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NMPA announces deal with YouTube over unpaid song royalties

By | Published on Friday 9 December 2016

National Music Publishers Association

The National Music Publishers’ Association in the US has announced an agreement with YouTube that will facilitate the distribution of “royalties for musical works used in videos on YouTube where ownership was previously unknown”.

As previously reported, there is an extra layer of complexity when it comes to digital licensing Stateside because there is no collecting society for mechanical rights, ie an American version of the UK’s MCPS. Companies like the Harry Fox Agency traditionally fill the gap to an extent, but there is no direct American counterpart of the mechanical rights societies that exist elsewhere.

It’s generally agreed that a stream exploits both the ‘performing right’ and ‘mechanical right’ elements of the copyright (or in the case of YouTube, publishers might talk about the ‘sync right’ being the second element exploited). In the UK, while streaming services will often do direct deals with the big five music publishers, the digital firm can ensure it has everything else covered by doing a deal with PRS for performing rights and MCPS for mechanicals.

In the US, the likes of BMI, ASCAP, SESAC and GMR perform the role of PRS on the performing rights side. There is then actually a compulsory licence covering mechanical rights. But under that licence the streaming service needs to file paperwork with the owner of any song streamed – or the US Copyright Office if the owner can’t be identified – and pay royalties to the rights owner or Copyright Office at the statutory rate.

A company like HFA can administer that process, but there is no one-stop database listing every song and its owners. Moreover, there is no database confirming which precise song any one recording contains. This is true everywhere, but in other countries the collecting societies do the data crunching, and the publishers make sure they are allied to the relevant collecting society. In the US, millions in non-performing right royalties fall into a hole.

Various streaming services have been sued on this issue because – while the real problem is arguably the music publishing industry’s failure to put in place a collective licensing system in line with other countries – under the law it is the digital platforms that are liable for copyright infringement for failing to comply with the terms of the compulsory licence.

The most high profile case of this kind to date is that being pursued by David Lowery and Melissa Ferrick against Spotify. As those cases gained momentum, the NMPA – which previously owned HFA – stepped in to try to facilitate a settlement, whereby it and Spotify would work together to identity all unidentified songs, and the streaming service would then hand over unpaid royalties and a little compensation. That left self-publishing songwriters with the option to sign up to the settlement or join the Lowery/Ferrick action.

Litigation against YouTube on unpaid royalties would be further complicated by the bloody safe harbours, so both the NMPA and the Google firm are presumably hoping that there will be an even greater incentive across the music publishing and songwriting community to sign up to this settlement. The trade group says that, under the deal, “millions of dollars in previously unclaimed non-performance royalties will be paid to publishers and songwriters”.

Publishers need to opt into the agreement by 28 Feb, after which YouTube will provide a list of songs it has been unable to identify owners for. Newly identified owners will then be paid any royalties they are due dating back to August 2012.

Confirming the deal, NMPA boss David Israelite said: “We appreciate YouTube’s willingness to work with us on behalf of the industry to help pay out millions of dollars in previously unclaimed royalties to publishers and songwriters. It is essential that we work with digital services like YouTube – the most popular digital platform for music discovery – to fix the challenge of incomplete ownership information to ensure royalties are no longer unmatched and music owners are paid accurately by the platforms that rely on their work”.

On YouTube’s side, Tamara Hrivnak said: “The revenue earned by the music industry on YouTube continues to grow significantly year over year, and we’re committed to making sure that publishers are paid for the usage of their works on our platform. We are excited to partner with the NMPA to address the industry-wide challenges associated with identifying publishing ownership on digital platforms”.