The MLC's Unprecedented Auditing of Streaming Services

Introduction

In recent news, a seismic shift is occurring in the music industry as The Mechanical Licensing Collective (MLC) takes a groundbreaking step by initiating audits on various digital service providers (DSPs). The spotlight on this development intensifies, especially after Bridgeport Music, representing George Clinton and Funkadelic, issued a notice of intent to audit The MLC.

Background of The MLC Audits

The MLC, since its establishment in 2021, has decided to audit all DSPs operating under its compulsory blanket license. This includes a diverse range of companies, from on-demand streaming services like Spotify and Apple Music to internet radio platforms such as Pandora and Mixcloud. The primary objective of these audits is to ensure the accuracy of reported and paid royalties, augmenting the measures already implemented by The MLC.

Legal Framework: Music Modernization Act (MMA)

The authority for The MLC to conduct audits, and likewise be audited, is rooted in the Music Modernization Act (MMA). Enacted in 2018, the MMA revolutionized the licensing system for musical work mechanicals, replacing the complex and inefficient song-by-song licensing system. The new blanket license not only aimed to streamline the process but also addressed the issue of unmatched and unpaid publishing royalties amounting to $427 million.

Bridgeport Music's Influence

The announcement of The MLC's audit plans closely follows Bridgeport Music's decision to exercise its right to audit The MLC. Notably, Bridgeport Music is recognized for its assertive approach to copyright enforcement, having been involved in high-profile lawsuits in the early 2000s. This move signals a proactive stance in ensuring transparency and accuracy in royalty reporting.

Key Players in the Auditing Process

Kris Ahrend, CEO of The MLC, emphasizes the statutory responsibility under the MMA to ensure DSPs report royalties accurately. To oversee DSP audits, The MLC has appointed Jane Bushmaker, a seasoned music industry audit veteran from the Analytics & Automation team. The audits themselves will be conducted by experienced external audit firms.

Unprecedented Historical Significance

The MLC's audit right marks a historic moment in the 115-year history of the U.S. compulsory mechanical license. This novel approach provides enhanced protection for songwriters and music publishers, reinforcing the commitment to fair and accurate royalty distribution.

Transparency and Communication

The MLC assures its members that the results of DSP audits will be promptly communicated, with clear identification of any recovered monies on royalty statements. This commitment to transparency aligns with the organization's dedication to fostering trust within the music industry.

List of Companies Under Audit

The comprehensive list of companies slated for audit by The MLC includes major players such as Spotify, Apple Music, Amazon Music, Tidal, and many others. The auditing process encompasses a wide spectrum of digital platforms, ensuring a thorough examination of royalty reporting practices.

Companies Under Audit:

1. Amazon Media Venture LLC (AMP)

1. Amazon.com Services LLC (Amazon Music)

1. Anghami FZ LLC (Anghami)

1. Appcompanist, LLC (Appcompanist)

1. Apple Inc. (Apple Music)

1. Artist Technology Group DBA PANTHR Music (PANTHR Music)

1. Audiomack Inc. (Audiomack)

1. Avail LLC (The Cover Foundry)

1. Beatport LLC (Beatport)

1. Bill Graham Archives, LLC (Wolfgang’s Music)

1. Boxine GmbH (Tonies)

1. Choral Tracks LLC (Choral Tracks)

1. Classical Archives, LLC (Classical Archives)

1. Da Capo Music, LLC (Yes! Fitness Music)

1. Deezer S.A. (Deezer)

1. ...and many more.

Conclusion

In conclusion, The MLC's decision to audit DSPs represents a crucial step in the evolution of music licensing. The move not only aligns with the legislative framework provided by the MMA but also sets a precedent for transparency and accountability in the industry.

FAQs: Unveiling Insights

1. Why is The MLC conducting audits now?

   • The audits are in line with the statutory responsibilities outlined in the Music Modernization Act (MMA) to ensure accurate royalty reporting.

2. How will the results of DSP audits be communicated to MLC members?

   • The MLC commits to updating its members on audit results and clearly identifying any recovered funds on provided royalty statements.

3. What prompted Bridgeport Music to audit The MLC?

   • Bridgeport Music's proactive stance aligns with its history of assertive copyright enforcement, reinforcing the need for transparency in royalty reporting.

4. Who oversees the DSP audits conducted by The MLC?

   • Jane Bushmaker, a seasoned audit professional from The MLC’s Analytics & Automation team, will oversee the audits, which will be conducted by external audit firms.

5. How does The MLC's audit right impact songwriters and music publishers?

   • The audit right signifies an unprecedented level of protection for songwriters and music publishers, enhancing trust in the royalty distribution process.