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Mechanical Licensing Collective

By Susan Marquez

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These days, making a living in the music industry can be a challenge, especially for songwriters and composers. Thankfully, there has been a change in U.S. copyright law. The Music Modernization Act of 2018 spurred the formation of a non-profit organization based in Nashville that helps songwriters and composers get the mechanical royalties they are due for certain types of digital uses of music in the United States. 


The Mechanical Licensing Collective (The MLC) collects and distributes royalties directly to the songwriter or composer or through a publisher or an administrator who collects on their behalf. “The Music Modernization Act changed the way digital mechanical licensing in the United States is done,” says Serona Elton, head of The MLC’s Educational Partnerships. “It mandated the creation of a mechanical licensing collective and set the rules about what it does and how it does it.” Serona is also a full-time professor at the University of Miami Frost School of Music,where she is the director of the Music Industry program. She explains some important,sometimes confusing, differences between what The MLC does and what ASCAP and BMI do. “Those organizations collect and distribute performance royalties from uses worldwide. We are focused only on mechanical royalties from digital uses in the United States. We both sit on the song and music publishing side of the business, not on the sound recording and artist side.”


To collect royalties from The MLC, songwriters, and composers must be members of the collective or signed up with a publisher or publishing administrator, who will collect from The MLC on their behalf. “Either way, those royalties are going to run through The MLC,” says Serona. “So, they have to do one or the other, or else they are basically losing the royalty money.” She explains that when there is a stream of a recording on a service like Spotify or Apple Music, that one stream generates three different sets of revenue. One type of money is the public performance royalties for the use of the song that goes to ASCAP and BMI, which they then pay publishers and writers. The second kind that people are familiar with is the revenue money that goes to the record label and the recording artist. The third type is mechanical royalty.

 

Not all kinds of streaming services generate mechanical royalties. “Digital mechanical royalties are generated by audio-only download services and interactive streaming services,” explains Serona. “An interactive service is different from a non-interactive service like digital radio, such as satellite radio or Pandora radio, where the listener can pick the channel or the station, but not exactly what they are going to listen to. On interactive services like Spotify and Apple Music, the listener gets to pick the specific track to listen to, and a stream on those services generates the three different types of revenue.” 


Serona says that songwriters and composers have gotten much more business savvy over timeabout understanding PRO money. “Additionally, without having a deep understanding of the music business, most people intuitively know that recording artists and record labels are paid on streaming,” says Serona. “But less people understand that there is also a mechanical royalty generated, which flows from Spotify to The MLC and then from The MLC to the publisher or publishing administrator, who then pays the songwriter. If a songwriter is acting as their publisher because they have never signed with a publisher and don’t have a publishing administrator, then they need to join The MLC so we can pay them directly.” 

The MLC was formed due to the change in the copyright law. “We are a very new organization but have done a lot of important work in a short amount of time,” states Serona. “Theorganization was first created in the summer of 2019. We spent 2020 building our staff, systems, processes, and member base so we would be ready for the new blanket license becoming available to the digital services on January 1, 2021. When the time came, we were ready to start receiving royalties and matching and paying them. In the year and a half since launching full operations, The MLC has met every milestone set by Congress in the Music Modernization Act and successfully distributed nearly $700 million in blanket royalties to our members.”


The response from songwriters and composers has been good and “really positive. I think we have improved their understanding of this complicated area of the business. It was very difficult to get a clear answer about how to collect this money before The MLC was formed. Now there is greater clarity thanks to our dedicated efforts to educate everyone about what The MLC is and what we do.” 


For more information about The MLC, visit their website at www.themlc.com

 

 

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