Music Money Matters: The MLC Audits Streaming Services for the First Time

Hold onto your headphones, music fans, because a major shake-up is happening behind the scenes of your favorite streaming services. The Mechanical Licensing Collective (MLC), the organization responsible for collecting and distributing mechanical royalties for songwriters and publishers in the US, has announced its first-ever audit of all major digital service providers (DSPs). This means companies like Spotify, Apple Music, Amazon Music, and YouTube Music are about to get their financial systems put under the microscope.

But why now?

The MLC was established in 2021 under the Music Modernization Act (MMA), a landmark legislation aimed at streamlining mechanical licensing for the digital age. Prior to the MMA, songwriters and publishers had to negotiate individual licenses with each streaming service, a complex and often unfair process. The MLC’s blanket license simplifies things by allowing DSPs to pay a single fee for the right to stream any song in the MLC’s vast repertoire.

However, with great power comes great responsibility (and the potential for, well, not-so-great accounting). The MLC needs to ensure that DSPs are accurately reporting their streams and paying the appropriate royalties. These audits are a crucial step in holding streaming services accountable and making sure songwriters and publishers get their fair share.

What does this mean for you, the music listener?

While the audits themselves may not directly impact your listening experience, the outcome could have significant downstream effects. More accurate royalty distribution could lead to fairer compensation for creators, which in turn could encourage them to keep making the music we love. It could also help address longstanding concerns about income disparity in the music industry, where a small number of artists capture a disproportionate share of streaming revenue.

So, what’s next?

The MLC has not yet announced a timeline for the audits, but we can expect to see results rolling in over the next few months. As the audits progress, stay tuned for updates and analysis on how this historic event might reshape the music industry for the better.

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