Tag: Mechanical royalties

Frozen Ledgers and Living Systems: What King William’s Domesday Book Can Teach Us About the Mechanical Licensing Collective

A static record can support governance, but it cannot replace it. When a dynamic economy is ruled by a frozen ledger, injustice is structural rather than accidental. The lesson of Domesday is not to abandon centralized records, but to build institutions that acknowledge change, dispute, and time.

Introduction: The Problem of the Frozen Record

The Domesday Book was not wrong so much as frozen. It rendered a living, changing system of land tenure into a static ledger that became authoritative precisely because it could not keep up with reality. The Mechanical Licensing Collective (“MLC”) repeats this error in digital form. Musical works ownership is dynamic, relational, and contested, yet royalties flow based on a fixed snapshot that is at least potentially outdated the moment it is operationalized. In both systems, the problem is not bad data but the pretense that a static record can govern a dynamic economy without producing systemic error.[1] That’s why I always recommend Weapons of Math Destruction by Kathy O’Neil to MLC executives, which they promptly ignore. 

I argue that the failure mode is mostly structural, not technical. The technical part is relatively trivial, compared to say AI training or protein folds.  I think it could be built far quicker, far cheaper, and far more accurately than the MLC which has blown a unique opportunity to start with a blank sheet of paper and instead perpetuated the Harry Fox Agency which was founded well before FoxPro.  The lesson of Domesday is not that better enumeration solves governance problems, but that static records require institutional counterweights to prevent injustice, capture, and permanent misallocation.  That is, to prevent the MLC to be like the MLC.

Background: Two Authoritative Ledgers

A. The Domesday Book

Commissioned by William the Conqueror in 1085–1086, the Domesday Book was a comprehensive survey of landholding and economic resources in post‑Conquest England.[2] Its purpose was fiscal and administrative: to identify who held land, what that land was worth, and what obligations were owed to the Crown.[3] Domesday recorded information through sworn local inquests and was intended to be definitive.

Crucially, Domesday was never designed to be updated, at least not in real time. It froze a moment in time and became authoritative precisely because it was fixed. Almost immediately, it diverged from reality as land changed hands through death, forfeiture, re‑grant, and political favor.[4] Rather than revise Domesday, medieval England developed supplementary institutions—annual fiscal records, local courts, and royal adjudication—to manage change and dispute.[5]

B. The Mechanical Licensing Collective

The Mechanical Licensing Collective was created by Congress in Title I of the Music Modernization Act of 2018 to administer the blanket mechanical license for digital music services in the United States.[6]  (More accurately, Title I was written by the lobbyists and imposed on the world with Congress’s chop.). The MLC maintains a centralized database of musical works ownership, collects mechanical royalties from digital service providers, and distributes those royalties to songwriters and publishers.[7]

Musical works ownership, however, is inherently dynamic. Writers change publishers, estates open and close, ownership splits are disputed, and metadata is frequently incomplete or corrected only after use aka “Copyright Control.”[8] As a result, the MLC’s database—however well‑intentioned—is outdated almost as soon as it is operationalized (particularly because it was and is based on the Harry Fox Agency’s database that MLC passed off as state of the art over the objections of others).

Domesday as a Governance Tool, Not a Truth Machine

Domesday succeeded at centralizing authority, not at preserving truth over time. Land tenure in eleventh‑century England was dynamic, relational, and politically contingent. Domesday froze these relationships into an official record that quickly diverged from lived reality, yet retained legal force because it was authoritative rather than accurate.[9]. Nothing that a Norman knight with broadsword and mace couldn’t fix.

Importantly, medieval England did not rely on Domesday alone. The development of Pipe Rolls, hundred and shire courts, and royal justice provided mechanisms to contextualize, correct, and supersede the frozen record.[10]

The MLC as Digital Domesday

The MLC performs a structurally similar function today. It fixes ownership claims, establishes a canonical record, and allocates ongoing revenue streams while disputes remain unresolved. Royalties flow based on the database snapshot in effect at the time of use, even when that snapshot is known to be incomplete or incorrect.[11]

As with Domesday, authority substitutes for adaptability. The database becomes dispositive not because it reflects reality, but because it governs the flow of money. In other words, the MLC is not authoritative because it is accurate or complete; it is authoritative because Congress made its use compulsory. That’s right—it’s not authoritative because it’s accurate, it’s authoritative because it’s authorized.

Three Solutions Grounded in Domesday’s Afterlife

1. Authoritative Record Plus Living Supplement (The Pipe Roll Model)

Domesday was supplemented by the Pipe Rolls—annual fiscal records that reflected changes in obligations over time.[12] Applied to the MLC, this suggests separating baseline records from continuous reconciliation layers and treating unmatched royalties as unreconciled obligations of the MLC rather than abandoned property of the songwriter.

2. Jurisdictional Pluralism (The Hundred and Shire Court Model)

Domesday did not eliminate local adjudication. Disputes were resolved in courts that contextualized Domesday entries rather than deferring blindly to them.[13]  Similarly, ownership and split disputes should be resolved in external and independent fora, with the MLC conforming its records and payouts to those determinations.

3. No Profit from Unresolved Ownership (The No Escheat Without Judgment Model)

In medieval England, the Crown could claim land only through recognized legal mechanisms such as forfeiture or escheat.[14] Uncertainty alone did not justify enrichment.  A Domesday‑informed reform would prohibit institutional profit from unresolved ownership and require segregation of disputed funds.

By contrast, the MLC “black box” is not escheatment at all—yet it functionally resembles one-sided escheatment without due process. Under traditional escheat or unclaimed-property regimes, the state’s claim arises only after defined predicates: notice, diligence, and a lawful adjudication or administrative determination of abandonment, coupled with a public fiduciary obligation to locate the owner. The black box instead permits private retention and deployment of other people’s money based solely on unresolved ownership, without a judgment of abandonment, without a comparable duty to search for the owner, and with the economic upside of delay accruing to the intermediary rather than the missing payee.

For example, California requires some effort:

California law requires all holders (corporations, businesses, associations, financial institutions, and insurance companies) of unclaimed property to attempt to contact owners before reporting their property to the State Controller’s Office.

Holders are required to send a notice to the owner’s last known address informing them that the property will be transferred to the State Controller’s Office for safekeeping if the owner does not contact them to retrieve it.

The State Controller’s Office sends notices to all owners of property that will be transferred to the state. These notices are sent out before the property is to be transferred, giving owners an opportunity to retrieve property directly from the holder.

The constitutional problem is sharpened by Title I of the MMA, which expressly preempts state escheatment and unclaimed-property laws—but arguably does not replace them with functionally equivalent federal protections. States are forbidden to take custody of abandoned property without notice, diligence, and due process; yet the MMA authorizes a private entity to hold, invest (or so MLC argues), and ultimately distribute unmatched royalties on a market share basis (including to companies represented on MLC’s board of directors) without any finding of abandonment, without judicial process, and without a neutral public custodian.

Specifically, Title I provides at 17 U.S.C. § 115(d)(11)(E):

(E)Preemption of state property laws.—

The holding and distribution of funds by the mechanical licensing collective in accordance with this subsection shall supersede and preempt any State law (including common law) concerning escheatment or abandoned property, or any analogous provision, that might otherwise apply.

So with a waive of the hand, Title I preempts the detailed protection of escheatment traditions that date back to the doctrine of defectus sanguinis in the 12th century (the Pipe Roll of 1130 (31 Henry I)). This asymmetry raises serious Due Process and Equal Protection concerns (not to mention conflicts of interest), and potentially a Takings Clause problem: Congress may not displace state escheat safeguards and simultaneously permit private enrichment from unresolved ownership where states themselves would be constitutionally barred from proceeding without judgment and owner-protective procedures.  It also raises a classic unconstitutional state preemption without federal statute problem.[15]

Three Contemporary Reforms the MLC Could Adopt

1. Authoritative Record + Living Reconciliation Layer (The Pipe Roll Model)

Adopt a structural separation between the MLC’s baseline ownership database and a continuous reconciliation system that tracks changes, corrections, disputes, and late‑arriving claims on a monthly basis.

In practice, unmatched royalties would be treated as unreconciled obligations rather than quasi‑abandoned funds. The MLC would maintain a rolling, auditable ledger capable of updating distributions when ownership data changes, including retroactive true‑ups once claims are resolved, instead of locking outcomes to a stale snapshot.

This reform acknowledges that ownership is dynamic and prevents early database errors from permanently reallocating value.

2. Independent Adjudication with Mandatory Conformance (The Hundred and Shire Court Model)

Formally decouple ownership and split dispute resolution from the MLC’s internal processes and require the MLC to conform its records and payouts to determinations made by independent fora.

In practice, disputes would be resolved in courts, arbitrations, or designated independent neutral bodies, and the MLC would treat those determinations as binding inputs rather than discretionary metadata updates. The database would no longer enjoy a presumption of correctness when ownership is contested and disputes would not be resolved by conflicted statutory committees.

This prevents the MLC from acting as judge, jury, and paymaster and restores legitimacy to ownership determinations.

3. Mandatory Segregation and No Profit from Unresolved Ownership (The No Escheat Without Judgment Model)

Prohibit the MLC from retaining, investing, or reallocating royalties tied to unresolved ownership and incentives them to find the correct owners.

In practice, all black‑box royalties would be held in segregated custodial accounts or at least ledgers. Market‑share distributions would be barred unless and until lawful abandonment is established, and the MLC would carry an affirmative duty to search for and notify potential claimants, analogous to the duties of traditional unclaimed‑property regimes.

This removes perverse incentives to delay resolution and aligns the MLC with basic due‑process and fiduciary norms, especially critical given the MMA’s preemption of state escheat laws (which itself may be unconstitutional).

Taken together, these reforms shift the MLC away from treating a frozen ledger as dispositive authority and toward an institutional design that acknowledges change, dispute, and time—without sacrificing administrative efficiency. At $40 million a year, they should be able to pull this off or at least start slouching toward Bethlehem.

[1] S.F.C. Milsom, Historical Foundations of the Common Law (2d ed. 1981).

[2] Domesday Book (1086).

[3] R. Allen Brown, The Normans and the Norman Conquest (2d ed. 1985).

[4] J.C. Holt, Domesday Studies (1987).

[5] Mark Hagger, William: King and Conqueror (2012).

[6] Music Modernization Act, Pub. L. No. 115‑264, 132 Stat. 3676 (2018).

[7] 17 U.S.C. § 115(d).

[8] U.S. Copyright Office, Music Modernization Act Implementation Report (2019). “Copyright Control” is often a metadata band-aid: it flags that publishing info is incomplete or self-administered. The publisher share can wind up unmatched/unallocated even though ownership is knowable or is ultimately known after an indeterminate number of accounting periods.

[9] F.W. Maitland, Domesday Book and Beyond (1897).

[10] Richard FitzNigel, Dialogus de Scaccario (Dialogue concerning the Exchequer) (c. 1179).

[11] Copyright Royalty Judges, Phonorecords III & IV.

[12] Pipe Roll Society, The Pipe Roll of Henry I.

[13] Paul Brand, The Origins of the English Legal Profession (1992).

[14] Escheat is a common-law legal mechanism by which real property reverted to the Crown when a tenant died intestate and without lawful heirs. At common law, escheat required the extinction of the tenant’s line of inheritance; mere uncertainty of title or ownership was insufficient. In modern U.S. law, escheat has been adapted to intangible and unclaimed property, but it retains the same core features: notice, diligence, and a lawful determination of abandonment or lack of heirs before the sovereign (in our case a State) may take custody.

[15] See Connecticut Mutual Life Ins. Co. v. Moore, 333 U.S. 541 (1948); Texas v. New Jersey, 379 U.S. 674 (1965) (states may take custody of abandoned property only subject to procedural protections and priority rules); Cf. Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) (interest on private funds held by a custodian remains private property; government may not appropriate economic benefits without just compensation).

The Intention of Justice:  In Which The MLC Loses its Way on a Copyright Adventure

ARTHUR

Let’s get back to justice…what is justice?  What is the intention of justice?  The intention of justice is to see that the guilty people are proven guilty and that the innocent are freed.  Simple, isn’t it?  Only it’s not that simple.

From And Justice for All, screenplay written by Valerie Curtin and Barry Levinson

Something very important happened at the MLC on July 9:  The Copyright Office overruled the MLC on the position the MLC (and, in fairness, the NMPA) took on who was entitled to post-termination mechanical royalties under the statutory blanket license.  What’s important about the ruling is not just that the Copyright Office ruled that the MLC’s announced position was “incorrect”—it is that it corrected the MLC’s position that was in direct contravention of prior Copyright Office guidance.  (If this is all news to you, you can get up to speed with this helpful post about the episode on the Copyright Office website or read John Barker’s excellent comment in the rulemaking.)

“Guidance” is a kind way to put it, because the Copyright Office has statutory oversight for the MLC.  That means that on subjects yet to be well defined in a post-Loper world (the Supreme Court decision that reversed “Chevron deference”), I think it’s worth asking whether the Copyright Office is going to need to get more involved with the operations of the MLC.  Alternatively, Congress may have to amend Title I of the Music Modernization Act to fill in the blanks.  Either way, the Copyright Office’s termination ruling is yet another example of why I keep saying that the MLC is a quasi-governmental organization that is, in a way, neither fish nor fowl.  It is both a private organization and a government agency somewhat like the Tennessee Valley Authority.  Whatever it is ultimately ruled to be, it is not like the Harry Fox Agency which in my view has labored for decades under the misapprehension that its decisions carry the effect of law.  Shocking, I know.  But whether it’s the MLC or HFA, when they decide not to pay your money unless you sue them, it may as well be the law.

The MLC’s failure to follow the Copyright Office guidance is not a minor thing.  This obstreperousness has led to significant overpayments to pre-termination copyright owners (who may not even realize they were getting screwed).  This behavior by the MLC is what the British call “bolshy”, a wonderful word describing one who is uncooperative, recalcitrant, or truculent according to the Oxford Dictionary of Modern Slang.  The word is a pejorative adjective derived from Bolshevik.  “Bolshy” invokes lawlessness.

In a strange coincidence, the two most prominent public commenters supporting the MLC’s bolshy position on post-termination payments were the MLC itself and the NMPA, which holds a nonvoting board seat on the MLC’s board of directors.  This stick-togetherness is very reminiscent of what it was like dealing with HFA when the NMPA owned it.  It was hard to tell where one started and the other stopped just like it is now.  (I have often said that a nonvoting board seat is very much like a “board observer” appointed by investors in a startup to essentially spy on the company’s board of directors.  I question why the MLC even needs nonvoting board seats at all given the largely interlocking boards, aside from the obvious answer that the nonvoters have those seats because the lobbyists wrote themselves into Title I of the MMA—you know, the famous “spirit of the MMA”.)

Having said that, the height of bolshiness is captured in this quotation (89 FR 58586 (July 9, 2024)) from the Copyright Office ruling about public comments which the Office had requested (at 56588):

The only commenter to question the Office’s authority was NMPA, which offered various arguments for why the Office lacks authority to issue this [post-termination] rule. None are persuasive. [Ouch.]

NMPA first argued that the Office has no authority under section 702 of the Copyright Act or the MMA to promulgate rules that involve substantive questions of copyright law. This is clearly incorrect. [Double ouch.]

The Office ‘‘has statutory authority to issue regulations necessary to administer the Copyright Act’’ and ‘‘to interpret the Copyright Act.’’  As the [Copyright Office notice of proposed rulemaking] detailed, ‘‘[t]he Office’s authority to interpret [the Copyright Act]  in the context of statutory licenses in particular has long been recognized.’’

Well, no kidding.

What concerns me today is that wherever it originated, the net effect of the MLC’s clearly erroneous and misguided position on termination payments is like so many other “policies” of the MLC:  The gloomy result always seems to be they don’t pay the right person or don’t pay anyone at all in a self-created dispute that so far has proven virtually impossible to undo without action by the Copyright Office (which has other and perhaps better things to do, frankly).  The Copyright Office, publishers and songwriters then have to burn cycles correcting the mistake.  

In the case of the termination issue, the MLC managed to do both: They either paid the wrong person or they held the money.  That’s a pretty neat trick, a feat of financial gymnastics for which there should be an Olympic category.  Or at least a flavor of self-licking ice cream.

The reason the net effect is of concern is that this adventure in copyright has led to a massive screwup in payments illustrating what we call the legal maxim of fubar fugazi snafu.  And no one will be fired.  In fact, we don’t even know which person is responsible for taking the position in the first place.  Somebody did, somebody screwed up, and somebody should be held accountable.

Mr. Barker crystalized this issue in his comment on the Copyright Office termination rulemaking, which I call to your attention (emphasis added):

I do have a concern related to the current matter at hand, which translates to a long-term uneasiness which I believe is appropriate to bring up as part of these comments. That concern is, how did the MLC’s proposed policies [on statutory termination payments] come in to being in the first place? 

The Copyright Office makes clear in its statements in the Proposed Rules publication that “…the MLC adopted a dispute policy concerning termination that does not follow the Office’s rulemaking guidance.”, and that the policy “…decline(d) to heed the Office’s warning…”. Given that the Office observed that “[t]he accurate distribution of royalties under the blanket license to copyright owners is a core objective of the MLC”, it is a bit alarming that the MLC’s proposed policies got published in the first place. 

I am personally only able to come up with two reasons why this occurred. Either the MLC board did not fully understand the impact on termination owners and the future administration of those royalties, or the MLC board DID realize the importance, and were intentional with their guidelines, despite the Copyright Office’s warnings. 

Both conclusions are disturbing, and I believe need to be addressed.

Mr. Barker is more gentlemanly about it than I am, and I freely admit that I have no doubt failed the MLC in courtesy.  I do have a tendency to greet only my brothers, the gospel of Matthew notwithstanding.  Yet it irks me to no end that no one has been held accountable for this debacle and the tremendous productivity cost (and loss) of having to fix it.  Was the MLC’s failed quest to impose its will on society covered by the Administrative Assessment?  If so, why?  If not, who paid for it?  And we should call the episode by its name—it is a debacle, albeit a highly illustrative one. 

But we must address this issue soon and address it unambiguously.  The tendency of bureaucracy is always to grow and the tendency of non-profit organizations is always to seek power as a metric in the absence of for-profit revenue.  Often there are too many people in the organization who are involved in decision-making so that responsibility is too scattered.  

When something goes wrong as it inevitably does, no one ever gets blamed, no one ever gets fired, and it’s very hard to hold any one person accountable because everything is too diffused.  Instead of accepting that inevitable result and trying to narrow accountability down to one person so that an organization is manageable and functioning, the reflex response is often to throw more resources at the problem when more resources, aka money, is obviously not the solution.  The MLC already has more money than they know what to do with thanks to the cornucopia of cash from the Administrative Assessment.  That deep pocket has certainly not led to peace in the valley.

Someone needs to get their arms around this issue and introduce accountability into the process.  That is either the Copyright Office acting in its oversight role, the blanket license users acting in their paymaster role through the DLC, or a future litigant who just gets so fed up with the whole thing that they start suing everyone in sight.   

Saint Thomas Aquinas wrote in Summa Theologica that a just war requires a just cause, a rightful intention and the authority of the sovereign (Summa, Second Part of the Second Part, Question 40).  So it is with litigation.  We have a tendency to dismiss litigation as wasteful or unnecessary with a jerk of the knee, yet that is overbroad and actually wrong.  In some cases the right of the people to sue to enforce their rights is productive, necessary, inevitable and—hopefully—in furtherance of a just cause like its historical antecedents in trial by combat.  

It is also entirely in keeping with our Constitution.  The just lawsuit allows the judiciary to right a wrong when other branches of government fail to act, or as James Madison wrote in Federalist 10, so the government by “…its several constituent parts may…be the means of keeping each other in their proper places.”  

That’s a lesson the MLC, Inc. had to learn the hard way.  Let’s not do that again, shall we not?