Harry Fox Agency In The Crosshairs
One of the key questions that came up following the reporting on {Spotify’s royalty lawsuit crisis} is the Harry Fox Agency’s role in all of this. HFA, an organization that was set up by the publishers themselves is supposed to be responsible for managing compulsory licensing for the vast majority (though not all) of popular songwriters (remember, HFA is about compositions/publishing, not sound recordings). But it’s beginning to look seriously like HFA just fell asleep on the job and didn’t bother to do the one key thing it was supposed to do for all these music services: file Section 115 NOIs.
So, given that, it sure looks like HFA didn’t do the one thing that it was supposed to be doing all along, and that’s… going to be bad news for someone. The big question is who? All of the lawsuits have been against the various music services, but without being privy to the contracts between HFA and the music services themselves, I’d be shocked if they didn’t include some sort of indemnity clauses, basically saying that if music isn’t licensed because of HFA’s own failures to do its job that any liability falls back on HFA.
And, if that’s the case, HFA could be on the hook for a ton of copyright infringement. If it’s true that it’s basically been ignoring the fairly simple NOI process for a lot of artists, then that’s going to be a major scandal – but one that seems a lot harder to pin on the music services themselves.
Sources {have} pointed to an effort by Music Reports to ‘seize the moment of incompetence‘ at Harry Fox Agency, or HFA, a staunch Music Reports competitor in the mechanical licensing space. As the mechanical licensing agency for Spotify, HFA has been receiving heavy blame for the current Spotify royalty crisis, specifically for failing to send proper paperwork to artists, maintain a robust rights database, or create a system to fix its existing database issues.
The Music Reports ‘claims database’ would offer a possible solution to that mess, at least as it relates to this specific license. More importantly, it would save Spotify from having to build the damn database: according to details tipped to Digital Music News, an out-of-court solution forged by the National Music Publishers’ Association (NMPA) would see Spotify paying a one-time penalty for the non-payments, while also creating an interface for artists that would match all mechanical royalties to their rightful owners. And, share that data back to HFA.
As details of the NMPA resolution emerged, a number of industry executives wondered why Harry Fox would be exonerated, while leveraging Spotify to build its core database. HFA’s former ownership by the NMPA has also drawn criticisms of cronyism, and Apple has already started to move away from the company (and towards Music Reports). Meanwhile, the Agency’s lowball $20 million purchase by SESAC is now being viewed a bit differently: according to some insiders, the soggy price tag carried serious liability costs, the worst of which may lie ahead.
