The MLC’s Comprehensive Auditing Plan: Ensuring Accuracy in Royalty Reporting
A New Era of Accountability in Music Licensing
2024 marks a pivotal moment in music licensing history as the Mechanical Licensing Collective (MLC) embarks on a comprehensive audit initiative. This bold move underscores the MLC’s unwavering commitment to ensuring the accuracy of royalty reporting and safeguarding the rights of songwriters and music publishers.
Background: The Imperative for Change
Prior to the enactment of the Music Modernization Act (MMA) in 2018, the music industry grappled with a complex and inefficient song-by-song licensing system. This fragmented approach resulted in a staggering $427 million pool of unmatched and unpaid publishing royalties.
The MMA brought transformative change with a new blanket license for musical work mechanicals. This reform aimed to streamline licensing and address the challenges of the previous system. Concurrently, the MMA established the MLC as the central entity administering the blanket license and distributing royalties to copyright holders.
The MLC’s Auditing Authority: A Statutory Mandate
The MMA explicitly grants the MLC the authority to audit digital service providers (DSPs) operating under the compulsory blanket license. This provision underscores the importance of ensuring accuracy and transparency in royalty reporting.
Scope of the Audits: Casting a Wide Net
The MLC’s audit net encompasses a diverse range of companies involved in music licensing, including streaming services, interactive streaming services, and music apps. This comprehensive approach reflects the MLC’s determination to ensure accurate royalty reporting across the board.
Objectives of the Audits: Ensuring Integrity and Accuracy
The MLC’s audits have twofold objectives: verifying the accuracy of reported and paid royalties and identifying instances of underpaid or unreported royalties. This proactive approach aims to safeguard the financial interests of songwriters and music publishers.
Transparency and Accountability: A Commitment to Rights Holders
The MLC recognizes the importance of transparency and accountability in its auditing process. It pledges to keep members fully informed of audit results, clearly identifying recovered monies on royalty statements.
A Proactive Approach: Preventing Future Discrepancies
The MLC’s proactive auditing approach is not merely reactive; it aims to prevent future discrepancies and ensure the blanket licensing system’s long-term integrity by addressing potential issues early on.
Conclusion: A New Chapter in Music Licensing
The MLC’s comprehensive auditing plan marks a new chapter in music licensing, characterized by enhanced accountability, transparency, and accuracy. This decisive step towards ensuring fair and equitable royalty distribution reflects the MLC’s commitment to protecting the rights of songwriters and music publishers. As the MLC embarks on this important mission, the music industry can look forward to a more transparent and efficient licensing landscape.