso.org/obp/ui/#iso:std:iso-iec:19770:-1:en

Ochoa, T., & Goldman, E. (2019, January 22). An analysis of title I and title III of the music modernization act, part 1 of 2 (guest blog post). Technology and Marketing Law Blog. https://blog.ericgoldman.org/archives/2019/01/an-analysis-of-title-i-and-title-iii-of-the-music-modernization-act-part-1-of-2-guest-blog-post.htm

MLC play your part. (n.d.). The Mechanical Licensing Collective. Retrieved December 18, 2020, from https://www.themlc.com/play-your-part

Resnikoff, P. (2019, November 27). Mechanical licensing collective hands a juicy contract to HFA — Critics call the deal crooked. Digital Music News. https://www.digitalmusicnews.com/2019/11/27/hfa-mechanical-licensing-collective-contract/

The MLC data quality initiative — background. (2020, August 18). The Mechanical Licensing Collective. https://themlc.com/sites/default/files/2020-08/2020%20-%20DQI%20One%20Pager%20Updated%208-18-20.pdf

The music modernization act. (n.d.). U.S. Copyright Office. Retrieved October 15, 2020, from https://www.copyright.gov/music-modernization/

Music business student from Brooklyn whose chosen hill to die on is that the music industry needs to innovate through digital asset management & placemaking.

Music business student from Brooklyn whose chosen hill to die on is that the music industry needs to innovate through digital asset management & placemaking.