One of the loose ends from Title I of the Music Modernization Act is how the Congress is going to permit the Mechanical Licensing Collective and the Digital Licensee Coordinator to process the “black box” or unclaimed royalties.   It’s common to hear people using the experience with various private settlements as a guide for how to handle the MLC’s black box.  It is said that a small percentage of the black box was actually claimed, so it’s the fault of those who failed to make their claim that they missed out.

There may be a kernel of truth in that, but the real question is why was there such a small percentage claimed in the first place?  Wouldn’t the administration of settlements with poor claiming history be an example of what not to do in the future?  Certainly with a government mandate forcing the issue?

Congress clearly recognized their oversight role on the black box by mandating the Copyright Office conduct an unclaimed royalties study to develop best practices:

Not later than 2 years after the date on which the Register of Copyrights initially designates the mechanical licensing collective…the Register,in consultation with the Comptroller General of the UnitedStates, and after soliciting and reviewing comments and relevant information from music industry participants and other interested parties, shall submit to the Committee on theJudiciary of the Senate and the Committee on the Judiciary of the House of Representatives a report that recommends best practices that the collective may implement in order to—

(A) identify and locate musical work copyrightowners with unclaimed accrued royalties held by thecollective;

(B) encourage musical work copyright owners to claimthe royalties of those owners; and

(C) reduce the incidence of unclaimed royalties.

The Copyright Office held the first public consultation on the study last December, and posted a video of the meeting that is well worth watching.  As I noted in an MTP post last year:

There are two currently existing standards that the Copyright Office can reference for examples of industry best practices-the SoundExchange unclaimed royalty search for new members and the Lowery-Ferrick Spotify class action Songclaims portal powered by Crunch Digital.  It seems inescapable that these claiming standards should be guideposts for both the Copyright Office and the Copyright Royalty Judges.

Having such clear cut standards–already operational so not theoretical–is fortunate because it seems obvious that the Congress is both concerned with the black box distributions not being gamed and also intends to exercise its statutory authority to retain oversight over the Mechanical Licensing Collective’s operations.  In fact, Senator Grassley specifically stated in his questions for the record following the Copyright Office oversight hearing that:

“The success of the Music Modernization Act (MMA) will depend, to a large extent, on the effective and efficient operation of the Mechanical Licensing Collective (MLC). The MMA included provisions to ensure that there was robust ongoing oversight of the MLC by both the Copyright Office and Congress, and that the new MLC would be accountable to the stakeholders.”