The Mechanical Licensing Collective’s Comprehensive Audit Initiative: Upholding Accuracy and Transparency in Digital Music Royalties

A Turning Point for the Music Industry

2024 marks a transformative year for the music industry as the Mechanical Licensing Collective (MLC) embarks on an unprecedented audit campaign of digital service providers (DSPs) operating under its compulsory blanket license. This audacious move underscores the MLC’s unwavering commitment to safeguarding the rights of songwriters and music publishers by ensuring the accurate reporting and payment of royalties in the ever-evolving digital music landscape.

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

The Music Modernization Act (MMA) of 2018 emerged as a catalyst for change, revolutionizing the music industry by establishing a new blanket license for musical work mechanicals, replacing the outdated song-by-song licensing system. This landmark legislation addressed longstanding inefficiencies and complexities that plagued both digital services and the music business, leading to a substantial accumulation of unmatched and unpaid publishing royalties, commonly referred to as “blackbox” royalties.

The MLC, established under the MMA, took on the mantle of distributing these blackbox royalties and administering the new blanket license moving forward. Its mission is to ensure that songwriters, composers, and music publishers receive fair compensation for the use of their works in digital music streaming and other interactive services.

The Significance of Audits: Ensuring Accuracy and Protecting Rights

The MLC’s decision to conduct audits of DSPs is a pivotal step in fulfilling its statutory obligations under the MMA. These audits serve several critical purposes:

Accuracy Verification:

Audits enable the MLC to meticulously verify the accuracy of royalty reports submitted by DSPs, ensuring that songwriters and music publishers receive their rightful compensation.

Compliance Monitoring:

Audits play a crucial role in ensuring that DSPs comply with the terms and conditions of the blanket license, including proper reporting and payment of royalties.

Identifying Discrepancies:

Audits can uncover discrepancies between reported and actual usage data, leading to the identification of unpaid or underpaid royalties.

Enhancing Transparency:

Audits promote transparency and accountability in the digital music ecosystem, fostering trust and confidence among stakeholders.

MLC’s Comprehensive Audit Approach: A Commitment to Excellence

The MLC’s audit process is meticulously designed to be thorough, independent, and effective:

Independent Oversight:

Audits are conducted by experienced outside audit firms, ensuring impartiality and objectivity in the process.

Expert Leadership:

Jane Bushmaker, a seasoned music industry audit veteran and member of the MLC’s Analytics & Automation team, oversees the DSP audits with unwavering dedication.

Extensive Scope:

The audits encompass all DSPs operating under the MLC’s compulsory blanket license, including on-demand streaming services, internet radio companies, and music apps.

Diligent Execution:

Audits are conducted in accordance with generally accepted auditing standards, ensuring the highest level of rigor and accuracy.

Commitment to Songwriters and Music Publishers: Upholding the Rights of Creators

The MLC’s audit initiative underscores its unwavering commitment to protecting the rights of songwriters and music publishers. By ensuring accurate royalty reporting and payment, the MLC safeguards the livelihoods of those who create the music that enriches our lives.

Conclusion: A New Era of Accountability and Transparency

The MLC’s comprehensive audit program marks a new era of accountability and transparency in the digital music industry. As the MLC continues its mission of fairly compensating songwriters and music publishers, the audits serve as a powerful tool to ensure that the rights of creators are upheld and their works are valued.

Full List of Companies the MLC Intends to Audit:

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

And other DSPs operating under the MLC’s compulsory blanket license