The Mechanical License Collective (MLC) is Up & Running and You Need to Sign Up.

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The Mechanical License Collective (MLC) is up and running. The Music Modernization Act of 2018 specifically called for a nonprofit organization designated by the U.S. Copyright Office to collect digital mechanical royalties in the United States. A few years later, the MLC is trying to bridge the gap between technology, collection and royalties. In fact the MMA, specifically states that the only way to receive digital audio mechanical royalties due to songwriters and producers from DSPs pursuant to the compulsory blanket mechanical license is to become a Member of The MLC. The addition of streaming to the music business ecosystem has certainly led to significant change in a short time frame. The MLC is an example of this. Nonetheless, it is important to understand the dynamics and actual mechanics of what the MLC does and how it fits into the publishing and music business ecosystem. Although the collective is very important, just like with other streams of royalty revenue, you need to make sure you are collecting as much as possible.

What Royalty Does the MLC Collect and Pay Out?

The MLC collects and pays out the “streaming” (and digital download) mechanical royalty. A mechanical royalty is generated every time a song is reproduced. In 2021 and beyond reproduction mostly means every time a song is streamed on an interactive streaming platform like Spotify, Amazon Music, Tidal, Apple Music etc, which is what I refer to as the streaming mechanical royalty. Reproduction could also come in the form of a digital download via digital stores such as iTunes or Amazon. Less likely but still applicable, a reproduction could also come from a physical product like a vinyl or CD. The MLC collects and pays mechanical royalties from eligible DSPs (excluding YouTube) within the United States only. Domestic streaming mechanicals (and digital downloads from online music retailers such as as iTunes) are the only mechanical royalties collected by the MLC. The MLC does not collect royalties from the aforementioned physical sales (such as Vinyl, CDs etc).

Who Should Sign Up?

Songwriters and producers who have retained the right to administer any of their own musical works should sign up for the MLC. There has been a bit of confusion for many songwriters and producers on how the MLC will affect their publishing. The biggest thing here is figuring out whether you assigned your publishing administration / collection rights to any entity. Whether you are collecting publishing through admin companies like Songtrust or Kobalt, or bigger publishing companies like Sony ATV, UMPG etc., the musical works which are administered by those parties should be registered with The MLC by that party. Additionally, if you started your own publishing company, you will need to become Members of The MLC in order to register the musical works your publishing entity controls with The MLC, review and update the data for those works, and collect mechanical royalties for those works.

For songwriters and music producers who remain independent but are generating interest from attractive publishers and admin companies alike, the MLC allows you to collect on those domestic streaming mechanical royalties while retaining long term flexibility and ownership. If you are not affiliated with a publisher or admin company, sign up for the MLC as soon as possible. Even if you are affiliated with a publisher or admin company make sure they have your musical works registered with the MLC.

How Does the MLC Fit In The Publishing Puzzle?

The mechanical royalty, in particular, the streaming mechanical royalty is just a piece of the publishing and royalty puzzle. Joining the MLC, does not replace affiliating with a performing rights organization (ASCAP/BMI) in order to receive public performance royalties.

The MLC does not collect or pay out the following royalties:

  • Micro-sync royalties from companies such as YouTube, Facebook or Tik Tok
  • International mechanical royalties
  • Public Performance royalties (ASCAP, BMI etc)
  • Print royalties
  • Non-interactive publishing royalties from platforms such as Pandora, Sirius XM, Spotify Radio, Sonos Radio
  • Digital Performance royalties (Soundexchange)
  • Mechanical royalties from physicals (vinyls, cds, etc)

As you can see, the MLC collects and pays out a rather limited scope of royalties but streaming has become such an important revenue stream in the US that the mechanical royalties the MLC could pay out to a particular songwriter or producer might be significant. Historically (albeit a relative short time-frame), getting domestic streaming mechanical royalties as an independent songwriter or producer could be difficult. The MLC is bridging the game.

Other Notes:

  • There is no cost to become a Member of The MLC. Sign up here. https://portal.themlc.com/login?inactive
  • The MLC does not keep a portion of the mechanical royalties it collects to cover its operating costs. The operational costs of The MLC are paid for by DSPs through an administrative assessment set by the United States Copyright Royalty Board. The MLC distributes 100% of the mechanical royalties it collects.
  • The MLC distributes mechanical royalties on a monthly basis.
  • The MLC also maintains a publicly accessible database containing information relating to musical works (and shares of such works), the identity and location of the copyright owners of such works and the sound recordings in which the musical works are embodied.
  • Remember mechanical royalties are a type of publishing royalty. You only collect mechanicals if you have a publishing share on a song.

Entertainment Attorney l Music Industry Professor at Drexel U, Hip-Hop Professor at Rowan U l Newsletter l Email: kfowlkes@elawandbusiness.com

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