The Mechanical Licensing Collective is part of the Music Modernization Act, which became law on October 11, 2018.
The goal of the Mechanical Licensing Collective is to create and maintain the world’s most thorough database of music composition copyrights and their owners, collect mechanical royalties from digital music streaming services, and transmit those royalties to copyright holders based on the ownership claims.
Streaming services will pay mechanical royalties to the MLC based on the number of streams each song has. Then, it is up to composition copyright holders to enter claims on their songs in order to receive their proper royalty payments.
Currently, digital streaming services file a Notice of Intent (“NOI”) with the Copyright Office whenever they stream a song and cannot track down the copyright owner. This was initially considered more efficient than forcing music users to track down unknown copyright holders. However, with the advancement of digital music services where millions of songs are streamed, the Copyright Office has been overwhelmed with countless NOI filings, all of which represent mechanical royalty payments that song owners will not see.
The MLC takes will negate this by providing a “blanket mechanical license” for digital streaming of music compositions. This license is likely to result in many more payments, which in turn should end up in the hands of the proper copyright owner, due to the master database the MLC intends to create. This will also pertain to digital download services like iTunes.
It is important to note that the MLC pertains only to “interactive” streaming services, such as Spotify, not “non-interactive” internet radio services such as Pandora.
This article was last updated on October 12th, 2018. It should be noted that since the law is new, it will take a few years for the MLC to be fully functional.