The MMA and the MLC Explained

The Music Modernization Act (MMA), signed into law in October 2018, fundamentally reshaped how music publishers and songwriters collect mechanical royalties in the United States. It created the Mechanical Licensing Collective (MLC), a nonprofit entity tasked with administering licenses and distributing royalties for millions of compositions.

What Changed with the MMA

Before the MMA, obtaining mechanical licenses was fragmented and inefficient. If a streaming service wanted to license a composition, they had to negotiate with individual publishers or use the Copyright Office's compulsory license. This system created massive administrative overhead and made it nearly impossible for independent publishers to get properly licensed and paid.

The MMA introduced three major changes. First, it created the Mechanical Licensing Collective, which provides a blanket mechanical license for digital music services like Spotify, Apple Music, and Amazon Music. This means these platforms can now license and pay for all compositions through a single entity rather than negotiating with thousands of publishers individually.

Second, the MMA updated the statutory mechanical royalty rate for streaming and made it more transparent. The rates are now adjusted annually based on the Consumer Price Index. This gives publishers and songwriters greater certainty about what they'll earn.

Third, the MMA introduced the Mechanical Licensing Board, which governs the MLC and sets its policies. This board includes publisher representatives, songwriter representatives, and digital music service representatives, ensuring multiple perspectives in decision-making.

The Mechanical Licensing Collective

The MLC operates as a nonprofit with a mission to license musical compositions, collect data about what songs are being used, and distribute mechanical royalties. When you stream a song, the MLC is the entity that collected the license fee and will eventually distribute your share to the publisher and songwriter.

For this system to work, the MLC maintains a database of compositions and their ownership. Publishers and songwriters can claim their works in the database to ensure they receive payments. However, the MLC's work relies on accurate data, which remains challenging given the sheer volume of compositions and frequent ownership changes.

Benefits and Ongoing Challenges

The MMA has simplified licensing and improved transparency, benefiting digital music services and larger publishers who now deal with one licensing body. Independent publishers gained clearer access to mechanical licenses that were previously unavailable or prohibitively expensive to obtain.

However, challenges remain. The MLC's database is still incomplete, with many compositions unclaimed or incorrectly registered. This means some songwriters and publishers aren't receiving royalties owed to them. Additionally, the transition period created confusion, and smaller independent publishers have had to adapt their workflows significantly.

The MMA and the MLC represent significant progress in modernizing music licensing for the digital age, though the industry continues to refine the system and improve data accuracy.