The Mechanical Licensing Collective to Audit Digital Service Providers

The Mechanical Licensing Collective (MLC) has announced its intention to conduct audits on all digital service providers (DSPs) operating under the compulsory blanket license administered by the MLC.

Under this audit, on-demand streaming services such as Amazon Music, Tidal, Deezer, and Apple Music, internet radio companies including Pandora, Mixcloud, and iHeart Radio, and music apps like Ultimate Guitar, PianoTrax, and WeavRun will be assessed to ensure the accuracy of reported and paid royalties. These audits go beyond the measures already taken by the MLC.

The MLC, responsible for administering the new blanket license established by the Music Modernization Act (MMA), will keep its members informed on the results of the audits and clearly identify any monies recovered on the royalty statements provided to members.

The landmark MMA, passed in 2018, introduced a new compulsory mechanical licensing system to replace the previous complex song-by-song licensing system. It also addressed the issue of unmatched and unpaid publishing royalties, which had accumulated to a pool of $427 million, often referred to as “blackbox” royalties. The MLC was created to distribute these royalties and oversee the new blanket license.

News of the audits comes a month after Bridgeport Music, representing artists such as George Clinton and Prince, exercised its right to audit the MLC. Known for its aggressive stance on copyright enforcement, Bridgeport Music was involved in the controversial lawsuit against YouTube that influenced the expansion of protected elements under copyright law.

CEO of the MLC, Kris Ahrend, emphasized the MLC’s statutory responsibility to ensure accurate reporting of royalties and introduced Jane Bushmaker, an audit veteran from their Analytics & Automation team, who will oversee the audits conducted by experienced external audit firms.

Alisa Coleman, Chair of the MLC’s board of directors, highlighted that the MLC’s audit right is the first of its kind in the 115-year history of the U.S. compulsory mechanical license and offers enhanced protection for songwriters and music publishers. This marks the beginning of the MLC’s fulfillment of this important function.

The MLC’s target for audits includes popular DSPs and well-known music platforms such as Amazon Music, Tidal, and Apple Music. It also includes internet radio providers like Pandora, Mixcloud, and iHeart Radio, as well as various music apps such as Ultimate Guitar, PianoTrax, and WeavRun.