The Copyright Office announced that it is extending deadlines for certain filings including the compulsory mechanical license:
The Acting Register of Copyrights is extending the temporary adjustments to certain timing provisions under the Copyright Act for persons affected by the COVID-19 national emergency. The Coronavirus Aid, Relief, and Economic Security (CARES) Act authorizes the Register to temporarily adjust statutory deadlines for copyright owners and other affected parties if she determines that a national emergency declared by the President is generally disrupting the normal operation of the copyright system. Under this authority, the Copyright Office has announced adjustments relating to certain registration claims, notices of termination, and section 115 notices of intention and statements of account [as required for the compulsory mechanical license for songs].
These emergency modifications originally were set to expire on May 12, 2020. Because, however, the disruptions caused by the national emergency remain in effect, the Acting Register is extending them for up to an additional sixty days, or through July 10, 2020. For further details, please visit the Office’s Coronavirus page.
There are a number of deadlines relating to Title I of the Music Modernization Act (the massive amendment to the compulsory mechanical license that created the blanket compulsory license and the MLC which is now “The MLC”). These deadlines are suspended under the new emergency powers of the Copyright Office. The emergency powers last for the duration of the declared national emergency as do the suspensions of deadlines. When do you think the national emergency will get undeclared? Our bet is that it will last well into at least first quarter of next year because so much stimulus and state economic relief depend on the existence of a declared national emergency.
And what else happens in first quarter of next year? Wanna guess?
The suspension of deadlines could also apply to the launch of “The MLC.” Our bet is that the Copyright Office will not extend the hard wired January 1, 2021 “License Availability Date” (which is the date that the new blanket compulsory license is available to music services) but will extend the deadlines that The MLC is required to send statements and payments to songwriters, publishers and potentially foreign authors societies (like SACEM) who theoretically collect mechanical royalties from The MLC and not under a direct license.
There’s also the potential for new deadlines in the regulations that are currently being drafted that may include disclosures for things like whether The MLC can actually function. Things like that.
It’s unclear if the Copyright Office is also empowered to suspend the payment deadlines from the digital services to The MLC under the “administrative assessment” that involves the payment of $60 million of startup and operating costs or thereabouts. Even if the emergency powers could include those payments, our bet is that those millions and millions and millions will flow just fine in the time of the virus. Songwriters may go hungry, but some payrolls will get paid.
According to the Copyright Office notification:
While the MMA’s most significant change is to establish a new, blanket license for digital music providers (DMPs) to be administered by a mechanical licensing collective (MLC), this blanket license is not yet available. DMPs and other licensees must continue to comply with section 115’s conditions on a song-by-song basis during the current transition period. The emergency relief outlined below is directed at obligations accruing during this transition period and is unrelated to activities of the MLC. [So far.] This relief is also necessarily limited to obligations related to the statutory section 115 license and is unrelated to obligations that stem from direct licensing agreements between private parties….
The Copyright Office has become aware that, as a result of the COVID-19 national emergency, some entities, including at least one DMP and its licensing administrator, may be prevented from serving NOIs and SOAs in a timely manner due to an inability to physically process paper notices and statements resulting from a shutdown of corporate offices….
List of Affected Works and Licenses: Entities making use of this adjustment must track how they use it and must maintain a record of licenses by copyright owner for which they have made use of the adjusted timing provisions. They must also keep a list of the affected musical works. Over time, the Office expects the list of licenses with respect to the number of copyright owners to remain the same, or decrease, as copyright owners opt-into electronic delivery, while the list of affected works may increase as new sound recordings continue to be released.
Hmmm…”at least one DMP and its licensing administrator” eh? Wonder who that is? Why wouldn’t they just say the names? Wouldn’t you need to know that if you wanted to look for this “List of Affected Works and Licenses”? Particularly because maintaining a “List of Affected Works and Licenses” sounds like a potentially tall order if the DMP would happen to be Spotify and “its licensing administrator” would happen to be HFA. Our bet is that HFA is the prime beneficiary of this emergency treatment.
(You may be asking why HFA would be Spotify’s “licensing administrator” because you thought that HFA represented publishers. Well, they do both. This has been a topic of discussion from time to time, particularly in some of the many lawsuits against Spotify for failing to license songs. Don’t worry, there’s no conflict of interest there don’t you know.)
But…when you go to HFA’s website you see this new link at the top of the page above the navigation bar:
We expected that if you clicked on that link it would take you to HFA’s “List of Affected Works and Licenses”. Not so fast. Here’s what you see:
We gather that HFA has no intention of doing the work to post a “List of Affected Works and Licenses” even though posting that list is a key component of the benefit they get from changing the law…sorry…the emergency rules that were announced for their benefit.
Instead, this paragraph says how they’re handling the Copyright Office announcement:
So you’ve been instructed little publishers. That’s all the compliance you’re going to get.
Instead of posting a list, HFA states that they have notified all the affected publishers and have given them instructions on how to set up an online account. This probably means that the publisher was already an HFA publisher but hadn’t set up an online account to receive NOIs. Or if you are not an HFA publisher but are a Spotify publisher who HFA services for Spotify, then it’s possible that you got a notice in your Spotify statement that you needed to set up a new HFA online account in order to receive your statements and NOIs in the future.
You will supposedly still get your HFA paper check, you just won’t get the statement for what it means until you sign up (and maybe give HFA your data if you are not already an HFA publisher).
So according to HFA’s website you already know who you are, and HFA will send you notices electronically once you sign up–even though they have already “temporarily transitioned” you to electronic statements and NOIs that you won’t get until you sign up if you happened to notice that you were “notified.”
Our bet is that your last paper statement from HFA probably had a cover letter or other “notice” that you may not have read or read closely because you weren’t expecting it.
And when the national emergency is over–whenever that may be–HFA will transition you back to paper statements. Particularly if the national emergency ends after the License Availability Date and you get sucked into the compulsory blanket license?
And of course the service’s matching obligations to get their safe harbor under MMA will go forward smoothly and not be affected. (You know, the one they’re being sued for by Eminem’s publishers?)
Easy peasy, right? What could possibly go wrong? That entire process will go smooth as glass, we are so sure. Probably not. We’re about as sure about that as we are that absolutely no one will do anything about HFA’s failure to comply with the emergency regulations after they got the emergency suspension for their benefit announced to every songwriter and publisher in the world. For as King Louis XIV of France said, I am the law and the law is me.
Get it? Got it? Good.