Why We Wrote This Guide
Music Reports (MRI) is another major royalty collection entity in the United States. This organization services a variety of agreements to collect royalties, administer digital voluntary licenses, and pay due royalties to music publishers and owners of copyright. We wrote this guide to describe the role Music Reports plays in the greater context of the music industry and help rights holders understand ways they may benefit from their services.
Role of Music Reports in the Music Marketplace
Notice of Intention (NOI)
How Music Reports Works
How Metadata Should Be Delivered to MRI
Who Pays for Music Reports’ Services?
Founded in 1995 by Ronald Gertz and Doug Brainin, Music Reports is a privately held company that was initially established to provide a service for the administration of public performance licenses for local television stations. To evolve with the ever-changing music marketplace, Music Reports now offers a variety of copyright, licensing, and royalty services for music rights holders and companies that use music, such as digital music services, cell phone providers, radio broadcasters, consumer products, and more. Music Reports also offers services for the administration of sound recording performance rights and manages cue sheets for audio/visual programs.
Further, with streaming now the most popular form of music consumption, Music Reports Inc. and other mechanical license clearinghouses have become an increasingly integral part of the music industry. They have deals with many of the most popular streaming services to handle mechanical royalties associated with interactive streaming. This places them at an increasingly unique and important position within the music publishing sector of the music industry.
Role of Music Reports in the Music Marketplace
Though it is understandable to assume that music streaming services generate the lion’s share of royalties in the digital age; mechanical, sync, and performance royalties are generated from music uses on platforms outside the definition of the standard DSP (i.e. social media platforms). Music Reports services digital voluntary licenses for such platforms, and then passes the appropriate royalties to the rights holder.
Historically, the Harry Fox Agency has been the leader in handling physical mechanical royalties, which are paid by the record labels. In the age of streaming, the collection and payment of mechanical royalties from on-demand streaming falls on the shoulders of the digital music services, and the avenue in which these royalties go from the music service to the music publisher is primarily under the purview of the Mechanical Licensing Collective (as far as DSPs are concerned). Mechanical collections outside instances on DSPs are by and large administered by the deals that Harry Fox Agency and Music Reports have in place with certain digital platforms. For example, below is a partial list of Music Reports’ clients:
Amazon (music videos)
Apple (Apple Fitness and music videos)
Since Music Reports has deals with these companies to handle their payment of royalties, rights holders must opt-in to Music Reports’ voluntary license agreements and provide the most accurate possible metadata. This enables MRI to link composition information with the applicable recordings that are distributed on these platforms so that the compositions can be properly licensed and paid on.
Notice of Intention (NOI)
Formerly, Music Reports offered services to assist in the processing of NOIs for compulsory licenses. However, this is no longer the case for digital phonorecord deliveries. If a digital platform wants to obtain a license for the underlying composition to a recording that is to be distributed on its platform, Section 115 of the Copyright Act allows the user of the music—in this case, the streaming service—to distribute the composition by purchasing a blanket mechanical license from the Mechanical Licensing Collective. Before the formation of the MLC, compulsory licensing for digital use was authorized through filing a notice of intention (NOI) with the U.S. copyright office. This notice served as a legal way for a music user to obtain a compulsory license for distribution of the song on its platform. However, following the formation of the MLC, NOIs only apply to non-digital phonorecord deliveries (e.g., for CDs, vinyl records, tapes, and other physical media). If the proper guidelines are followed by the music user, the music publisher cannot refuse the use of their song, with a few notable exceptions, these exceptions include:
Right of First Use: The compulsory license does not apply to compositions that have not yet been recorded. Until a song has been recorded under the authorization of the copyright owner, AND that first recording has been distributed to the public, the publisher can charge anything it wants for use of the copyright and is not bound by the compulsory license rate.
Dramatic Musical Works: The song cannot be intended for an opera, musical, or any other stage production. This type of use is known as Grand Rights.
Non-Phonorecord: The composition must be an audio-only recording in order to apply to a compulsory license. In 1995, the Copyright Act was revised to make it clear that compulsory mechanical licenses apply to DPDs too, or digital phonorecord delivery (such as a song download from iTunes).
Major Changes: When you obtain a compulsory license, you are allowed to arrange the song “to conform it to the style or manner of interpretation of the performance” (Copyright Act 115(a)(2)). However, you cannot change the basic melody or fundamental character of the work, so no new lyrics or melody. This also means you cannot sample the composition in a new work without the publisher’s permission as well.
How Music Reports Works
Based in Woodland Hills, California, Music Reports is powered through their internal database, Songdex. Songdex consists of detailed metadata on millions of copyrights, maintained by the Music Reports staff through rigorous research and metadata updates directly from rights holders. This information is used to carry out the services offered by Music Reports, including and resulting royalties. Therefore, it is crucial that Music Reports maintains fully accurate data and is continuously updated on any and all catalog changes so that the right people and the right companies are getting paid at the right time.
There is no membership with Music Reports. Rather, Music Reports makes direct deals with digital music services. In order to receive royalties from these platforms, MRI needs the proper metadata from the publisher, then the publisher must review and enter into their various licensing agreements. These digital music services use Music Reports to administer and distribute royalties to music publishers and rights owners. Rights owners who expect to get paid for the use of their music on digital music services must ensure that Music Reports receives all the necessary metadata so that this can occur.For extensive information on Notices of Intention and compulsory licenses provisions, visit the Copyright Act website.
A mechanical license grants the rights to reproduce and distribute copyrighted musical compositions on CDs, records, tapes, ringtones, permanent digital downloads, interactive streams, and other digital configurations supporting various business models, including locker-based music services and bundled music offerings (definition courtesy of Harry Fox). For physical sales and permanent downloads, the mechanical royalties have historically been paid by the record label distributing the composition underlying their sound recordings. In this new age of interactive streaming, the mechanical royalties associated with on-demand streams are paid by the streaming service through a blanket license furnished by the Mechanical Licensing Collective, as opposed to being paid by the owner of the accompanying sound recording.
How Metadata Should Be Delivered to Music Reports
Music Reports must receive regular updates on one’s catalog. Updates include the acquisition of a new catalog, lost rights to a catalog, a new writer signed, changes to a percentage share of a song, new ISRC Codes found, or any other piece of information pertaining to one’s catalog. This information is utilized by Music Reports to update Songdex, which is used in the administration and payment of royalties.
Music Reports should receive as much information as possible in the metadata being delivered, such as title, composer(s), composer percentages, recording artists, alternative titles, ISWC code, ISRC codes, controlled territories, administering publishers, record labels, etc. Any piece of information that could be provided about a given composition should be provided. Of course, like most companies who collect and distribute royalties, there will be mandatory data and optional data. More information is almost always beneficial. The more accurate the provided data is, the more accurate Songdex will be, and therefore the more accurate royalty payments will be.
Music Reports has an Excel spreadsheet template that can be used to fill out and deliver metadata, although they do also accept other similar formats, as long as the applicable information is provided. For major catalog changes or the signing of a new writer, a redacted agreement and/or Letter of Direction is highly encouraged along with the metadata submission. Additionally, once an account is set up with Music Reports, one will be able to login to access the delivered catalog and make updates.
Launched in 2016, Music Reports created a claiming function for publishers who have an account with them. This tool allows publishers to match their composition data to any recordings currently missing their applicable publishing ownership information. This tool helps increase the accuracy of the data within Songdex and helps ensure that all of one’s songs are properly licensed so that all recordings containing one’s applicable copyrights can be properly monitored and royalties distributed.
There are a couple of key differences between claiming within the Music Reports database and claiming on other platforms, such as YouTube. First, when a composition claim is made to a recording, it is verified by Music Reports’ team of copyright researchers. Assuming there is no conflicting information, the claim is then confirmed and accepted. This helps to ensure that all of the information remains clean and free of any issues.
Taking advantage of the Music Reports claiming tool allows publishers to have a level of control in making sure that any recordings containing their compositions are not only linked but linked with as little delay as possible.
Music Reports also maintains a database of cue sheets called Cuetrak. It is important to keep Songdex updated so that any cue sheets managed by Music Reports are also up-to-date. Songdex is used to make sure that these cue sheets are up-to-date, and therefore it is especially important if one has had music licensed in audio/visual programs.
One of the common issues with cue sheets is that they are stagnant. Since publishing administration rights, as well as PRO affiliations, continually change, a cue sheet from a show or film from many years ago may not have the current publishing information. Music Reports keeps track of all these moves and matches the cue sheet information to the information in Songdex so that the correct publishers are paid.
Mechanical Royalty Rates
The royalty rates for interactive streaming are complex, and are not straightforward like the mechanical royalty rate for physical sales, digital downloads, and ringtones. The rate for physical sales and downloads is 9.1 cents for songs under 5 minutes, and 1.75 cents per minute, or fraction thereof, for songs over 5 minutes. The rate for ringtones is 24 cents per ringtone.
Mechanical royalty rates for interactive streaming are based on a number of factors and formulas. The applicable service’s revenue, money paid to the sound recording owners, the number of subscribers, and performance royalties are just some of the factors taken into consideration when determining streaming rates. Therefore, unlike the mechanical royalties paid for physical sales and digital downloads, there is no set rate.
Harry Fox Agency & The MLC
The Harry Fox Agency and the MLC are the other major collection agencies in the United States that have deals in place to collect digital mechanical royalties. For example, Amazon is a Music Reports client for their music video content, while the MLC collects the mechanical royalties generated from interactive streaming on Amazon Music. Therefore, to collect any due mechanical royalties from the use of one’s music on Amazon, both Music Reports and the MLC must possess all the necessary information pertaining to the music to collect and distribute these royalties on behalf of Amazon. Therefore, for one to receive U.S. mechanical royalties from all applicable digital service platforms, Harry Fox Agency, Music Reports, and the Mechanical Licensing Collective need the proper metadata. In conjunction, HFA and MRI need authorization to service their respective digital voluntary licenses.
Who Pays for Music Reports’ Services?
There is no cost to songwriters or publishers to submit their metadata to Music Reports, and in fact, it is highly encouraged for all songwriters and publishers who have released music to make sure that Music Reports receives all of the necessary metadata, sets up an account, and opts-in to their digital voluntary licenses to get paid. Music Reports need this information, and in as expeditious a manner as possible so that all the parts involved in the collection and disbursement of relevant royalties can be as smooth as possible.
The Harry Fox Agency charges an 11.5% commission to administer mechanical licenses. Deleted sentence Music Reports does things a little bit differently. Their royalties are 100% pass-through from the service provider directly to the rights holder (the composer or music publisher). Music Reports makes its money from the service providers themselves. They charge digital platforms, phone companies, greeting card companies, television companies, and whoever else is using the media. Those companies pay Music Reports, which, using its massive database of compositions, passes out those royalties without taking a commission.
Isabella Weaver, Luke Evans, Mamie Davis, Jacob Wunderlich, Rene Merideth, Jeff Cvetkovski, & Aaron Davis
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