Exploration Weekly - The MLC Has Distributed Over $1.5 Billion in Royalties to Members / BMG to Speed Up Mechanical Royalty Payments for Songs Released by their US Artists / Human Artistry Campaign Welcomes Joe Biden's AI Executive Order

Investors are bringing a lot of money to the music publishing table – with catalog purchases, leasing of royalties, loans, etc. We also have many songwriters whose rights are reverting to themselves. Many investors and new owners struggle in the dynamic of understanding the process of a catalog transition and when to expect royalty money to flow from one administrator to a new one. These hurdles are often the same when any owner changes administrator. What are the steps post-signing papers on a catalog purchase? When should an owner think about getting an administrator? What should owners be looking for? How can an administrator best manage expectations? What are the challenges to transition for smaller administrators vs major publishers? What are the transition processes and timelines one should expect at each source–HFA, MLC, YouTube, sub-publishing, etc. And what do you do when it all goes sideways?

🗓️ Tuesday, November 14th, 2023
🕑 2:30pm – 4:00pm PST | Zoom Webinar Broadcast

Moderator: Rene Merideth | Co-Founder & COO, Exploration

Panelists:
Michelle Bayer | Owner, Shelly Bay Music
Miles Feinberg | Founder & President, Music Rights Group
Sindee Levin, Esq. | Law Offices Of Sindee Levin

Advance Reservation:
CCC Members $0 per person | Non-members $5 per person

Registration deadline is Tuesday, November 14, 2023, at 1:30pm PST

In this newsletter:

• The MLC Has Distributed Over $1.5 Billion in Royalties to Members
• BMG to Speed Up Mechanical Royalty Payments for Songs Released by the Company's US Recording Artists
• Human Artistry Campaign Welcomes Joe Biden's AI Executive Order
• Tech Companies Insist Training AI Models With Existing Content is Fair Use in Copyright Office Submissions
• TikTok Strikes Global Deal With DistroKid for Indie Artists to Upload Music to TikTok Music and CapCut

In its third Annual Membership Meeting last week, The MLC revealed milestones and key metrics from the previous year, announcing the successful distribution of over $1.5 billion in royalties.

BMG has unveiled an initiative to speed up the payment of mechanical royalties to its US publishing clients when their songs are used on recordings released by BMG’s US artists.

US President Joe Biden yesterday issued an executive order setting out a wide range of initiatives to regulate AI - a move welcomed by the music industry-led Human Artistry Campaign.

Now, the details...

Exploration Weekly - November 3, 2023
Compiled by Ana Berberana

The MLC Has Distributed Over $1.5 Billion in Royalties to Members

In an email to DMN today, The MLC revealed that it has fulfilled ‘every milestone set by Congress’ in the Music Modernization Act, leading to the successful disbursement of $1.5 billion in royalties. Moreover, the MLC relays that it has ‘also effectively illuminated the black box for digital audio mechanicals by allowing members to search all the unmatched data and propose matches for their works using the MLC Matching Tool.’ The MLC further states that its suite of member tools, including the matching tool, are as effective for the smallest creator as they are for large publishers and administrators. “The MLC has received and approved more than 1 million proposed matches submitted by members through the Matching Tool,” the release adds. As of September’s distribution, The MLC featured direct distribution of over $1.3 billion in blanket royalties and over $160 million in royalties processed by The MLC, ‘but paid by DSPs pursuant to voluntary licenses.’ “The MLC has completed 31 monthly royalty distributions to date, every one of which has been completed on time or early,” the email states. The MLC also highlighted its current match rate for all royalties processed through October as 90%, with more than 32,000 members, having added over 9,000 in 2023 so far. Referencing its public database, the MLC recorded more than 33 million works, alongside over 3 million new works added in 2023 so far. Kris Ahrend, CEO of The MLC, was in a celebratory mood, ‘particularly in reaching the milestone of distributing over $1.5 billion in royalties.’ Ahrend added, “We look forward to continuing our work to fulfill our mission of ensuring songwriters, composers, lyricists , and music publishers receive their mechanical royalties from streaming & download services in the United States accurately and on time.”

BMG to Speed Up Mechanical Royalty Payments for Songs Released by the Company's US Recording Artists

BMG has unveiled an initiative to speed up the payment of mechanical royalties to its US publishing clients when their songs are used on recordings released by BMG’s US artists. Mechanicals will be paid within the same quarter rather than the standard industry practice of at least three to six months later. The initiative is a direct result of BMG’s investment in a cloud-based royalties system, which spans both music publishing and recordings. The change will directly benefit BMG songwriters who write for BMG-signed artists. It will be particularly advantageous for clients who choose the company to represent both their songs and recordings, including Bush, George Harrison, Jelly Roll, Jennifer Lopez, LP, Mammoth WVH, Spiritbox and Terrace Martin, among others. Sebastian Hentzschel, BMG chief operating officer, said: “This is a practical benefit of BMG’s decision to offer music publishing and recordings off the same integrated platform. No conventional music company can do this. It means that if two songwriters contribute to a BMG recording and one is signed to BMG and the other to another company, the BMG writer will get paid sooner. We believe passionately that artists and songwriters should benefit from the speed and efficiency modern royalty accounting can deliver. It is yet another reason I believe we are the best publisher in the world.” This latest service enhancement comes three years after BMG announced it would become the first music company to abolish the so-called controlled composition deduction. BMG continues to pay mechanical royalties on all releases in the US at the full statutory rate. Eric Scott, EVP, rights administration & royalty services, who leads BMG’s royalty team based in Nashville, said: “A genuine commitment to service requires a substantial investment in technology but also a team which is committed to going the extra mile. We believe it is the right thing to do. All the indications so far are that our clients really appreciate it.”

Human Artistry Campaign Welcomes Joe Biden's AI Executive Order

The music industry-led Human Artistry Campaign has welcomed a wide-ranging executive order issued by US President Joe Biden yesterday that puts in place an assortment of measures in a bid to ensure the "safe, secure and trustworthy development and use of artificial intelligence”. Biden himself called the executive order "the most significant action any government anywhere in the world has ever taken on AI safety, security and trust”. It instructs various US government departments to step up their efforts in regulating different aspects of AI. Among many other things, it touches on the copyright and transparency concerns that have been raised by the creative industries. For example, the Department Of Commerce is given the task of developing standards for watermarking and clearly labeling AI-generated content. And the US Copyright Office - which has already instigated a consultation on AI - will advise the President on "potential executive actions relating to copyright and AI", including in relation to "the scope of protection for works produced using AI and the treatment of copyrighted works in AI training”. Commenting on the executive order, the Human Artistry Campaign said yesterday: “The inclusion of copyright and intellectual property protection in the AI executive order reflects the importance of the creative community and IP-powered industries to America's economic and cultural leadership”. "On behalf of over 170 members spanning the creative and technology communities", it went on, "the Human Artistry Campaign applauds this effort to craft a responsible, ethical AI policy that will promote innovation and allow both AI and human creativity to strengthen each other and thrive".

Tech Companies Insist Training AI Models With Existing Content is Fair Use in Copyright Office Submissions

The deadline for making submissions to the US Copyright Office's consultation on all things AI was earlier this week and those submissions have now been made public. Unsurprisingly, while copyright owners talk a lot about “consent” in their submissions, the tech companies talk a lot about “fair use”. "We believe”, writes Stability AI, “that training AI models is an acceptable, transformative and socially beneficial use of existing content that is protected by the fair use doctrine and furthers the objectives of copyright law, including to ‘promote the progress of science and useful arts’”. Generative AI models pose a number of copyright questions. The big one is whether technology companies training AI models with existing content need to get permission from whoever owns the copyright in that content. The copyright industries, including the music industry, say yes, consent must be sought. But many AI companies reckon not. That is based on exceptions that exist in many copyright systems, which are scenarios where copyright-protected works can be used without license. Though, under US law, we are talking about the wider and more ambiguous concept of fair use. We already knew AI firms were claiming fair use covers the training of their models, but the new submissions with the Copyright Office sets that out in much clearer terms. Echoing the comments of Stability, OpenAI says in its submission that it "believes that the training of AI models qualifies as a fair use, falling squarely in line with established precedents recognising that the use of copyrighted materials by technology innovators in transformative ways is entirely consistent with copyright law”. And Google states that "the doctrine of fair use provides that copying for a new and different purpose is permitted without authorisation where - as with training AI systems - the secondary use is transformative and does not substitute for the copyrighted work”. Interestingly, Stability does concede that "the improper use of a person's physical or voice likeness can be problematic if it wrongfully implies a person’s endorsement of, affiliation with, or promotion of a work or idea. The improper use of personal likeness should be governed by clear rules that specify impermissible use".

TikTok Strikes Global Deal With DistroKid for Indie Artists to Upload Music to TikTok Music and CapCut

TikTok and DistroKid have struck a new global deal that they say will create “new revenue opportunities for independent artists”. The deal will see music distributed by DistroKid available across TikTok Music, CapCut, and in TikTok’s Commercial Music Library. In the media statement announcing the news, DistroKid and TikTok say that the deal “will unlock new opportunities for independent artists to promote their music, build an audience, and make their music accessible to the platform’s millions of video creators and music listeners”. DistroKid claims to be the world’s largest distributor of independent music. The company estimates that it distributes “30-40% of all the world’s music”. DistroKid and TikTok have been working together since 2019 when DistroKid signed on as a distributor for independent artists to get their music uploaded to TikTok. Since then, music from DistroKid artists has also been available in TikTok’s Commercial Music Library (CML), which offers a catalog of artist-driven music for brands to use in their advertising on TikTok. Back in May, TikTok inked global distribution deals with Believe, DistroKid, Vydia and more to “fuel the pipeline of talent and artist-driven music” on its Commercial Music Library. Now, the new agreement between TikTok and DistroKid means that for the first time, music from artists distributed by DistroKid will also be available on TikTok Music, the platform’s new premium-only music streaming service, which is available in five countries (Australia, Singapore, Mexico, Brazil and Indonesia). TikTok and DistroKid also say that, as part of their ongoing partnership, they plan to seek out “new opportunities to make the most of the platform for indie creators”.

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