MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stat Of the Week is supported by music data analytics firm Chartmetric.
Nashville-headquartered non-profit organization The Mechanical Licensing Collective (MLC) just reached a significant milestone.
The org has confirmed that it has exceeded $2 billion in royalties distributed to publishers and songwriters since launching full operations in 2021.
The MLC has come a long way over the past five years. In 2019 it was designated by the United States Copyright Office (USCO) as the entity tasked with licensing and exclusively administering rights after the Music Modernization Act (MMA) was first signed into US law.
It then started to administer blanket mechanical licenses in January 2021 to music streaming services in the United States like Spotify and Apple Music, who have since been required to pay large sums of mechanical royalties to MLC.
The job of the MLC is then to pay these royalties to music publishers, administrators, CMOs outside of the US, and self-administered songwriters, composers and lyricists whose songs have been streamed.
This month, The MLC completed its 36th monthly royalty distribution, every one of which, it said, “has been completed on time or early”.
MLC CEO Kris Ahrend told MBW today (March 27) that this latest distribution, which took the MLC over the $2 billion threshold, “is significant to The MLC as an organization because it shows that the systems and the processes we have built are working effectively, allowing us to fulfill our mission for the benefit of our members.”
He added: “For the songwriters and music publishers we serve, reaching $2 billion in total royalties distributed shows that we are having a significant and positive impact on rightsholders. More rightsholders than ever before are receiving their mechanical royalties, and the amount of those payments is higher than ever.”
The previous distribution update from the MLC arrived in October 2023, when it announced that it distributed $1.5 billion in royalties to publishers and songwriters, which means the MLC’s total payout figure to date has risen by $500 million in the past five months alone.
Kris Ahrend told MBW that “just under $1 billion” (roughly $980 million) in total blanket royalties was processed by the MLC in FY 2023.
This year (2024), the MLC expects its total blanket royalties for the year to exceed $1 billion.
“For the songwriters and music publishers we serve, reaching $2 billion in total royalties distributed shows that we are having a significant and positive impact on rightsholders.”
Kris Ahrend, The MLC
“On top of that we will begin paying out additional royalties as a result of the finalization of the Phono III rates, through a combination of matched historical royalties from 2018-2020 and adjustments to the blanket royalties for uses in 2021 and 2022 for which we previously distributed royalties at the earlier rates,” added Ahrend.
“And while the amount of money we distribute continues to grow, our effective administration rate (i.e., the percentage of the royalties we process that our operating budget represents, which is already under 3%) will only continue to drop, which means that the DSPs required to fund our operating costs are getting an exceptionally good deal.”
Since launching full operations in 2021, the MLC has grown its membership to more than 38,000, many of whom are based outside of the United States.
“We continue to see the number of members outside the United States grow as more and more creators around the world choose to distribute their music in the United States,” Ahrend told us.
He added: “The MMA requires The MLC to conduct extensive outreach activities to ensure that all rightsholders entitled to receive mechanical royalties from the US market are paid properly, so we will continue our efforts to ensure that we are reaching those creators wherever in the world they may be based.”
According to the MLC, it distributes “tens of millions” of dollars in US streaming royalties to rightsholders around the world each year, with members outside of the US representing more than 10 million of the 35 million songs for which The MLC has data in its public database.
“Overall, we’ve essentially doubled the number of songs for which we have data in our database since establishing our database at the end of 2020, and since almost one-third of those works come from members outside the US, we expect to continue to add more data from non-US members just as we are adding more data from our US members,” said Ahrend.
He added: “We have effectively illuminated the “black box” by empowering our Members with several tools that enable them to take actions intended to eliminate the black box. As more rightsholders continue registering their works with The MLC, the influx of data will increase, as will the US mechanical royalties we distribute.”
“We want to be an engaged member of the global music industry, partnering with like-minded organizations that wish to help transform the way the music industry administers rights, while continuing to set new, higher standards for excellence, transparency and service that other similar organizations can emulate.”
Kris Ahrend
The MLC’s global reach now includes more than 100 Collective Management Organizations (CMOs) that represent rightsholders in nearly 130 countries worldwide.
“We are actively building relationships with other CMOs around the world, in order to share best practices with them on a variety of subjects, including matching practices and fraud detection and prevention,” Ahrend explained.
“We have also engaged directly with CISAC, the global organization that represents CMOs, to explore how we can work with them and their members.
“Finally, we have entered into vendor agreements with a number of companies based outside the US to help us fulfill our mission – particularly in the matching area, where several of our new Supplemental Matching Partners are based outside the US.
“Overall, we want to be an engaged member of the global music industry, partnering with like-minded organizations that wish to help transform the way the music industry administers rights, while continuing to set new, higher standards for excellence, transparency and service that other similar organizations can emulate.”
A number of CMOs, as well as publisher representatives, have responded to the news about the MLC hitting the $2 billion distribution milestone.
John Phelan, Director General of the ICMP, the global trade organization representing the music publishing industry, said: “Before you get to covers, remixes and UGC (User Generated Content), the music publishing industry today licenses more than 160 million tracks across several thousand digital audio or AV services and platforms worldwide, spanning every genre and language. Trillions of metadata iterations arise annually. That’s the global business environment The MLC was born into.
“Publishers do so much heavy lifting to ensure all those licenses and data flow as smoothly as they should. CMOs continue to have a critical role in that fluidity, of course, and a feature of The MLC’s work is to ensure ex-US companies’ music gets licensed and paid for via the reciprocal agreements.”
“The MLC is commission-free, has distributed more than $2 billion to rightsholders, has swift dispute mechanisms and is setting very solid standards on transparency internationally – both in terms of its database and auditing.”
Added Phelan: “ICMP’s majors and indies globally continue to feed their metadata into The MLC’s database. The MLC is commission-free, has distributed more than $2 billion to rightsholders, has swift dispute mechanisms and is setting very solid standards on transparency internationally – both in terms of its database and auditing.
”Those are a tribute to the standards being set by Kris and his team at The MLC, how smartly it was co-architected by our American colleagues at NMPA, but also demonstrates that ever better transparency and cost efficiency are vital attributes in what is a fast-evolving digital licensing landscape worldwide.”
A spokesperson from the independent publisher trade body the IMPF said: “Since its formation, The MLC has been at the centre of a significant step forward in making sure that, from self-published songwriters to small and large independent music publishers, including those who exploit their works in the USA, all are properly remunerated. The MLC reflects the mission of IMPF in championing the rights of songwriters and music publishers, and it’s cost effective and transparent operation is a great asset.”
Credit: Garry Jones/PRS For Music
“The MLC has always been a willing partner, working closely with PRS for Music to develop international initiatives which protect creators’ rights and ensure their royalties are paid fairly.”
Andrea C. Martin, PRS for Music
Andrea C. Martin, Chief Executive of the UK-based PRS for Music, said: “PRS for Music and The MLC has a shared belief in the importance of transparency and a common focus on delivering timely and accurate distributions.
“The MLC have always been a willing partner, working closely with PRS for Music to develop international initiatives which protect creators’ rights and ensure their royalties are paid fairly.”
“They have become an invaluable source of data and one of our most significant sources of foreign revenue for SOCAN clients.”
Jennifer Brown, CEO, SOCAN
Jennifer Brown, CEO of Canada’s SOCAN said: “SOCAN has a strong relationship with The MLC. From the outset, their team has demonstrated a level of excellence that has exceeded our expectations and allowed SOCAN to provide value to our clients through regular, clear and transparent communications.
“They have become an invaluable source of data and one of our most significant sources of foreign revenue for SOCAN clients.”
A spokesperson from global publisher, Boa Musica, said: “The MLC’s ability to establish a much needed standardization of rights collection & distribution processes from DSPs has allowed Boa Musica to receive unclaimed digital mechanical royalties that had been pending for a lengthy duration. Its enhanced transparency has also helped us ensure that our partners are receiving accurate & periodical payments for the correct usage of their music. We fully support The MLC’s much noticed push for rightful compensation for songwriters, and we hope to continue witnessing the very welcomed positive effect that this is having within the music industry.”
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