National Music Publishers' Association (NMPA) President/CEO David Israelite

National Music Publishers’ Association (NMPA) President/CEO David Israelite — losing his ‘Industry Consensus’?

Major music publishers like Sony/ATV continue to battle questions over their proposal to lead the Mechanical Licensing Collective, or MLC.

Earlier this week, the highly-influential Recording Academy also withheld its support for the NMPA’s MLC bid, thanks to serious concerns about unfair royalty claims.  Just 24 hours after straddling the fence, however, the Grammy organization sided with the National Music Publisher’s Association and its major label clientele, but not without serious reservations and calls for greater oversight into questionable ‘black box’ claiming procedures.

Behind the scenes, one insider blamed NMPA chief David Israelite for demanding the exclusive support of the Recording Academy, something the Academy initially declined to give.  Accordingly, the Recording Academy wasn’t listed as a supporter on the NMPA’s official MLC submission with the U.S. Copyright Office.

Now, another weighty organization is pushing back against the major publishers — and these guys got cloud.

In a filing submitted by the Digital Media Association, or DiMA, serious concerns were raised about the NMPA’s massive budget demands outlined in its MLC proposal. In particular, the group highlighted “stark substantive contrasts between the two submissions, and in particular between the operation and cost models set forth therein.”

DiMA, which represents major tech giants like Apple, Spotify, Amazon, Pandora, and Google, questioned why the NMPA’s MLC budget was multiples more expensive than that of rival group AMLC.

But DiMA stopped short of endorsing the upstart AMLC, whose operational budget is tiny compared to the NMPA’s proposed outlay.  The tech group, whose members will ultimately be paying for the MLC winner, “has not endorsed, and does not at this time endorse, either entity’s bid to become the Collective, nor has DiMA approved of either proposal submitted to the Copyright Office or any specific statements within those proposals.”

But given that DiMA members will be the ones paying the piper, it’s unsurprising that a resounding NMPA endorsement hasn’t materialized.

By sharp contrast, the NMPA is calling for an MLC staff of 55, while the AMLC says it needs 11 people.  In terms of overhead, the NMPA has called for a budget of between $25-$40 million a year, which multiplies the AMLC’s annual budget of $7-$8 million.

Compared to the AMLC, the NMPA’s proposal starts to look like a boondoggle, with lavishly-paid executives like current SoundExchange CEO Michael Huppe expected to make a windfall off the newly-formed group.  Sources say that Huppe, whose ‘non-profit’ salary at SoundExchange tops $1.4 million, has already been tapped by major publishing executives to play a central role in the NMPA’s MLC org.

But streaming giants like Spotify appear unwilling to support that level of bloat.  “Any such unreasonable costs, to the extent that they are accrued, should be borne by either the collective itself and/or the copyright owners that benefit from the collective,” DiMA flatly declared.

The resounding ‘maybe’ represents another blow to NMPA members like Sony/ATV, Warner/Chappell, Universal Music Publishing Group, Downtown Music Publishing, and Reservoir Media Management, a group that has collectively boasted itself as the ‘industry consensus’ pick.  Instead, the ‘consensus’ vote is now in the hands of the U.S. Copyright Office and Register of Copyrights, who are being urged by both DiMA and the Recording Academy to closely examine both budgetary and black box issues.

David Israelite has not responded to multiple inquiries related to the NMPA’s MLC bid.  Michael Huppe has also declined any comment to DMN.