Drama inside the Mechanical Licensing Collective (MLC)

Ok, so it is time to get up to speed with everything that has been going on with the newly formed Music Licensing Collective (MLC). The MLC, the government’s newest federal agency, was created due to the passing of the Music Modernization Act (MMA). According to Digital Music News, the MLCs primary function will be 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 set forth in the database. Specifically, streaming services will pay mechanical royalties to the MLC based on the number of streams each song has racked up.”  

With these goals in mind, the members of the MLC set off to make the world a better place for music rights holders. However, the agency has had a turbulent start. The collective was met with raised eyebrows when they requested over $66 million in start-up costs alone. Soon after two of its members reportedly bolted from the organization for unverified reasons. Lastly, Jeff Price, co-founder of the ALMC sent emails basically accusing the MLC of trying to steal money for themselves to the tune of over $1billion. 

MLCs $66 Million startup demand

When Trump signed off on the bill that made the MMA law back in October of 2018 I doubt anyone saw this coming. A whopping $66 million in start-up costs requested by the collective’s members. According to the members of the MLC, this figure represents the most effective and efficient way to run the new collection agency. This figure includes $37.25 million to get off the ground and another $29 million to get through the first year of operations. 

Even if proven true this figure is staggering.

Perhaps more interesting than the money however is who will be left with the bill. Streaming and Tech giants Spotify, Google, Amazon, and Apple will be picking up this hefty tab. This inevitably will lead to yet another conflict in the music streaming world which already looks like the ‘Battle of the Bastards.’ 

Adding more tension to the situation, rumors have begun circulating that major streaming platforms are being asked to withhold streaming mechanical payments to songwriters and publishers in order to fund the MLC. I’m sure artists are loving this.

Two down

In the same week that the MLC made its budget requests, it was reported that two of its members were out. Apparently neither of the departures are related to the budget or internal disagreements. Guess it was just awkward timing. One member is reportedly facing serious health issues while the other was the result of a conflict of interest. 

Regardless the MLC must replace these members and no one knows who or how that will be handled. What we do know however is that it will be heavily impacted by the stipulations and guidelines of the MMA. 

The Jeff Price Emails

In what has been described as “scathing” emails to MLC members and prominent journalist, Price accused the MLC of several questionable and flat out corrupt dealings. The first major accusation is that the MLC is pressuring streaming companies to withhold funds meant for songwriters and publishers to fund their overpriced monster of a collective. He states that in doing this would create major delays in payments to right holders since the MLC isn’t up and running yet. The second and most shocking accusation is that the MLC plans to purposely misappropriate the money and keep it for themselves.

Currently it is projected that streaming platforms are holding between $500M – $1.2B in unmatched royalty payments.

Days later a cease-and-desist from Pryor Cashman partner Benjamin K. Semel was sent to Price.

“This firm represents the Mechanical Licensing Collective (MLC),” the letter begins.  “We write to put you on formal notice of the inaccuracy, impropriety and possible illegality of your public statements about the MLC. We are in receipt of copies of emails that you sent to numerous news outlets and others in which you peddled false and defamatory stories about MLC activities. The defamatory fictions that you are hawking include a baseless and outrageous claim that the MLC attempted to prevent digital streaming services from matching and paying mechanical royalties in order to use the money to fund its operations. To be clear, your stories are entirely false, nor could an informed person reasonably believe otherwise “Such false statements are to the direct detriment of the songwriter and copyright owner communities that the MLC serves. Such attempts to damage the MLC’s reputation and public relations cost the MLC money and divert its resources from other operational tasks …”

Price has yet to respond.

The MLC has its hands full for sure. Regardless however the organization is in the power position as it is backed by the US government. It took a lot for the entity to be formed and it will take even more to bring it down. They are the law of the land as it pertains to mechanical licensing reform, we can only hope that their intentions are pure.