Historical Royalties

As part of the Music Modernization Act (MMA), digital service providers (DSPs) were given an opportunity to transfer to The MLC all of their “historical unmatched royalties,” namely U.S. digital audio mechanical royalties that had not been distributed to rightsholders because the DSPs were not able to match and pay to the respective copyright owners.

Under the MMA, DSPs that transferred their historical unmatched royalties to The MLC by February 15, 2021 were eligible for a limitation on liability for certain prior copyright infringement. 21 DSPs elected to transfer their historical unmatched royalties to The MLC according to this provision. These historical unmatched royalties related to streaming activities that took place between 2007 and 2020, before the blanket license administered by The MLC came into effect.

The initial value of the royalties transferred to The MLC was roughly $427 million, but that value subsequently dropped to roughly $398 million following the CRB’s finalization of the rates applicable to the unmatched usages that took place during the Phonorecords 3 rate period and the delivery by DSPs (in February 2024) of adjustments to their initial transfers that take into account those final rates.

While The MLC was awaiting the finalization of the rates for the uses that took place during the Phonorecords 3 period, The MLC began processing the data reported by DSPs for historical unmatched uses that took place during the earlier rate periods. The MLC was able to match many of these older uses that were previously unmatched and, as a result, was able to begin distributing matched historical royalties for uses from those earlier periods in May of 2022.

The CRB finalized the rates for the Phonorecords 3 period in August 2023. Under applicable regulations, DSPs had until February 9, 2024 to deliver their revised usage and adjusted payments for their previously reported Phonorecords 3 usages. The MLC began distributing the first sets of matched historical royalties for uses that took place during the Phonorecords 3 rate period in its April 2024 royalty distribution – only two months after it received the revised data for this period from DSPs. Each distribution of matched historical royalties also includes the associated interest calculated at the rate recommended in the MMA from the time the historical unmatched royalties were transferred to The MLC.

The following graphic shows the final, adjusted amount of the historical unmatched royalties that were transferred by DSPs to The MLC for each CRB rate period, along with the total amount of royalties from each period that The MLC has been able to match and distribute to date to copyright owners: