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First Licence Referral pilot 

The First Licence Referral (FLR), otherwise known as the First Licence Refusal process has been reviewed by representatives of both MPA and MCPS management and member publishers. The first recording licence right remains, as enshrined in the Membership Agreement, however the group that undertook this review unanimously agreed that the existing process needs to be improved so that it can:

  1. Minimise any delays or even losses to MCPS members’ royalties
  2. Provide a means for when an MCPS member wishes to prevent an unwanted first release of their work
  3. Reduce the administration involved for members and MCPS

This review identified some key problems within the existing process:

  • ‘Flags’ are currently used in the FLR process and are applied as part of the work registration. These FLR flags are selectively applied by members, but can sometimes be applied incorrectly to the work; i.e., to works that have already been licensed or previously had their FLR flag lifted or removed..
  • MCPS is unable to remove FLR flags unless directly instructed to do so by the relevant member.
  • The existing process does not notify individual licensees quickly enough to prevent an unwanted release. The reasons for this can include:
    o the application for licence being submitted close to or after the release date;
    o the work being registered after release;
    o any delay in the member’s response to the FLR request.
  • Some works have been released on products when FLR flags have not been lifted by all the members concerned. In those circumstances, MCPS was unable to invoice for the work and members’ royalties were subject to the inherent risks and delays caused by subsequent clear-up procedures.
  • The current process provides no protection where a licence application is not submitted by the licensee or the system is circumvented by a licence application to another society.
  • The FLR process doesn’t provide any protection in respect of digital only releases, as processing under the online licence takes place after release, and the licensing relationship is with the digital service provider not the record company

The six month trial of a new FLR process which was approved by the MCPS Board has now come to an end, and an analysis of the trial has been presented to the MCPS Board, who have given their formal approval for the new process to be implemented on a permanent basis from the 1st July 2011.

During the trial the licensing operations team experienced a 40% overall reduction in the number of FLR flags being applied to new registrations. During this period, a total of 1,290 new FLR flags were removed, resulting in £968,000 of physical product royalties being paid through without delay. There were two genuine situations where unwanted first releases were reported by members and these were referred to MCPS Licensing for further investigation and contact with the record company and licensing of those products has been prevented.

A reminder about how the new process will work

The first change that should be noted is that notification of the FLR flag will no longer be via the work registration process. The box for requesting a first licence referral within the OLR application will now be removed. CWR users should note that while the FLR field on CWR will still be within the format, the data will now be ignored at the point of registration in ICE.

The new process will offer members a proactive option to alert MCPS in the event of a potential unwanted first release of one of their works.

If you are aware of such a release and want to exercise your right to refuse the first licence you are now required to send an email to MCPS at flr@mcps.co.uk.

This email should confirm the following information:

  1. contact details
  2. title of the musical work and the writer(s) involved
  3. name of the recording artist and label involved

MCPS will acknowledge receipt and use this information to investigate the specific release. When appropriate, MCPS will inform the record label quickly and in writing that the licence for the planned release will be refused. Any feedback from the label and advice on the next steps will subsequently be provided to the member in question. 

The anticipated benefits of this new process as proved by the 6-month trial are as follows:

  • Faster payment of associated royalties.
  • No invoice delays as a result of FLR flags remaining on works.
  • Helps to support MCPS’ monitoring and enforcement process by informing us of genuine unauthorised releases
 
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