The year commenced with the Mechanical Licensing Collective‘s (MLC) first-ever redesignation process, alongside the less-publicized Digital Licensing Coordinator (DLC). This initiative began in late January when the Copyright Office launched a thorough review of both organizations to assess their compliance with the responsibilities outlined in the Music Modernization Act of 2018. This redesignation will become a routine evaluation every five years, ensuring that these entities remain accountable and effective in their roles.

During this review process, stakeholders including publishers, songwriters, and streaming services had the opportunity to submit letters voicing their opinions on the MLC and DLC’s performance and potential improvements. The volume of feedback was significant, highlighting the industry’s keen interest in the future direction of these organizations. This engagement underscores the proactive stance of the industry as it seeks to shape the landscape of music licensing and royalty distribution.

As the letters from the Copyright Office made headlines, tensions emerged among various stakeholders regarding the future vision for the MLC. While there was a general consensus on the need for the MLC to continue its role in collecting and distributing mechanical royalties, the Digital Media Association (DiMA) called for enhanced efficiency and transparency, given their financial support for the MLC’s operations. In response, the National Music Publishers Association (NMPA) defended the MLC, accusing DiMA of attempting to undermine the organization’s progress. This ongoing dialogue reflects the complexity of the relationships within the music publishing sector.

The redesignation process is ongoing, and the future implications for both the MLC and DLC remain to be fully realized. Stakeholders are watching closely as these developments unfold.

When UMG announced its decision to allow its licensing agreement with TikTok to lapse on February 1, citing the platform’s failure to provide “fair value” for its extensive catalog of hit songs, many music enthusiasts anticipated the removal of tracks by top artists such as Taylor Swift, Drake, BTS, and Ariana Grande. However, the real ramifications were felt more broadly across the music publishing landscape.

Publishers were acutely aware that the most significant fallout would stem from TikTok’s removal of works by UMPG songwriters. Although some of these songwriters may not have the same fame as the artists on UMG’s roster, their contributions underpin numerous tracks across various labels and publishers, thereby creating a domino effect that reverberated throughout the industry. The interconnectedness of the music publishing ecosystem means that such decisions can have widespread implications.

As reported by Billboard, this situation led to non-UMG recording artists collaborating with UMPG songwriters to withhold information about the identity of the songwriters on certain tracks in order to circumvent the TikTok ban. Many songwriters felt pressured to comply with these requests, raising concerns about their negotiating power. The standoff ultimately reached a resolution about three months later, but it is likely that the overall impact on the publishing royalties of those writers was minimal due to the time involved in revenue collection. The incident underscores the vulnerability and challenges that songwriters face in the ever-evolving digital landscape.

For those new to the realm of music publishing, it may be surprising to learn that from 2018 to 2022, during the Phonorecords III period, there was significant ambiguity regarding the appropriate compensation for music publishers and songwriters concerning streaming mechanical royalties. This uncertainty arose after major streaming services like Spotify and Amazon Music appealed the initial royalty rate determination from 2018, leading to a protracted conflict that delayed resolution for years. By the time a resolution was reached in August 2023, the period in question had already concluded, leading to a collective sigh of relief across the industry.

Throughout this dispute, streaming services continued to distribute payments to music publishers based on either previous royalty rates or the initial Phonorecords rate, which was established before the legal battles unfolded. On February 23, the MLC announced the outcome of their analysis regarding the adjustments owed, revealing a staggering $419.2 million adjustment. While this was a headline-worthy figure, the detailed breakdown indicated that a substantial portion of this amount—potentially up to one-third—had already been dispersed. Nevertheless, receiving millions of dollars for past services is a welcome windfall for any business.

It is no secret that Spotify and music publishers have had a tumultuous relationship. However, after the peaceful resolution of Phonorecords IV (2023-2027), which was agreed upon by streamers, the NMPA, and the Nashville Songwriters Association International, it seemed as though a truce had been established. Unfortunately, this peace lasted less than two years. In March, Spotify began implementing discounted mechanical royalty rates for streams on its premium tiers, a move that disrupted the fragile equilibrium and led to renewed tensions with publishers.

Spotify justified this action by claiming it was exercising one of the concessions made by publishers in Phonorecords IV, which permitted “bundled” services to share the royalty distribution among various offerings provided under a single price. By introducing audiobooks into its premium audio tiers, Spotify argued that it should now be able to divide royalties that were previously allocated solely for music. This shift is projected to result in a $150 million decrease in royalty payments over the first year of implementation, raising alarm bells among publishers and songwriters alike.

The music publishing community did not remain passive in response to this decision. Songwriter organizations voiced their opposition, while the MLC initiated a lawsuit against Spotify, contending that Spotify Premium does not qualify for the discounted rates. In addition, the NMPA launched a comprehensive campaign to counter this change, which included filing complaints with the FTC, reaching out to the attorneys general of nine states, proposing legislative measures in both the House and Senate, and issuing cease and desist notices to Spotify for allegedly unlicensed content. The ongoing litigation between the MLC and Spotify highlights the contentious nature of this issue and its implications for the future of music publishing.

Following UMG’s licensing conflict with TikTok, the NMPA announced its own decision to let its model license with TikTok expire, effective May 1. The organization confirmed that it had no intentions of renewing the license, which had been primarily utilized by independent publishers. Unlike the significant upheaval resulting from UMPG’s songwriting removal, the expiration of the NMPA’s license attracted relatively little attention. Many publishers using this license found alternative means to secure licensing, while any remaining unlicensed content was quietly removed from the platform.

The NMPA’s decision to cease its licensing agreement with TikTok signaled a clear indication that UMG’s dispute was not an isolated incident; rather, the music industry and TikTok are entering a more complex phase in their relationship. This shift became even more evident in the fall when Merlin, representing thousands of independent labels, also experienced its TikTok license lapse after claiming that TikTok had disengaged from negotiations, opting instead to pursue individual licensing agreements with each Merlin member.

The highly publicized conflict between rappers Kendrick Lamar and Drake captured the attention of hip-hop enthusiasts throughout the year. However, it also raised important questions regarding the future of sampling and copyright in the age of AI. On May 24, the collaboration between Sexyy Red and Drake on the track “U My Everything” featured a sample from a track titled “BBL Drizzy.” This unique case illuminated the complexities of clearing samples that are largely generated by artificial intelligence.

Though complicated sample clearances are commonplace in the music industry, this situation presented a new twist. The original track “BBL Drizzy,” created by comedian King Willonius using the AI platform Udio, gained popularity after being unofficially remixed by Metro Boomin and uploaded to SoundCloud. In an effort to reclaim the narrative, Drake chose to sample Willonius’s original AI-generated creation in “U My Everything,” officially releasing it across all music platforms.

In discussions with Billboard, Willonius and the legal representatives for Metro Boomin, Donald Woodard and Uwonda Carter of Woodward & Carter, explained that they had utilized recent guidelines from the U.S. Copyright Office to navigate this unusual situation. Woodard indicated that the master recording of “BBL Drizzy” is considered “public domain,” allowing it to be used without royalties. However, since Willonius wrote the lyrics to the track, copyright law mandates that he receive credit and compensation for the sample used in “U My Everything.” The focus remains on ensuring recognition for the human contributions within the evolving landscape of AI-generated music.

As the industry continues to grapple with the implications of AI on music creation, this case may serve as a precursor to future regulations that could redefine the process for sampling in a world increasingly influenced by artificial intelligence. The integration of AI into music composition could significantly impact the roles of songwriters and producers.

Hipgnosis, founded by Merck Mercuriadis, transformed the catalog market by elevating music prices and establishing it as a coveted asset class for investors. However, the past two years have been marked by significant turmoil for the company, including a shareholder revolt, an accounting scandal, and intense internal conflicts. Amidst this turmoil, Mercuriadis stepped down from his roles as chairman and CEO of Hipgnosis Songs Management.

Ultimately, Blackstone emerged victorious in the bidding war, acquiring the publicly traded Hipgnosis Songs Fund for an astounding $1.6 billion. This catalog comprises 65,000 copyrights, featuring iconic songs from artists like the Red Hot Chili Peppers, Journey, Shakira, and Neil Young. The acquisition was finalized on July 29, marking a significant shift in the landscape of music publishing and investment.

If anyone claims to have a comprehensive understanding of how performance royalties are calculated, they may be overstating their knowledge. The process, managed by performance rights organizations (PROs), is notoriously complex and has faced long-standing criticism from songwriters and publishers regarding its lack of transparency, especially concerning royalty bonuses for top-tier talent.

In September, the House Judiciary Committee took action by sending a letter to the Register of Copyrights, Shira Perlmutter, urging an examination of PROs. The committee highlighted two critical issues: the proliferation of PROs and their transparency shortcomings. Although the Copyright Office cannot implement immediate changes to PRO operations, such inquiries often signal a growing concern and may lead to future hearings or legislative proposals.

With the attention drawn to issues surrounding PROs, coupled with BMI’s sale to New Mountain Capital, GMR’s escalated rates for hit songs, and the introduction of AllTrack into CISAC as a rights management entity, it’s evident that the future of PROs will be a major point of focus for publishers, songwriters, and licensees as they move into 2025 and beyond.