The US music industry scored a major legal victory in 2018 when the Music Modernization Act (MMA) was signed into law.
The bill paved the way for a complete overhaul of the licensing framework in the market via the introduction of a blanket mechanical license for digital service providers (DSPs).
What that means in practice is that music streaming services in the United States like Spotify and Apple Music now pay large sums of mechanical royalties to an exclusive administrator – The Mechanical Licensing Collective (MLC).
It’s The MLC’s job to then distribute these royalties, making sure they go to the music publishers, administrators, ex-US CMOs, and self-administered songwriters, composers and lyricists whose songs have been streamed.
“[The MMA] fundamentally changed how DSPs license the music they make available on their platforms and how rightsholders are paid for those uses of their music,” explains Kris Ahrend, CEO of The MLC.
“Prior to the MMA, DSPs had to license the musical works they wanted to use on a song-by-song and share-by-share basis,” adds Ahrend. “But as streaming grew in popularity and more and more music was added to these platforms, DSPs did not do this effectively.”
As a result, notes Ahrend, rightsholders weren’t receiving all the mechanical royalties they’d earned from music usage on streaming services, and those services were in turn accumulating vast sums of unpaid royalties.