MLC to Audit Digital Service Providers (DSPs) for Accurate Royalty Reporting

Introduction: A Paradigm Shift in Music Licensing and Distribution

In a groundbreaking move that promises to revolutionize the music industry, the Mechanical Licensing Collective (MLC) has announced its intention to audit all digital service providers (DSPs) operating under the compulsory blanket license it administers. This unprecedented initiative marks a pivotal moment in the history of music licensing, aiming to ensure the accuracy of reported and paid royalties and enhance protection for songwriters and music publishers.

Background: The Music Modernization Act (MMA) and the MLC’s Role

The Music Modernization Act (MMA), enacted in 2018, brought about a transformative change in the music industry’s licensing landscape. It introduced a new blanket license for musical work mechanicals, replacing the outdated song-by-song licensing system that had become cumbersome and inefficient.

The MMA also established the MLC, a non-profit organization tasked with administering the new blanket license and distributing royalties to songwriters, composers, and music publishers. This entity serves as the central hub for collecting and distributing royalties from DSPs based on usage data, addressing the historical issue of unmatched and unpaid publishing royalties.

MLC’s Auditing Authority and Responsibilities: Ensuring Transparency and Accountability

The MLC’s authority to conduct audits and be audited itself is explicitly stated in the MMA, ensuring transparency and accountability in the royalty distribution process. These audits are designed to verify the accuracy of DSPs’ royalty reporting and ensure compliance with the blanket license.

To ensure the utmost rigor and independence, the MLC has appointed Jane Bushmaker, an industry veteran with extensive experience in music industry audits, to oversee DSP audits. These audits will be carried out by qualified external audit firms, adding an additional layer of independence and expertise to the process.

Bridgeport Music’s Independent Audit Request: A Catalyst for Change

The MLC’s decision to initiate audits is independent of Bridgeport Music’s recent exercise of its right to audit the MLC. Bridgeport Music, known for its assertive approach to copyright enforcement, has taken steps to ensure the accurate distribution of royalties to its clients.

The MLC emphasized that its audit plans were not influenced by Bridgeport Music’s actions, reaffirming its commitment to fulfilling its statutory responsibilities under the MMA.

Significance of the MLC’s Auditing Initiative: A New Era of Transparency and Accountability

The MLC’s audits mark a pivotal moment in the history of compulsory mechanical licensing in the United States. For the first time in 115 years, DSPs will be subject to audits, providing enhanced protection for songwriters and music publishers.

This initiative demonstrates the MLC’s commitment to ensuring accurate royalty reporting and safeguarding the rights of music creators. It also sets a precedent for transparency and accountability in the digital music licensing ecosystem.

List of Companies to be Audited by the MLC: Ensuring Widespread Compliance

The MLC’s audits will encompass a comprehensive list of DSPs operating under the compulsory blanket license, including:

1. Spotify
2. Apple Music
3. Amazon Music
4. Tidal
5. Deezer
6. Pandora
7. Mixcloud
8. iHeart Radio
9. Ultimate Guitar
10. PianoTrax
11. WeavRun

These audits will ensure that all DSPs are adhering to the terms of the blanket license and accurately reporting usage data, leading to fair and timely royalty payments to songwriters and music publishers.

Conclusion: A New Era of Fairness and Accuracy in Music Royalty Distribution

The MLC’s auditing initiative marks a watershed moment in the music industry, ushering in a new era of fairness and accuracy in royalty distribution. By holding DSPs accountable for their reporting practices, the MLC is protecting the rights of music creators and ensuring that they receive the compensation they deserve. This move sets a precedent for transparency and accountability in the digital music licensing ecosystem, benefiting songwriters, composers, music publishers, and the entire music community.