Mechanical Licensing Collective, Digital Licensee Coordinator Reach Agreement

The Mechanical Licensing Collective (the MLC) and the Digital Licensee Coordinator, Inc. (the DLC) announced today (Nov. 14) an agreement that will allow the MLC to perform critical tasks as directed under the Music Modernization Act (MMA).

The agreement states that the MLC will receive $33.5 million for start-up costs and an initial annual assessment for 2021 of $28.5 million; that the MLC will provide public disclosures, including as to royalty collection and distribution, executive compensation, significant expenses, and projected annual budgets; and the creation of a new budgeting advisory committee comprised of equal numbers of representatives of the MLC and the DLC, which will enhance collaboration in evaluating operating costs.

MLC Board Chair Alisa Coleman and DLC Board Chair James Duffett-Smith offered the following statement upon announcement of the agreement:

“Today’s agreement between the MLC and the DLC represents a landmark achievement for every facet of the music industry. As a result of this accord, the central feature of the Music Modernization Act will be able to commence operations with the resources necessary to help ensure its success.

“Overall, this agreement is a great step forward for all of us within the music community and clearly builds off the tremendous progress we made with the passage the Music Modernization Act. With this phase behind us, we will now continue our work together to finalize the operations and other requirements under the law as we prepare to help songwriters get the royalties they are owed.”

NMPA President & CEO David Israelite said, “The deal struck with the biggest streaming companies in the world to fund the collective’s start up and future operational costs is an important step forward for our industry. The collective is an unprecedented agency serving both songwriters and steaming services so that the entire system works better. We are pleased the digital services met the budgetary requirements to ensure the success of the MLC’s mission. The Music Modernization Act contained ambitious requirements and this agreement will give all parties a good head start on achieving its goals.”

Highlights of the agreement include:

• Funding Agreement Demonstrates a Commitment to Getting Implementation Right
  • The MLC will receive $33.5 million for start-up costs and an initial annual assessment for 2021 of $28.5 million.
  • All costs will be divided up among licensees, with the largest services paying a greater share.
  • Interim financing will be provided for the MLC before formal assessment collections begin in 2021.
• Continued Commitment to Operational Transparency
  • The MLC will provide public disclosures, including as to royalty collection and distribution, executive compensation, significant expenses, and projected annual budgets.
• Collaboration In Evaluating Operating Costs Builds Off Spirit of MMA
  • Creation of new budgeting advisory committee comprised of equal numbers of representatives of the MLC and the DLC that will enhance collaboration in evaluating operating costs.
  • The committee will provide input on future budgets and modifications to the annual assessment going forward.
  • Streamlined budget adjustments and assessment dispute process will limit the need to turn to the Copyright Royalty Board.

Established by the MMA, the MLC is a nonprofit entity designated by the United States Copyright Office to develop and administer a revolutionary mechanical licensing system that will launch on Jan. 1, 2021. The MLC will be responsible for collecting and distributing royalties payable to songwriters and copyright owners by digital music services, and for the creation of a first-of-its-kind, public database that will contain critical copyright information on all musical works.

The DLC is a nonprofit entity designated by the United States Copyright Office to represent the interests of digital music services under the MMA. The founding members of the DLC board are Amazon, Apple, Google, Pandora and Spotify.

For more information, visit themlc.com.