US Copyright Office Issues Best Practices to Reduce Unclaimed RoyaltiesJuly 12, 2021

As directed by the Music Modernization Act (“MMA”), on Thursday, July 8, 2021, the US Copyright Office (the “Office”) released a public report to recommend best practices for the Mechanical Licensing Collective (“MLC”) to effectively match copyright owners with unclaimed royalties for musical works, and ultimately reduce the incidence of unclaimed royalties.

Unclaimed royalties are royalties that are generated by usage of a song, but not paid, or “matched” to the copyright owner of the song. In February 2021, the MLC reported $424,384,787 in unclaimed royalties.

In 2018 the MMA was passed and replaced the song-by-song compulsory licensing structure with a blanket licensing system for digital music providers. The legislation established the MLC to administer this blanket license. The MLC, among other things, collects and distributes royalties, and identifies musical works and their copyright owners for payment. The MLC also maintains a publicly accessible database with information relating to musical works such as the identity of the relevant copyright owners. In cases where the MLC cannot match musical works to copyright owners, the MLC is authorized to distribute unallocated royalties to copyright owners identified in the MLC records, based on the relative market share of the copyright owners as reflected in usage reports provided by digital music providers.

The Office developed the best practice recommendations after receiving and considering commentary by a variety of stakeholders. The recommendations broadly state that the MLC should undertake significant measures to work toward reducing the incidence of unclaimed royalties, specifically by maximizing outreach and transparency. The Office recommends the MLC engage in education and outreach, improve the usability of the online system for claiming royalties, take reasonable steps to ensure that the data is of the highest possible quality, employ both automated and manual matching processes, ensure the distribution processes are transparent and practical, and monitor and track success metrics.

The full report can be found here: https://www.copyright.gov/policy/unclaimed-royalties/FINAL–Unclaimed–Royalties–Study–WEB–July7.pdf.

Julie L. Spieker is an Intellectual Property Attorney in the MVS Biotechnology & Chemical Practice Group as well as the Mechanical and Electrical Practice Group. To learn more, visit our MVS website , or contact Julie directly via email .