A major component of the recently passed Music Modernization Act is a new entity known as the Music Licensing Collective (or MLC), designed to manage blanket licensing, gather money from streaming platforms, and payout revenue to copyright owner. Here we review some key things songwriters should know before the MLC goes into effect.
Guest post by Bobby Owsinski of Music 3.0
One of the many aspects of the recently passed Music Modernization Act by Congress is what’s known as the Music Licensing Collective, or MLC. This is the new entity that’s going to manage blanket licensing, collect money from streaming services, and pay copyright owners in the future. It’s slated to begin on January 1st, 2021 and will be funded by the streaming music platforms.
What Will The MLC Do?
Songwriters receive two kinds of royalties. Performance royalties are paid to those that are affiliated with a performing rights organization, meaning either ASCAP, BMI, GMR or SESAC.
Mechanical streaming royalties are a different story however. Streaming platforms must license millions of individual songs and there’s no single agency that currently does this job. Right now, music publishers either collect mechanical royalties for a songwriter or they hire a third-party company to collect the royalty for them. The problem is that many self-published songwriters end up paying someone to collect these royalties, or they attempt to do the job themselves, which can be complicated and time-consuming. As a result, many don’t even bother with collecting them at all.
The MLC hopes to remedy that by acting as a one-stop source for easy licensing and collection and distribution of streaming mechanical royalties. The best part is that it’s free – all you have to do is join as soon as it gets going.
What Happens If You Don’t Join?
It’s possible that you’re not getting paid for streams right now because the streaming platforms can’t match the song’s copyright to you as the correct owner. As a result, the royalties are put aside instead of being paid, and this is known as “black box money.” Although there’s no way to know the exact amount, it’s been estimated that there are millions of dollars essentially tied up in limbo in the black box. One of the MLC’s jobs is to match everything up so songwriters and publishers get paid instead of going in the black box.
While now it’s not very easy to find out if you’re owed money, it will be much easier with the new system. There will be one public database that will contain all ownership information that every songwriter and publisher can access. If you’re not getting paid, you’ll be able to check all the copyright information on every song to make sure that it’s correct and make any changes as needed.
Although you’ll still be able to check the public database even if you haven’t registered with the MLC, there’s really no good reason not to do it. It’s the MLC’s job to try to find you and get you paid, but that will be much easier to do if you’re registered (again, it will be free).
That said, the Music Licensing Collective isn’t live yet and won’t be for another year or so. There’s still a lot of work to do and it’s all still in the preliminary stages. It’s worth keeping an eye on though, since it’s a way to ensure that you receive all the streaming mechanical royalties that you have coming to you. You can keep tabs on the latest news here.