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 these historical unmatched royalties to The MLC by February 15, 2021 were eligible for a limitation on liability for certain prior copyright infringement.

21 DSPs transferred a total of $426.9 million in historical unmatched royalties to The MLC. 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 DSPs completed their delivery of data related to these royalties in the summer of 2021.

The rates and terms used to calculate these royalties are determined by the Copyright Royalty Board (CRB) and vary depending on the year in which the streaming activity took place. The streaming activity for the historical unmatched royalties transferred to The MLC took place during three different rate periods: Phonorecords 1 (2007[1]-2012), Phonorecords 2 (2013-2017) and Phonorecords 3 (2018-2020).

Upon processing the data reported by DSPs on these historical unmatched royalties, we were able to match many of the uses that were previously unmatched. As we match these historical uses to copyright owners, we distribute the associated royalties directly to those identified copyright owners, together with interest from the time the royalties were transferred to The MLC.

The following graphic shows the amount of historical unmatched royalties that were transferred by DSPs to The MLC for each CRB rate period, and how much of that total amount has been matched and distributed to the respective copyright owners:

^[1] Royalties that The MLC received for 2007 through 2012 are covered by rates set forth in Phonorecords 1.

Phono I

2008-2012

$0.42m Distributed $0.48m Transferred

Phono II

2013 - 2017

$25.51m Distributed $52.81m Transferred

Phono III

2018 - 2020

$0.00m Distributed $373.58m Transferred

* The MLC received the revised data and adjusted royalties from DSPs on February 9, 2024. The MLC aims to begin distributing matched historical royalties from the Phono 3 period later this Spring. The MLC expects that process will continue through the end of the year and into 2025.

March 2024

Which DSPs Transferred Historical Unmatched Royalties?

The following table provides information on DSP transfers of historical unmatched royalties to The MLC, as required by the MMA (see 17 U.S.C. 115(d)(10)(B)(iv)(III)(aa)). Where certain conditions are met, the law permits DSPs to retroactively adjust the amount of accrued unmatched royalties they have transferred to The MLC (see 37 CFR 210.10(k)).

Note: DSPs that make transfers (or subsequent adjustments) must certify the accuracy of all of the data they deliver to The MLC. The MLC’s acceptance of transfers, or posting of information on transfers, does not constitute certification or approval by The MLC of the accuracy of any information accompanying any transfer, the validity of any certification, the eligibility of any DSP to make a transfer, or whether a DSP has met the legal requirements necessary to obtain a limitation on liability under the MMA.

DSP Name	Original Date Transferred	Original Total Transferred	Current Total Transferred
Google, LLC (Google Play Music / YouTube)	January 27, 2021	$32,855,221.60	$33,034,563.57
Deezer SA	February 10, 2021	$988,337.55	$988,337.55
SoundCloud Operations, Inc.	February 10, 2021	$10,171,725.34	$10,171,725.34
Amazon.com Services LLC (Amazon Music)	February 11, 2021	$42,741,507.25	$44,313,424.15
Apple Inc. (Apple Music)	February 11, 2021	$163,338,890.04	$165,727,890.23
Aspiro AB (Tidal)	February 11, 2021	$6,975,425.39	$6,975,425.39
Mixcloud Ltd	February 11, 2021	$13,650.44	$13,650.44
Pacemaker Music AB (Pacemaker)	February 11, 2021	$277.73	$277.73
Spotify USA Inc. (Spotify)	February 11, 2021	$152,226,039.20	$149,947,452.02
Weav Music, Inc. (Weav Run)	February 11, 2021	$12,710.79	$12,710.79
Xandrie USA, Inc. (Qobuz)	February 11, 2021	$106,893.28	$106,893.28
Bill Graham Archives, LLC (Wolfgang's)	February 12, 2021	$18,408.94	$18,408.94
Fan Label, LLC (FanLabel)	February 12, 2021	$4,748.00	$3,661.95
iHeart Media + Entertainment, Inc (iHeartRadio)	February 12, 2021	$1,299,328.30	$1,299,328.30
MediaNet, Inc. (GTL)	February 12, 2021	$98,344.79	$98,344.79
Midwest Tape (Hoopla)	February 12, 2021	$278,990.69	$278,990.69
Pandora Media, LLC (Pandora)	February 12, 2021	$12,362,076.88	$12,362,076.88
Recisio SAS (Karaoke-Version)	February 12, 2021	$2,087.18	$2,087.18
Slacker, Inc. (LiveXLive)	February 12, 2021	$400,000.00	$925,801.00
Audiomack, Inc	February 16, 2021	$490,123.23	$490,123.23
M&M Media, Inc. (Trebel)	March 25, 2021	$-	$108,557.43
Total		$424,384,787.62	$426,879,730.88

Timeline for Processing Historical Unmatched Royalties

After receiving the data on historical unmatched royalties from DSPs, The MLC ingested that data and began the work of processing and matching the data to registered musical works. In June 2022, The MLC began distributing matched royalties from the Phonorecords (Phono) 1 and 2 periods. By January 2024, we had matched and distributed more than $25 million in historical royalties to Members from the Phono 1 and 2 periods — more than 85% of the total Phono 1 royalties and more than 45% of the total Phono 2 royalties that DSPs transferred to The MLC. We have also made the data for remaining unmatched royalties available for Members to search using The MLC’s Matching Tool.

The final rates and terms for the Phono 3 period were not finalized by the CRB until August 2023, and DSPs had until February 9, 2024 to submit their adjustments to the final rates to The MLC. We were unable to begin distributing any historical royalties that we had matched from those years until we had received the adjustments. Even while waiting for the final rates and adjustments, we went ahead and attempted to match the uses for this period, and we made the data for any uses we were not able to match available for Members to search using the Matching Tool.

Now that we have received the adjustments from DSPs, The MLC anticipates the distribution of matched royalties from this period will begin in the spring of 2024.

Note: There are 3 different kinds of adjustments that DSPs may need to make related to the Phono 3 rate period (2018-2022). As the following chart illustrates, one kind of adjustment is to be handled directly between DSPs and rightsholders, while the two others require DSPs to deliver their adjustments to The MLC, which will then administer to Members:

Is There Still A “Black Box” of Mechanical Royalties With The MLC?

No, the data on all unmatched uses is posted and available to be searched by Members. As The MLC processes historical unmatched royalties and blanket royalties, we either match and distribute the royalties, or we make information on any remaining unmatched uses available to be searched by Members in The MLC’s Matching Tool. With this unprecedented transparency, The MLC has illuminated the so-called “black box” of streaming mechanical royalties for the first time.

How Can You Play Your Part?

The MLC encourages Members to ensure that they have claimed their shares of any works already registered with The MLC and to register any works that are not yet in The MLC database. More than 40% of blanket royalties that have not been distributed yet relate to shares of registered works that have not yet been claimed by the appropriate rightsholders. Members can look for their unclaimed shares by using The MLC’s Claiming Tool to search for their shares among those works that have been registered but not fully claimed.

Once Members have used the Claiming Tool to find their unclaimed shares, they can use The MLC’s Matching Tool to search for unmatched sound recording uses featuring their songs that have not yet been matched to a registered work in The MLC’s database. Members can then submit proposed matches between those unmatched uses and their registered songs that match to the uses. Once The MLC has reviewed and approved these proposed matches, the submitting Member will receive any royalties The MLC has accrued for those uses as well as royalties for any new uses of those matched products that are reported to The MLC in subsequent months.

What About Historical Unmatched Royalties That Do Not Get Matched or Claimed?

The MLC’s focus now is on matching historical unmatched royalties and distributing the associated royalties to the respective rightsholders. Where uses remain unmatched and unclaimed for more than 3 years, the MMA provides a process to distribute those royalties to all copyright owners based on market share, but there is no deadline by which The MLC must distribute any remaining royalties based on a market share. The MLC has not yet distributed any unmatched royalties via a market share distribution, nor has it made any decisions about when in the future it might do so.

When any unmatched and unclaimed uses are eventually identified as ready for a market share distribution, The MLC will publicize throughout the industry the intended distribution at least 90 days in advance. The MMA further provides at least 50% of royalties that any Member receives from The MLC based on market share must be paid/credited to the respective songwriters in proportion to the contribution of their works to the Member’s market share.