So What Exactly Is The MLC?
Thanks to the Music Modernization Act (MMA) of 2018, there’s a new kid on the block when it comes to getting some of the royalties you’re owed: The Mechanical Licensing Collective, Inc., also known as The MLC. Essentially, The MLC is the new, non-profit organization created and overseen by the U.S. Copyright Office in order to facilitate the information and payments of mechanical royalties here in the U.S. under the new provisions in the MMA. But wait, so how exactly does all this work? What even are mechanical royalties? And most importantly, how does The MLC get me my money? Well, let’s get into it.
Mechanical Royalties
One of the most important things to establish when discussing The MLC is the concept of mechanical royalties. Mechanical royalties are often confused with master or sound recording royalties, however, this is not the case. Mechanical royalties are generated whenever a composition embodied in a sound recording is “mechanically” (digitally or physically) reproduced.
Let’s take a step back to put this concept into perspective. For every piece of music, there are almost always 2 different copyrights associated with the song – the sound recording copyright (the audio files, or physical mediums such as CDs & cassette tapes), and the composition copyright (the underlying lyrics and melody of the song). Royalties generated from the sound recording are typically collected by your label or distributor, whereas royalties generated from the composition are typically collected by your Performing Rights Organization (PRO) and your publishing company, administrator, or entity.
However, one of the areas where these two copyrights overlap is mechanical royalties. Basically, in the early 1900s, the argument came about that since these “sound recordings” (at the time mechanically produced piano rolls, hence the term “mechanical” royalties) had compositions within them, that a small portion of the money generated on the sound recording side should be paid to the owners of the composition copyright since the sound recordings wouldn’t exist without the underlying lyrics and melody of the composition. Congress ultimately agreed, and now we have mechanical royalties to help bridge that gap.
Wendy Day (@rapcoalition) has a helpful little chart that shows some of the services that generate just performance royalties and then some of the services that generate performance and mechanical royalties.
Okay Word, So Then How Does The MLC Factor Into All This?
Until now, there were 2 major organizations here in the U.S. that collected these mechanical royalties and paid them out to your publishing company/administrator/entity – Harry Fox Agency (HFA), and Music Reports (MRI) (there is also a much smaller organization called Medianet that handles digital music platforms for other businesses where some additional mechanical royalties are also generated). However, with the passage of the entire Music Modernization Act (MMA) in 2018, the Musical Works Modernization Act in Title I of the MMA created a new, non-profit organization known as The Mechanical Licensing Collective. One of the main purposes of this new collective is to solve some of the issues with the old system of how mechanical royalties were licensed and paid out.
With the creation of The MLC also came the creation of a new blanket license for digital music providers since there has been such a problem with unclaimed royalties from Digital Service Providers (DSPs) due to the old licensing system. Also, The MLC has been tasked with creating a new and comprehensive database in order to reconcile all the metadata from the sound recording side and the composition side, that way the proper songwriters can get paid correctly and accurately from the proper sound recording that contains their underlying composition.
The U.S. Copyright Office has a very informative YouTube series (playlist below) that easily breaks down all of the information regarding the MMA and The MLC.
So That’s Cool and All, but Why Does This Matter?
While there has been some criticism of the MMA and the MLC (this example below contains some information that is misleading and not entirely accurate),
The information seems to indicate that this will very likely help you get more royalties and more money!
As part of the MMA, streaming services have to pay all unclaimed money to The MLC, where The MLC will then actively work to reconcile the data and pay the unclaimed money to the proper creatives. Plus, there will be new standardized rates for mechanical royalties going forward, which is expected to increase the overall royalty payout rate for mechanical royalties going forward. Essentially, more accurate data + a more inclusive and comprehensive licensing and payout system = more money for you!
So basically, you want to get paid? And get the royalties that you’re owed? Then make sure that all of your data is correct and sign up for an account with The MLC here.
Also, with our publishing administration services here at Gvngaroo Publishing, we make sure that your works are registered properly and accurately with The MLC, as well as every other collection society necessary to make sure you’re getting all of your royalties from all around the globe. Because it’s your money, shouldn’t you be getting all of it?
