The Mechanical Licensing Collective (MLC) has initiated audits of all digital service providers (DSPs) operating under its compulsory blanket license. The audits aim to ensure accuracy in reported and paid royalties, a crucial step in upholding the Music Modernization Act’s (MMA) commitment to a fair and efficient music licensing system.
The MLC, established in 2021 under the MMA, administers the compulsory blanket license for musical work mechanicals. This innovative license replaced the outdated song-by-song licensing system, streamlining the process for both digital services and the music industry. The MMA also empowered the MLC to address the longstanding issue of unmatched and unpaid publishing royalties, commonly referred to as “blackbox” royalties.
As part of its responsibilities outlined in the MMA, the MLC has now taken the significant step of auditing DSPs. The audits go beyond the measures already in place, ensuring transparency and accuracy in royalty reporting. Kris Ahrend, CEO of the MLC, emphasized the importance of this process, stating, “Ensuring DSPs have reported royalties accurately is one of the MLC’s statutory responsibilities under the MMA.”
The audits will be overseen by Jane Bushmaker, a music industry audit veteran and member of the MLC’s Analytics & Automation team. Experienced external audit firms will conduct the audits, adding an extra layer of credibility to the process.
“The MLC’s audit right is a first in the 115-year history of the U.S. compulsory mechanical license and provides enhanced protection for songwriters and music publishers,” noted Alisa Coleman, chair of the board of directors at the MLC. “The audit notices filed by the MLC mark the beginning of its fulfillment of this important function.”
One month prior to the MLC’s announcement, Bridgeport Music, representing George Clinton and Funkadelic, exercised its right to audit the MLC. Bridgeport Music, known for its assertive approach to copyright enforcement, adds an additional layer of scrutiny to the auditing process.
The list of DSPs to be audited includes a diverse array of companies licensing music, such as Spotify, Apple Music, Amazon Music, Tidal, Deezer, Pandora, Mixcloud, iHeart Radio, Ultimate Guitar, PianoTrax, and WeavRun, among others. The MLC has committed to updating its members on the results of these audits and will transparently identify any recovered funds in royalty statements.
Full list of companies the MLC intends to audit:
- Amazon Media Venture LLC (AMP)
- Amazon.com Services LLC (Amazon Music)
- Anghami FZ LLC (Anghami)
- Appcompanist, LLC (Appcompanist)
- Apple Inc. (Apple Music)
- Artist Technology Group DBA PANTHR Music (PANTHR Music)
- Audiomack Inc. (Audiomack)
- Avail LLC (The Cover Foundry)
- Beatport LLC (Beatport)
- Bill Graham Archives, LLC (Wolfgang’s Music)
- Boxine GmbH (Tonies)
- Choral Tracks LLC (Choral Tracks)
- Classical Archives, LLC (Classical Archives)
- Da Capo Music, LLC (Yes! Fitness Music)
- Deezer S.A. (Deezer)
- Fan Label, LLC (FanLabel)
- Global Tel*Link Corporation (GTL)
- Google, LLC (Google Play Music/YouTube)
- GrooveFox Inc. (GrooveFox)
- IDAGIO GmbH (Idagio)
- iHeartMedia + Entertainment, Inc. (iHeart Radio)
- M&M Media, Inc. (Trebel)
- Midwest Tape, LLC (hoopla)
- Mixcloud Ltd (Mixcloud)
- MONKINGME S.L. (MonkingMe)
- Music Choice (Music Choice)
- Napster Group PLC (Napster)
- Naxos Digital Services US Inc. (NAXOS)
- Nugs.net Enterprises, Inc. (Nugs.net)
- Pacemaker Music AB (Pacemaker)
- Pandora Media, LLC (Pandora)
- PianoTrax LLC (PianoTrax)
- Power Music, Inc. (Power Music)
- PRIMEPHONIC B.V. (Primephonic)
- Recisio SAS (Karaoke Version)
- Saavn Media Limited (Jiosaavn)
- Securus Technologies, LLC (Securus)
- Slacker, Inc. (Slacker/LiveXLive)
- Smithsonian Institution (Smithsonian Folkways Recordings)
- Sonos, Inc. (Sonos)
- SoundCloud Operations Inc. (Soundcloud)
- Spotify USA Inc. (Spotify)
- TIDAL Music AS (Tidal)
- Transsnet Music Limited (Boomplay)
- TRIBL, LLC (Tribl)
- Ultimate Guitar USA LLC (GuitarBackingTrack.com)
- Weav Music, Inc. (Weav Run)
- XANDRIE USA (QOBUZ)
- Yoto Ltd (Yoto)
This move aligns with the MLC’s commitment to address the challenges posed by the previous licensing system. The MMA aimed to create a fairer and more efficient environment for both digital services and rights holders. The audits signify a proactive approach to ensuring that all stakeholders receive fair compensation in the rapidly evolving landscape of digital music consumption.
In conclusion, the Mechanical Licensing Collective’s decision to audit DSPs demonstrates a commitment to transparency, accuracy, and fairness in the distribution of royalties. As the music industry continues to adapt to the digital era, these audits mark a pivotal step in ensuring that creators, publishers, and digital service providers operate on a level playing field, ultimately benefiting the entire music ecosystem.
