These audits aim to verify the precision of both reported and remitted royalties, going beyond the existing measures implemented by the MLC.
The Mechanical Licensing Collective (MLC) has issued notices of intent to audit all digital service providers (DSPs) operating under its compulsory blanket license since its establishment in 2021.
This encompasses a diverse range of companies involved in licensing music, such as on-demand streaming services (e.g., Spotify, Apple Music, Amazon Music, Tidal, and Deezer), the interactive streaming segment of internet radio companies (e.g., Pandora, Mixcloud, and iHeart Radio), and music apps (e.g., Ultimate Guitar, PianoTrax, and WeavRun).
The audits aim to ensure the precision of reported and remitted royalties, surpassing the existing measures implemented by the MLC.
A spokesperson for the MLC has affirmed its commitment to keeping members informed about the outcomes of any audits conducted on digital service providers (DSPs).
The organization pledges to clearly delineate any funds recuperated through audits in the royalty statements provided to its members.
The authority for the MLC to conduct audits, as well as to undergo audits itself, is outlined in the Music Modernization Act (MMA).
This significant legislation from 2018 introduced a comprehensive blanket license for mechanical rights in musical works, replacing the previous intricate and inefficient song-by-song licensing system that posed challenges for both digital services and the music industry. The outdated piecemeal licensing system led to the accumulation of a $427 million pool in unmatched and unpaid publishing royalties.
The MMA also established the MLC to distribute these royalties, often referred to as “blackbox” royalties, and oversee the implementation of the new blanket license going forward.
The announcement of the MLC’s auditing initiatives comes just a month after Bridgeport Music, the entity representing George Clinton and Funkadelic, chose to exercise its auditing rights with the MLC.
Bridgeport Music is renowned for its assertive stance on copyright enforcement, having previously filed a lawsuit in the early 2000s accusing over 800 artists and labels of infringement.
The company was also a defendant in the controversial Blurred Lines lawsuit, alongside Marvin Gaye’s estate, which is believed to have significantly expanded the scope of elements considered protected under copyright law.
A spokesperson for the MLC clarifies that the decision to issue notices of intent for auditing DSPs was made independently of the developments involving Bridgeport Music.
“Kris Ahrend, CEO of the MLC, emphasizes that ensuring accurate reporting of royalties by DSPs is a statutory responsibility under the MMA. To oversee DSP audits, the MLC has enlisted music industry audit veteran Jane Bushmaker, a member of the MLC’s Analytics & Automation team, and external audit firms with substantial experience in the field.
Alisa Coleman, Chair of the Board of Directors at the MLC, highlights that the MLC’s audit right is a historic first in the 115-year history of the U.S. compulsory mechanical license. This groundbreaking step enhances protection for songwriters and music publishers. The filing of audit notices by the MLC marks the initiation of this crucial function.
Below is a comprehensive list of companies that the MLC intends to audit:
- Amazon Media Venture LLC (AMP)
- Amazon.com Services LLC (Amazon Music)
- Anghami FZ LLC (Anghami)
- Appcompanist, LLC (Appcompanist)
- Apple Inc. (Apple Music)
- Artist Technology Group DBA PANTHR Music (PANTHR Music)
- Audiomack Inc. (Audiomack)
- Avail LLC (The Cover Foundry)
- Beatport LLC (Beatport)
- Bill Graham Archives, LLC (Wolfgang’s Music)
- Boxine GmbH (Tonies)
- Choral Tracks LLC (Choral Tracks)
- Classical Archives, LLC (Classical Archives)
- Da Capo Music, LLC (Yes! Fitness Music)
- Deezer S.A. (Deezer)
- Fan Label, LLC (FanLabel)
- Global Tel*Link Corporation (GTL)
- Google, LLC (Google Play Music/YouTube)
- GrooveFox Inc. (GrooveFox)
- IDAGIO GmbH (Idagio)
- iHeartMedia + Entertainment, Inc. (iHeart Radio)
- M&M Media, Inc. (Trebel)
- Midwest Tape, LLC (hoopla)
- Mixcloud Ltd (Mixcloud)
- MONKINGME S.L. (MonkingMe)
- Music Choice (Music Choice)
- Napster Group PLC (Napster)
- Naxos Digital Services US Inc. (NAXOS)
- Nugs.net Enterprises, Inc. (Nugs.net)
- Pacemaker Music AB (Pacemaker)
- Pandora Media, LLC (Pandora)
- PianoTrax LLC (PianoTrax)
- Power Music, Inc. (Power Music)
- PRIMEPHONIC B.V. (Primephonic)
- Recisio SAS (Karaoke Version)
- Saavn Media Limited (Jiosaavn)
- Securus Technologies, LLC (Securus)
- Slacker, Inc. (Slacker/LiveXLive)
- Smithsonian Institution (Smithsonian Folkways Recordings)
- Sonos, Inc. (Sonos)
- SoundCloud Operations Inc. (Soundcloud)
- Spotify USA Inc. (Spotify)
- TIDAL Music AS (Tidal)
- Transsnet Music Limited (Boomplay)
- TRIBL, LLC (Tribl)
- Ultimate Guitar USA LLC (GuitarBackingTrack.com)
- Weav Music, Inc. (Weav Run)
- XANDRIE USA (QOBUZ)
- Yoto Ltd (Yoto)”
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