Feb 23, 2022 - Business

Major leap for streaming royalties

Music Licensing Collective CEO Kris Ahrend in a headshot

Music Licensing Collective CEO Kris Ahrend. Photo provided by the MLC

The Nashville-based Mechanical Licensing Collective (MLC) is on track to distribute more than $400 million in royalties to songwriters and publishers since its launch, according to its top executive.

Why it matters: The nonprofit MLC's job is to match royalties from on-demand streaming services with the correct copyright owner. It was created by the landmark Music Modernization Act, which President Trump signed into law in 2018.

Driving the news: Streaming services like Spotify and Apple Music were previously on the hook to license songs. But, failures to pay the correct songwriter led to expensive lawsuits.

  • As a compromise, streaming companies agreed to fund the creation of the MLC and support the Music Modernization Act. In exchange, they ceased to be legally liable for such lawsuits.
  • Songwriter advocacy groups, including the Nashville Songwriters Association International, also backed the bill.

Between the lines: Because streaming revenue is now fundamental to the music economy, industry stakeholders have closely watched the MLC's success in paying out royalties.

  • According to its annual report, the MLC has achieved a match rate of more than 87% by using a newly created database and sophisticated software.
  • The MLC is headquartered in Nashville and employs about 80 people. Its membership boasts more than 17,000 copyright holders.

What he's saying: Kris Ahrend, CEO for the MLC, says he's proud "there's been no gap" in making regularly scheduled monthly payments to copyright owners.

  • A major challenge facing the MLC is identifying the correct copyright owners entitled to another approximately $424 million in unmatched royalties that accumulated before the organization was launched.

What's next: Ahrend tells Axios the MLC will successfully pay out those royalties by continuing to get the word out about the organization, signing up members and building out its database.

  • "More members and more data will give us a much greater chance at succeeding in making the connections and paying people that money."

Editor's note: This story has corrected the name of the organization on track to distribute more than $400 million in royalties to the Mechanical Licensing Collective, not the Music Licensing Collective.

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