The MLC has paid out $1 billion to songwriters so far

MBW’s Stat Of The Week is a series in which we highlight a single data point that deserves the attention of the global music industry. Stat of the week is powered by Cinq music groupa technology-focused record label, distribution and rights management company.

A bill was signed into US law back in 2018, paving the way for a complete overhaul of the music licensing framework in the market by introducing a blanket mechanical license for Digital Service Providers (DSPs).

This bill, the Music Modernization Act (MMA), led to the designation of the United States Copyright Office (USCO). Mechanical licensing collective (MLC) – an entity charged with licensing and rights management.

What all this means in practice since then is that music streaming services have fallen in the US Spotify And apple music had to pay large sums of mechanical royalties to MLC, which acts as exclusive administrator.

The MLC’s job is to then distribute those royalties to music publishers, administrators, former US CMOs, and self-governing songwriters, composers, and lyricists whose songs were streamed.

In 2022, the MLC’s second year of operation, the organization distributed more than $532.3 million in royalties directly to its members and processed usage covered by voluntary licenses granted by an additional 48 million DSPs million dollars were under management, bringing the MLC’s total royalties for the year to $48 million roughly $580.3 million.

The MLC announced this distribution number in a letter to its members received by MBW this week.

To date, according to MLC, including February 2023, the royalties distributed by MLC have achieved that 1 billion dollars Milestone, including $945.9 million in lump sum royalties and an additional $137.1 million in voluntary royalties.

“Reaching this milestone demonstrates that the processes we built and put in place just two years ago are working effectively and allow us to fulfill our mission of paying rights holders their digital audio mechanics royalties.”

Kris Ahrend, MLC

MBW reached out to the MLC for comment on the milestone. Kris Ahrend, Chief Executive of MLC, said: “Reaching this milestone demonstrates that the processes we built and put in place just two years ago are working effectively and allow us to fulfill our mission of providing rights holders with their digital audio mechanics royalties to pay.”

He added: “It also shows how much we can achieve as an industry when we work together. We are grateful to our members, partners and other stakeholders for contributing.”

Elsewhere in the letter obtained from MBW, the MLC says its current average match rate for the nine distributions completed in 2021 is greater than 90% and its current average match rate for the 12 distributions completed in 2022 is greater than 89%. .

The MLC also addresses the industry’s so-called “black box,” the unpaid royalty pool that rightsholders cannot access due to insufficient data.

The MLC says that for digital audio mechanics in the US, the “black box” emerged before the introduction of the body $426.9 million in unpaid royalties accrued by 21 DSPs between 2007 and 2020.

The MLC adds that it “illuminates this so-called black box” by regularly reporting unpaid royalty data to its members and by making the unpaid royalty data available to members to use tools within the MLC to search and can react to this portal.

Speaking to MBW in December 2021, Kris Ahrend explained that “Members can use the portal to manage their catalogues, register works and access their royalty statements”.

He added: “The portal is also where members can access resources like our new matching tool, which allows them to browse the unrivaled uses of sound recordings we’ve collected and suggest matches to songs, that you have registered with us.”

Commenting on the latest news, Ahrend noted that the MLC “began paying out adjusted historical royalties last June and to date we have paid out more than 20% of the oldest unadjusted royalties for uses that occurred between 2007 and 2017 .” .

He continued, “We expect this percentage to increase significantly over the next few months as we begin our second run on these older uses. We have also already made all the data for the remaining unmatched uses from this period available for our members to search using our matching tool.

“Most of the historically unmatched royalties we’ve received ($373.6 million of $426.9 million) relate to more recent uses that occurred in the last three years before the new blanket license came into effect (2018-2020), and the rates for those uses (Phono Records III) have not yet been finalized by the Copyright Royalty Board (CRB). Once these tariffs are final, the DSPs have 6 months to send the new usage reports and license fees.“

The CRB sets the tariffs managed by the MLC. The 2018-2022 Songwriter Ratings case was fought between the National Music Publishers Association (NMPA) (on the publishers’ side) and the streaming services in a legal showdown dubbed “CRB III.”

These procedures for the five years in between 2018 and 2022, saw the CRB decide to increase songwriter/publisher royalties for streaming and other mechanical uses 10.5% To 15.1% .

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