Does a Member of The MLC have the right to audit The MLC?
Yes, the Music Modernization Act (MMA) grants rightsholders the right to conduct a formal audit of The MLC to verify the accuracy of royalty payments made to such rightsholder should they wish to do so.
The full MMA provision for Member audits is 17 U.S.C. 115(d)(3)(L), which can be found here.
What information can Members access without conducting a formal audit of The MLC?
The MLC provides unprecedented transparency to its Members. Members can use The MLC’s Public Search tool to check the ownership data for every musical work contained in The MLC’s database. This includes the total percentage of shares of each work that have been claimed, the rightsholders who have claimed those shares and the sound recording products that The MLC has matched to each musical work.
Members can also search the data for every sound recording use reported by DSPs that The MLC has not been able to match to a musical work in The MLC’s database and then propose matches to musical works they have registered with The MLC.
Finally, each month The MLC provides detailed royalty statements to Members receiving royalty payments showing each sound recording product that was matched to a work registered by the Member concerned, the amount of royalties attributable to the uses of that musical work that were reported by DSPs for that month’s usage, and rate sheets detailing how The MLC calculated the per stream (or per download) rate for those royalties. With this data, any rightsholder can conduct a thorough review of the accuracy of their royalty payments at any time.
How does a Member initiate an audit?
A copyright owner initiates an audit of The MLC by filing a Notice of Intent to Audit with the Copyright Office and simultaneously delivering a copy of the notice to The MLC . Delivery of the notice to The MLC can be accomplished via email to MemberAudits@themlc.com, with a copy delivered by mail to The MLC at 333 11th Avenue South, Suite 200, Nashville, TN 37203 ATTN: Member Audit. The notice must identify the period of time to be audited. The Register of Copyrights is directed to publish the notice in the Federal Register within 45 days after receipt.
How often can a Member audit The MLC and for what periods?
A copyright owner can audit The MLC only once per year for any (or all) of the preceding three calendar years. Each year can only be audited once.
Who can conduct the audit?
The audit must be conducted by a qualified auditor, which means an independent, certified public accountant with experience performing music royalty audits. (17 U.S.C. 115(e)(25)).
Who is responsible for the audit costs?
The copyright owner is responsible for the cost of the audit.
What are the possible outcomes of a Member audit?
In case of an underpayment by The MLC, The MLC will pay the underpaid amount to the copyright owner. In case of an overpayment by The MLC, The MLC will debit the copyright owner for the overpaid amount, or the copyright owner can refund the overpaid amounts to The MLC.