2024: The MLC Embarks on a Comprehensive Audit of Digital Service Providers
The Mechanical Licensing Collective (MLC) has initiated a comprehensive audit of all digital service providers (DSPs) operating under the compulsory blanket license administered by the MLC since its inception in 2021. This move is a significant step toward ensuring the accuracy of reported and paid royalties, enhancing transparency, and promoting accountability among DSPs in their dealings with music creators and rights holders.
Unveiling the Scope of Audits: Embracing a Wide Spectrum of Music Platforms
The MLC’s audit plans encompass a diverse range of companies that license music, reflecting the dynamic landscape of the digital music industry. On-demand streaming services such as Spotify, Apple Music, Amazon Music, Tidal, and Deezer will undergo scrutiny, along with interactive streaming services offered by internet radio companies like Pandora, Mixcloud, and iHeart Radio. Additionally, music apps like Ultimate Guitar, PianoTrax, and WeavRun will also be subject to the MLC’s comprehensive review. This broad scope of audits underscores the MLC’s commitment to ensuring fairness and accuracy in royalty distribution across the entire digital music ecosystem.
Addressing Historical Issues and Embracing Modernization: A Transformative Shift
The MLC’s audit initiative is deeply rooted in the Music Modernization Act (MMA), a landmark 2018 law that revolutionized the licensing and distribution of musical work mechanicals. The MMA replaced the outdated song-by-song licensing system, which had become increasingly complex and ineffective for both digital services and the music industry. This obsolete system resulted in a substantial pool of $427 million in unmatched and unpaid publishing royalties, often referred to as “blackbox” royalties.
The MMA established the MLC as the central entity responsible for distributing these accumulated royalties and administering the new blanket license moving forward. The MLC’s audits are a critical step in addressing historical issues related to royalty payments and ensuring the smooth functioning of the new licensing system, thus fostering a more equitable and transparent environment for music creators and rights holders.
Bridgeport Music’s Catalyst Role and the MLC’s Independent Response
The MLC’s decision to conduct DSP audits gained significant attention following Bridgeport Music’s exercise of its right to audit the MLC. Bridgeport Music, known for its assertive approach to copyright enforcement, has a history of taking legal action against alleged copyright infringements. However, the MLC emphasizes that its decision to initiate DSP audits was entirely independent of Bridgeport Music’s actions.
MLC’s Unwavering Commitment: Ensuring Accuracy, Transparency, and Enhanced Protection
The MLC’s CEO, Kris Ahrend, underscores the organization’s statutory responsibilities under the MMA to ensure accurate royalty reporting by DSPs. To spearhead the audit process, the MLC has appointed Jane Bushmaker, a seasoned music industry audit veteran and member of the MLC’s Analytics & Automation team, to oversee the audits. Experienced external audit firms will be engaged to conduct the audits, ensuring a thorough and independent review of DSPs’ royalty payments.
Alisa Coleman, Chair of the MLC’s Board of Directors, emphasizes the significance of the audit process as a first in the 115-year history of the U.S. compulsory mechanical license. This initiative marks a pivotal step in fulfilling the MLC’s mandate to provide enhanced protection for songwriters and music publishers, ensuring they receive fair compensation for their creative works.
Complete List of Companies to be Audited by the MLC
The following is a comprehensive list of companies that the MLC intends to audit:
– Spotify
– Apple Music
– Amazon Music
– Tidal
– Deezer
– Pandora
– Mixcloud
– iHeart Radio
– Ultimate Guitar
– PianoTrax
– WeavRun
Conclusion: A Call for Collaboration and a Brighter Future
The MLC’s comprehensive audit of DSPs is a transformative step toward ensuring accuracy, transparency, and accountability in the digital music industry. This initiative marks a new era of collaboration between DSPs, music creators, and rights holders, fostering a more equitable and sustainable ecosystem where all stakeholders can thrive.
As the MLC embarks on this historic endeavor, we invite all stakeholders to join hands in supporting this critical effort. By working together, we can create a future where music creators are fairly compensated for their works, and music fans can continue to enjoy the transformative power of music without boundaries.