Mechanical Licensing Collective Receives $424 Million in Unpaid Royalties

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Mechanical Licensing Collective Receives $424 Million in Unpaid Royalties

The Mechanical Licensing Collective (MLC) has officially received $424 million worth of unpaid royalties from digital platforms including Spotify, YouTube, and Apple Music.

Mechanical Licensing Collective higher-ups recently announced the multimillion-dollar unpaid-royalties tranche in a formal release. “A total of 20” digital service providers (DSPs) have transferred unclaimed payments to the MLC “to seek the MMA’s [Music Modernization Act’s] limitation on liability for past infringement.”

Somewhat surprisingly, Spotify forwarded about $11 million less in unpaid royalties to the MLC than Apple Music transferred, at $152,226,039 to $163,338,890, respectively. However, the streaming services’ transfers were decidedly larger than those provided by the 18 other DSPs, with the contributions from Spotify and Apple Music accounting for a combined total of nearly 75 percent of the $424 million tranche.

Amazon Music transferred $42,741,507 worth of unpaid royalties to the Mechanical Licensing Collective, per the release, against $32,855,222 in unclaimed royalties from Google, including for the now-defunct Google Play Music and YouTube. (As an interesting aside, the MLC received Google’s unpaid royalties on Wednesday, January 27th, and the other entities transferred their own unmatched payments no earlier than Wednesday, February 10th.)

SiriusXM’s Pandora followed by providing $12,362,077 in unmatched royalties to the MLC, against $10,171,725 from SoundCloud, $6,975,425 from Tidal, $1,299,328 from iHeartRadio, and $988,338 from Deezer.

The 11 remaining sums were transferred by Audiomack ($490,123), LiveXLive ($400,000), Hoopla ($278,991), Qobuz ($106,893), inmate calling service Global Tel Link ($98,345), Wolfgang’s ($18,409), Mixcloud ($13,650), Weav Run ($12,711), Fan Label ($4,748), Karaoke Version ($2,087) and Pacemaker ($278).

In addition to the $424 million or so in unpaid royalties, the listed DSPs sent the Mechanical Licensing Collective “more than 1,800 data files, which contain in excess of 1.3 terabytes and nine billion lines of data.” Now, the MLC, which rolled out a user portal last year and unveiled the precise location of its offices in October, “can begin the process of reviewing and analyzing the data in order to find and pay the proper copyright owners,” per the text.

The Artist Rights Alliance (ARA) addressed the unmatched-royalties transfer in a formal statement, indicating in part: “Today’s historic transfer of almost half a billion dollars in unmatched royalties to The MLC is a great start – but there’s a lot of work still to be done to get that money to the songwriters that earned it.

“We are grateful to the Copyright Office team that skillfully and doggedly worked through a number of complex issues in the months leading up this transfer, including major disagreements about the proper treatment of past industry settlements.

“In the months ahead we look forward to engaging further with the Office about efforts by publishers who have already been paid for historical usages via settlement agreements to seek double payment out of these new funds.

“As we have told the Office in our prior filings, the major publishers that already settled with digital services and received payment from them should not be allowed to claim a further share of the monies transferred to The MLC today.”

Worth noting in conclusion is that sources informed Digital Music News in late October of 2020 that smaller streaming services were pushing back against their perceived lack of input in the MLC’s development process. Napster was reportedly among the most vocal of these critics, and an additional source specified that the dispute centered in large part on “the fee that is payable by all DSPs whether or not they use the new blanket license.”

This “one-time administrative assessment for the startup phase of the Mechanical Licensing Collective” was due alongside the first annual bill, on Monday, February 15th. And Napster (as well as its previous owner, RealNetworks, and its current owner, MelodyVR) is conspicuously absent from the list of DSPs that have transferred unpaid royalties to the MLC.





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