The MLC’s Auditing Initiative: Ensuring Accurate Royalty Reporting in the Digital Music Landscape

In the realm of digital music, where streaming services reign supreme, the Mechanical Licensing Collective (MLC) has emerged as a pivotal force in safeguarding the rights of songwriters and music publishers. Established under the Music Modernization Act (MMA) of 2018, the MLC bears the responsibility of administering mechanical royalties for musical works in the United States. Recognizing the paramount importance of accurate royalty reporting, the MLC has embarked on a comprehensive auditing initiative, aiming to verify the integrity of royalty payments by digital service providers (DSPs) operating under its compulsory blanket license.

Delving into the MLC’s Auditing Mandate

The MLC’s auditing program represents a proactive approach to ensuring that DSPs adhere to the stipulations of the MMA and fulfill their obligations in reporting and paying royalties accurately. This initiative encompasses a diverse spectrum of DSPs, including prominent on-demand streaming services like Spotify, Apple Music, Amazon Music, Tidal, and Deezer, as well as internet radio platforms such as Pandora, Mixcloud, and iHeart Radio. Music apps like Ultimate Guitar, PianoTrax, and WeavRun also fall within the scope of these audits.

By conducting thorough audits, the MLC aims to go beyond existing measures in place to guarantee accurate royalty reporting and payment. This comprehensive approach underscores the MLC’s unwavering commitment to protecting the rights of songwriters and music publishers, ensuring that they receive their rightful compensation for the use of their creative works in the digital realm.

Objectives of the MLC’s Audits: Ensuring Transparency and Accountability

The MLC’s audits are guided by a clear set of objectives, centered around verifying the accuracy of data reported by DSPs regarding the utilization of musical works on their platforms. This entails scrutinizing various factors, including the number of streams, downloads, and other forms of digital consumption, along with the associated royalty rates and calculations. Through these audits, the MLC seeks to uncover any discrepancies or errors in royalty reporting, leading to potential adjustments and the recovery of unpaid royalties for songwriters and music publishers.

Transparency and accountability are fundamental pillars of the MLC’s auditing process. The organization is committed to keeping its members informed about the outcomes of DSP audits, ensuring that any recovered royalties are clearly indicated on the royalty statements provided to members. This transparency fosters trust and confidence among stakeholders, reinforcing the MLC’s dedication to ensuring that creators receive their rightful compensation.

Historical Context: The Music Modernization Act (MMA) – A Catalyst for Change

To fully grasp the significance of the MLC’s auditing initiative, it is essential to delve into the historical context that gave rise to the Music Modernization Act (MMA) of 2018. Prior to the MMA, the mechanical licensing system for musical works in the United States was characterized by a fragmented and inefficient song-by-song licensing process, resulting in a substantial backlog of unmatched and unpaid publishing royalties. The MMA brought about a transformative shift, introducing a new blanket license for musical work mechanicals, effectively replacing the previous piecemeal licensing system.

This blanket license streamlines the licensing process, facilitating the efficient distribution of royalties to songwriters and music publishers for the use of their works in digital formats. The establishment of the MLC as a non-profit organization tasked with administering the blanket license and distributing royalties further solidified the MMA’s commitment to modernizing the mechanical licensing system and addressing the challenges posed by the digital music era.

The MLC: A Guardian of Creators’ Rights in the Digital Age

The MLC’s role in the digital music landscape cannot be overstated. As the administrator of the blanket license, the MLC is responsible for collecting and distributing royalties from DSPs, conducting audits to ensure accurate royalty reporting, and maintaining a comprehensive database of musical works and their associated ownership information. This multifaceted approach ensures that songwriters and music publishers receive their rightful compensation for the use of their creative works in the digital realm.

The MLC’s creation represents a monumental step towards modernizing the mechanical licensing system, addressing the complexities of the digital music era, and safeguarding the rights of creators. Its auditing initiative further underscores the MLC’s commitment to ensuring accuracy, transparency, and accountability in the royalty reporting process, guaranteeing that songwriters and music publishers receive the compensation they deserve for their contributions to the world of music.

Bridgeport Music’s Audit of the MLC: A Bold Move for Transparency

In a notable development that further highlights the importance of the MLC’s auditing initiative, Bridgeport Music, the company representing the legendary George Clinton and Funkadelic, exercised its right to audit the MLC in 2023. Known for its assertive approach to copyright enforcement, Bridgeport Music’s decision to audit the MLC underscores the significance of ensuring accuracy and transparency in the mechanical licensing process.

This move by Bridgeport Music serves as a testament to the industry’s demand for accountability and the need for rigorous oversight to safeguard the rights of creators. It reinforces the critical role of auditing in verifying the accuracy of royalty reporting and ensuring that songwriters and music publishers receive their rightful compensation.

Conclusion: A Collective Effort to Uphold the Integrity of Music Licensing

The MLC’s auditing initiative stands as a testament to the organization’s unwavering commitment to protecting the rights of songwriters and music publishers in the digital music landscape. By conducting comprehensive audits of DSPs, the MLC aims to ensure accurate royalty reporting, identify discrepancies or errors, and facilitate the recovery of unpaid royalties. This proactive approach underscores the MLC’s dedication to transparency, accountability, and the overall integrity of the mechanical licensing system.

The MLC’s efforts, coupled with the industry’s collective responsibility to uphold the highest standards of accuracy and transparency, will ultimately lead to a more equitable and sustainable ecosystem for music creators. As the digital music landscape continues to evolve, the MLC’s auditing initiative serves as a beacon of hope, signaling a brighter future for songwriters and music publishers, where their creative contributions are duly recognized and compensated.