CRB Orders Phonorecords IV to Settle The Parties to File All “additional” Written and Oral Agreements After Rejection

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Earlier this month, leading music publishers and streaming giants, including Spotify, released an unedited version of their Phonorecords IV agreement. But then the songwriters’ organizations called for disclosure of any “additional” agreements, and the Copyright Board (CRB) ordered the parties to shed light on transactions related to the main agreement (but not included in it).

Chief copyright Judge David P. Shaw most recently filed the order, which came about two months after streaming platforms and publishers announced they had reached an agreement in the Phonorecords IV case. In short, the proposed deal, among other things, will slightly increase the rates of copyright and publishing royalties from on-demand streaming services for the period 2023-2027.

The fact that a hastily concluded contract will raise the royalty rate (to a total rate of 15.35%) is of great importance, since the same organizations that worked out the compromise have been fighting for years for a trial in the Phonorecords III case and a 43.8% increase in the rate.

However, despite the Phonorecords IV bid increase, organizations such as Music Creators North America (MCNA) and individuals including the songwriter (and long-time critic of mechanical bids) George Johnson, immediately demanded transparency regarding the exact terms of the transaction and the terms of any related contracts.
MCNA also disagreed with the “joint notice of placement” submitted by Google and NMPA after the Copyright Board ordered the parties who settled the issue at the end of September to confirm the “absence of other related agreements and other clauses” in the Phonorecords IV deal. .

“However, the Joint Response and Joint Submission do not fully and adequately respond to Order 63,” Judge Shaw wrote about the previously highlighted disclosure of the unedited settlement agreement. “The judges note that Order 63 directs all Parties to the settlement to certify that there are no other related agreements or provisions other than the Proposal and the Proposed Rules attached to the Proposal, and that if any such other agreements or provisions exist, the Parties to the settlement must ‘submit’ them within the aforementioned time limit.”

And before delving into the details related to these mandatory documents, Judge Shaw made it clear that he and the two other CRB judges “will not advance the procedures for accepting statutory rates and conditions set out in 17 U.S.C. ยง801(b)(7) (A) unless and until they understand that they have a full representation and disclosure of the settlement agreement of the Parties, which is proposed as the basis for such statutory rates and conditions, and full compliance with Order 63. and this procedure.”

The main part of the rigidly worded last order, for its part, obliges streaming services and publishing companies to “submit (not “submit”) any additional written agreements … that constitute remuneration or are contractually bound to the Settlement Agreement mentioned in the motion.”

However, not limited to “additional written agreements”, the order also requires organizations to send “a detailed description of any additional oral agreements” relating to the transaction with Phonorecords IV, in addition to “a certificate or certificates from a person or persons to hand over knowledge that there are no other contracts, written or oral, in addition to the Settlement Agreement” and contracts sent by the order itself.

In conclusion, the judge of the Show ordered the recipients to “explain in an additional note why the remaining limited parts of the Joint Response, except for Appendix A, from which the designation “Restricted Access” was removed, in case of disclosure, would prevent the Producer from receiving such information in the future.”

The specified persons have until Thursday, October 27, to provide the requested information and documents, and MCNA, as well as the Songwriters Guild of America (SGA) have addressed Digital Music News with a joint statement on the development.
“We are thrilled that the US Copyright Board (CRB) today responded positively to the requests of songwriter George Johnson and the organization Music Creators North America (MCNA) regarding the urgent need for transparency in the process of mechanical bid setting.

“By ordering all digital music distributors and participating music publishers that they must register with the CRB either all relevant, supporting information and agreements regarding the scope and nature of their proposed streaming royalty settlement, or alternatively certify under oath that such additional information or agreements exist, the CRB sought to ensure so that a comprehensive analysis of the CRB and the submission of comments by an independent community of music creators can be carried out before accepting or rejecting the CRB proposal.

“This is exactly the type of openness that the US Congress had in mind and which is required by the US Copyright Law, and we thank the CRB for its unwavering application of the law,” the comments conclude.

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