What is a Mechanical License?

For over a century now, American copyright law has worked to create and maintain a system that ensures copyright owners are compensated for the use of their intellectual properties. At the same time, the system also works to provide the maximum availability of compositions to individuals that may wish to recreate and distribute them. Artists and producers have been reproducing compositions since the beginning of the music business. Obtaining the rights to create these physical reproductions is referred to as mechanical licensing.

Our guide was written to provide a comprehensive overview of the history, purpose, and process of mechanical licensing.

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In this newsletter:

The National Music Publishers’ Association (NMPA) has requested the Senate and House Judiciary Committees to reform the statutory license in the Copyright Act that currently prevents free market negotiations for mechanical royalty rates for songwriters and music publishers.

CISAC says in its annual report that the challenges and opportunities around AI are a key focus this year. President of the organization, Abba’s Björn Ulvaeus, says that members should “act now” and “not sit on our hands waiting to see how things evolve”.

The UK-based Mechanical-Copyright Protection Society (MCPS) announced it has paid £204.3 million ($260 million) to music publishers, songwriters, and composers for UK-based plays, marking an 8.5% increase from 2022 and a 43% increase over the past five years.

Now, the details...

Exploration Weekly - May 24, 2024
Compiled by Ana Berberana

Music Publishers Call for Congress to Overhaul Copyright Act

The National Music Publishers’ Association has sent a letter to the leaders of the Judiciary Committee in the Senate and House of Representatives, requesting the overhaul of the statutory license listed in the Copyright Act, which “prevents private negotiations in a free market” for mechanical royalty rates for songwriters and music publishers in the U.S. In the letter — which arrives against the backdrop of the publishing communities’ recent offensive against Spotify for the lower royalties incurred by bundling music and audiobooks, among other issues — NMPA president/CEO David Israelite writes that the overhaul would prevent songwriters and publishers from being exploited by “Big Tech:” “Those who do operate in a free market, such as record labels, have negotiated protections against bad faith tactics. However, music publishers and songwriters have no such leverage.” Such a move would enable publishers and songwriters to negotiate for mechanical royalty rates as record labels do. However, per a rule dating back to 1909, their rates are determined by the government, specifically the Copyright Royalty Board. The negotiations around those rates, which are updated every four years, have been contentious in the past. While those rates have been increased in recent years, many feel they remain insufficient.

CISAC Annual Report Provides Updates on AI Campaigns and ISWC Refinements

CISAC - the global organization for song right collecting societies - has published its annual report setting out its lobbying priorities and providing updates on its other projects. Unsurprisingly, the challenges and opportunities presented by AI are a key focus, but there are also updates on CISAC’s work around song data. The organization’s President Björn Ulvaeus kicks off the AI conversation at the start of the report, noting that - at CISAC’s General Assembly in Mexico last year - he discussed how AI “will bring the biggest revolution the creative sector has seen”. The conclusion of the General Assembly, he adds, was that “we must act now. We should not sit on our hands waiting to see how things evolve. We cannot let tech companies and policy makers sit at the decision-making tables while the creators are left outside the room”. “Since then”, he continues, “I’m pleased to say a lot has happened. We have taken our messages to regulators. We have sat with world leaders. We have issued many submissions in national legislatures”. Through that work, he goes on, three core principles have emerged: the need for creators to consent to the use of their work by AI companies, the need for creators to be fairly remunerated, and the need for AI companies to be fully transparent about what training data they use.

The UK Mechanical-Copyright Protection Society (MCPS) Says Mechanicals Topped $260 Million in 2023

The UK-based Mechanical-Copyright Protection Society (MCPS) has announced it has paid out £204.3 million ($260 million) to music publishers, songwriters, and composers for UK-based plays. This payout represents an 8.5% uplift (£15.9M/$20.2M) in 2022 and a 43% increase in annual distributions over the last five years. That growth is driven by streaming, the continued popularity of vinyl, and increasing international royalty collections. The MCPS celebrates its 100th year in 2024 and represents and protects the mechanical copyrights of over 37,000 publisher, songwriter, and composer members. The MCPS ensures its members are remunerated when their works are copied or reproduced in physical products, streaming, digital downloads, and broadcast—all of which carry a mechanical royalty for the underlying song composition. In 2023 the organization drove further efficiencies, delivering a blended reduced commission rate of 6.5%, allowing for more monies to be distributed to its members. MCPS paid to its members all excess commissions it generated after covering overheads, amounting to £7.2M ($9.15M) during the year. This value is distributed with line-by-line information for convenience and accuracy in onward distributions. Over the last five years, MCPS has added over 9,000 new members, reflecting 32% growth. As the company celebrates its 100th year, it has now distributed over £4B ($5.08B) of mechanical royalties to its members in the 21st century.

The Worldwide Independent Network Calls For Creation of AI ‘Licensing Marketplace’ in New Manifesto

The Worldwide Independent Network (WIN), which represents indie music trade associations worldwide, has called for the creation of a “licensing marketplace” for the development of AI technology, alongside the release of a new set of principles to guide AI development. WIN’s new “guidance on generative artificial intelligence” includes five key principles: AI development is subject to copyright; prioritizing a human-centered approach; safety of creators, fans, consumers and the public; transparency as a fundamental element; and ethical AI development hand-in-hand with music. “The thousands of independent music businesses that make up WIN’s membership play a vital role in promoting new talent and diversity of genres and languages in the global music marketplace,” WIN said in a statement issued on Tuesday (May 21). “These principles highlight their call for consistent high standards across the globe, as well as to engage with AI developers to build a licensing marketplace that works for the benefit of all.” WIN’s AI manifesto comes as music companies around the world navigate the complex new world of AI, working to maximize the technology’s potential for artists and businesses while addressing challenges such as deepfakes of artists and the unauthorized use of copyrighted music in training AI models.

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