Digital Services Question Mechanical Licensing Collective Costs as Funding Remains Up in the Air

Even though the Mechanical Licensing Collective (MLC) has proposed a $29 million annual budget, which is in line with the $30 million that the U.S. Congressional Budget Office projected as part of the process to get the Music Modernization Act (MMA) passed, the digital services which must fund it are dragging their feet on approving that budget, according to sources familiar with the negotiating process.

But the budget isn’t the only issue at stake. Other potential conflict points include the $37.25 million proposed start-up funding; which formula would be used to assess each digital service’s share of such costs; setting a minimum payment that each service should have to pay; and how to ensure transparency in the process.

But one of the selling points in setting up a blanket mechanical license to be administered by the MLC was that it was supposed to save the digital services money. Until now, each digital service had its own way of matching rights holders with sound recordings, usually with the assistance of a service provider like the Harry Fox Agency (HFA) or Music Reports Inc. (MRI). The centralized clearinghouse is supposed to eliminate those duplicate efforts, and thus provide savings, collectively if not individually -- at least in theory.

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Ed Christman - Billboard