The Copyright Royalty Board (“CRB”) is empowered under U.S. copyright law to set compulsory mechanical royalty rates to be paid by music users to music publishers and foreign societies for the right to distribute and/or transmit physical and digital phonorecords, ringtones, interactive streams, and limited digital downloads. In the 2008 CRB proceeding, the National Music Publishers’ Association (“NMPA”) requested, and the CRB ruled, that music copyright owners are entitled to collect a late fee of 1.5% per month (18% annually) for late payments of royalties from record companies and other music users (“Late Fees”).

In response to the ruling, NMPA and the Recording Industry Association of America (“RIAA”) entered into a Memorandum of Understanding on November 10, 2009 (“MOU 1”). In April 2012, the parties agreed to extend similar arrangements through at least 2017 (“MOU 2”), and in October 2016, the parties agreed to further extend such arrangements through at least 2022 (“MOU 3”). MOU 3 extends the program (“Late Fee Program” or “Program”) whereby record companies and music publishers, including non-U.S. mechanical collecting societies (“foreign societies”) (music publishers and foreign societies are referred to together herein as “publishers”), will work together to improve mechanical licensing practices and encourage prompt dispute resolution. In exchange for waivers of certain late fees, record companies must comply with the provisions of MOU 3, including paying participating publishers their market share of accrued pending and unmatched royalties.

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MOU 3 applies to pending and unmatched royalties accrued by participating record companies for the distribution of CDs, downloads, ringtones and certain other products in the United States. There are two distribution phases for these royalties:

• Group V, Phase A – pending and unmatched royalties accrued for product released in 2018 and 2019
• Group V, Phase B – pending and unmatched royalties accrued for product released in 2020 through 2022

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Group V is open to NMPA-member music publishers and foreign societies with musical compositions initially distributed by one or more participating record companies in the United States from 2018 through 2022.

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No. If you previously participated, you will be deemed to have opted into MOU 3 by default and are not required to take further action.

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You will need to opt out of MOU 3 on or before July 2, 2018 at 11:59 PM (Eastern Time), which is the close of the opt-in period, by accessing the HFA Agreement Portal and selecting “No” when asked if you want to participate.

To access the HFA Agreement Portal, please visit www.harryfox.com and click “Log into My HFA”. Enter the same email address that received the MOU 3 NMPA Late Fee Program notification. If this is your first time accessing HFA Online, please click the blue “first time here” button to set a password and proceed to your agreements. If this is not your first time accessing HFA Online, enter your password and proceed to the Agreement Portal. Once inside the Portal, you will be instructed on how to opt out of MOU 3.

If you have any questions regarding the process to opt out of MOU 3, please contact HFA, the Program Administrator, at clientservices@harryfox.com.

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You must opt into MOU 3 using the HFA Agreement Portal. To Access the HFA Agreement Portal, please visit www.harryfox.com and click “Log into My HFA”. Enter the same email address that received the MOU 3 NMPA Late Fee Program notification. If this is your first time accessing HFA Online, please click the blue “first time here” button to set a password and proceed to your agreements. If this is not your first time accessing HFA Online, enter your password and proceed to the Agreement Portal. Once inside the Portal, you will be instructed on how to opt into MOU 3.

If you did not receive notification about MOU 3, please contact the Program Administrator at clientservices@harryfox.com.

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You must become a member of the NMPA before you opt into MOU 3. To apply for NMPA membership, please contact NMPA as indicated on the NMPA website (www.NMPA.org).

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No. To participate in Group V distributions, you must join NMPA before you opt into MOU 3.

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Please contact NMPA as indicated on the NMPA website (www.NMPA.org).

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Any person, firm, corporation or partnership that meets the following requirements is eligible for NMPA membership:

• they are actively engaged in the business of publishing music, and
• have been in business for a period of at least one year, and
• are based in or have an office in the U.S.

Election to membership is by approval of the NMPA Board of Directors. Complete applications will be presented to the Board at the first meeting following receipt and processing by NMPA.

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After the close of the opt-in period, each participating publisher will receive a communication from HFA containing (i) instructions on claiming catalogs owned or administered by the participating publisher, (ii) a blank W9 to be completed by the participating publisher, to the extent HFA does not have a current W9 on file, and (iii) a form to direct HFA on how Late Fee payments should be distributed (i.e., payee and direct deposit information).

Once HFA has received the information requested from participating publishers, it will calculate the publisher market share for each participating publisher. As pending and unmatched royalties accrue and are paid by record labels to HFA, payments will be distributed to each participating publisher in accordance with its market share.

Distributions to participating publishers occur approximately once per quarter after the initial bulk payment.

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No. The NMPA, HFA, and their attorneys will not act as legal counsel to any publisher, and should not be relied on for legal advice.

The NMPA strongly encourages all interested music publishers and foreign societies to carefully review (i) MOU 3; (ii) the Overview; and (iii) the Summary of NMPA Late Fee Program Terms – Group V before deciding whether to opt in or opt out. Please note that only MOU 3 and the Final Release are legally binding; the overview and summary documents are not intended to be comprehensive. Each publisher is encouraged to seek independent legal counsel regarding all matters relating to the MOU 3 Late Fee Program.

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The participating record companies have provided and will continue to provide the Program Administrator with records of payments made by the participating record companies to music publishers and foreign societies. In addition, HFA, as Program Administrator, will access its payment data for regular mechanical royalties received from Participating Record Companies and distributed by HFA. Data from the Participating Record Companies and HFA will be used to calculate the relative market shares of publishers who received payments from the Participating Record Companies during that period. The participating publishers’ market shares will be used to determine how the Group V funds will be distributed.

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Participating publishers will have the right to contest the determination of their assigned market share by making a claim to the Program Administrator. The Program Administrator will have sole discretion to revise publisher market share calculations. There will be no right of appeal after the Program Administrator decides whether to revise the participating publisher’s market share.

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Group V, Phase A Bulk Distribution: Second Quarter 2022

Group V, Phase B Bulk Distribution: Second Quarter 2025

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The MOU terminates on December 31, 2022, or such later date that, pursuant to 17 U.S.C. 803(d)(2)(B), the royalty rates and terms set in the most recent mechanical royalty rate-setting proceeding (covering 2018 through 2022) are superseded by successor rates and terms. Certain provisions relating to payment of pending and unmatched royalties by participating record companies for the sale of Group V product after that date will remain in effect past the termination of MOU 3.

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No.

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Yes. The Program Administrator will have the right to audit participating record companies on behalf of participating publishers for the initial bulk distributions and ongoing sales of Group V product, and will be able to examine pending and unmatched accrual rates used by participating record companies with respect to ongoing sales of digital product.

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In consideration for making Group V payments, participating record companies will receive a release from participating publishers for claims arising from the reproduction and distribution of Group V product as to which pending and unmatched royalties have accrued, including claims for nonpayment, late payment and infringement.

The language of the Final Release is included as Attachment 1 of the Summary of NMPA Late Fee Program Terms. Participating publishers agree to be bound by the Final Release when opting into MOU 3. You will be able to review MOU 3 and the Final Release before deciding whether to opt into or opt out of MOU 3. The release is not effective until the participating publisher has received payment based on pending and unmatched royalty accruals for those units under MOU 3. The release will roll forward to cover additional units of product as the participating publisher receives additional payments based on sale of those units.

Additionally, participating publishers must agree to release the parties to MOU 3, including participating record companies, the NMPA, the RIAA, and the Program Administrator for claims relating to the implementation and administration of MOU 3. This release becomes effective upon the participating publisher receiving payments under MOU 3. Please see the Final Release for more details.

In consideration for receiving Group V payments and implementation of the Default Rules and Best Practices, participating publishers agree not to collect certain late fees that would otherwise apply to Group V product pursuant to the Section 115 statutory license or another mechanical license such as a Section 115 variance mechanical license (e.g., an HFA license).

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Yes. Participating Record Companies and Participating Publishers have adopted and may continue to adopt Best Practices and Default Rules to improve communications and clearances. A Best Practices Group, composed of representatives from participating publishers and participating record companies, will oversee implementation of the Best Practices and Default Rules.

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The Program Administrator has not been authorized to address and will not respond to questions relating to how songwriters are paid. We suggest songwriters contact their publishers directly for guidance.

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