in Artist News, Music Modernization Act 341 Words

@digitalmusicnws: Mechanical Licensing Collective Hands a Juicy Contract to HFA — Critics Call the Deal Crooked

[Editor Charlie sez:  This week in MMA drama….just in time for turkey.]

The newly-minted — and funded — Mechanical Licensing Collective has just awarded a plum contract to the Harry Fox Agency, owned by private equity firm the Blackstone Group.  Critics are quickly pointing to a ‘no-bid contract’ based on political horse-trading, with HFA assailed for serious licensing problems in the past.

Read the post on Digital Music News

For context, the DMN reference to “crooked” may refer to an apparent “snag” to passage of the Music Modernization Act reported on July 23, 2018 by Shirley Halperin at Variety (our emphasis):

[O]n July 17, private equity firm Blackstone, which purchased performance rights organization SESAC in January 2017, submitted a proposal that MMA proponents say would “doom” the legislation by “upsetting the fundamental structure of the bill to benefit its private company at the expense of the entire music industry.”

At the heart of the issue for Blackstone is the nearly 100-year-old Harry Fox Agency (HFA), the rights management and collection entity which was bought by SESAC in 2015 for a reported $20 million. The HFA has acted as a hub for administrating and distributing mechanical license fees on behalf of music publishers. The MMA in establishing its proposed Mechanical Licensing Collective (MLC), to be overseen by a Board of publishers which includes four self-published songwriters, allows the HFA to compete as a vendor in an open market but it could also devalue SESAC’s investment.

Says attorney Dina LaPolt, a key figure in drafting and shepherding the MMA through the halls of Congress: “We worked very hard to get songwriters on the governing board of the Music Licensing Collective so they can be involved in the oversight of properly matching the mechanical royalty income. We cannot have a competing entity.  We are in this problem because of HFA’s inability to effectively license. HFA should just shut their doors, fire everyone, and sell off all their furniture.”

Variety also reported a few weeks later that the “roadblock” was quickly resolved apparently by eliminating the complained of competition.