IP Tech Knowledgy

On July 8, 2019, the U.S. Copyright Office issued a Final Rule designating Mechanical Licensing Collective, Inc. (MCLI) to serve as the Mechanical Licensing Collective (MLC) required under the Music Modernization Act (MMA). The MLC will be the organization responsible for administering blanket licenses to digital service providers (DSPs) to make and distribute digital music deliveries. The blanket license administered by the MLC will replace the existing compulsory licensing structure, under which DSPs, such as Spotify, Apple Music and Tidal, were required to license musical works from copyright owners on a per-work, song-by-song basis.

As we previously reported, the MMA was passed into law on October 11, 2018. After its passage, the U.S. Copyright Office solicited proposals to fill the role of the MLC, and MCLI was chosen over a proposal from the American Music Licensing Collective. In the Final Rule, the Office cited MCLI’s significant advantage in endorsements and broad support from owners of musical work copyrights.

The MLC will begin collecting and paying out royalties under the blanket license on January 1, 2021. Under the MMA, the MLC is required to create a publicly accessible database containing information relating to musical works and the identity and location of the copyright owners of such musical works. To identify copyright owners, the MLC will establish a claiming portal accessible by individual copyright owners through which such owners can establish their entitlement to royalty payments under the blanket license. Royalties will still be collected for licensing musical works in MLC’s database that do not have recorded copyright owners, and the MLC may distribute such unclaimed royalties to the remaining recorded owners based on their relative market share as reported by the DSPs. Accordingly, copyright owners should follow the development of the MLC closely to ensure they will be able to register and receive all royalty payments to which they are entitled.