The Mechanical Licensing Collective and Digital Licensee Coordinator have reached a deal on funding levels for the organization, which will see the MLC receive $33.5 million for start-up costs and an initial annual assessment for 2021 of $28.5m.
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.
Established by the MMA, the MLC is a nonprofit entity designated by the United States Copyright Office to develop and administer a mechanical licensing system that will launch on January 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 MLC has also agreed to provide public disclosures, including as to royalty collection and distribution, executive compensation, significant expenses, and projected annual budgets.
A new budgeting advisory committee will also be created, 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.
It has also been agreed that a streamlined budget adjustments and assessment dispute process will limit the need to turn to the Copyright Royalty Board.
“Today’s agreement between the MLC and the DLC represents a landmark achievement for every facet of the music industry.”
Alisa Coleman and James Duffett-Smith, MLC
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.”
“This is a watershed moment in music licensing and a win for the entire music community. The agreement between the MLC and DLC highlights the unwavering commitment of the streaming companies to establishing a fully functional MLC that can fulfill its mission.”
Garrett Levin, Digital Media Association
Garrett Levin, CEO of the Digital Media Association (DiMA), issued the following statement today on the historic agreement announced by the Mechanical Licensing Collective Inc. (MLC) and the Digital Licensee Coordinator, Inc. (DLC):
“This is a watershed moment in music licensing and a win for the entire music community. The agreement between the MLC and DLC highlights the unwavering commitment of the streaming companies to establishing a fully functional MLC that can fulfill its mission.
“At the heart of the MMA is the potential to establish a system that works better for songwriters and allows streaming services to continue innovating on behalf of fans and creators.
“The streaming services have been committed to building that better system, which is why we were able to come together and reach this agreement today.”
“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.”
David Israelite, NMPA
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.”
Music Business Worldwide