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:

Phono I

2008-2012

$0.42m Distributed $0.48m Transferred

Phono II

2013 - 2017

$26.18m Distributed $52.81m Transferred

Phono III

2018 - 2020

$74.05m Distributed $344.38m Transferred

May 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 initially transferred to The MLC (see 37 CFR 210.10(k)). DSPs were also permitted to retroactively adjust the amount of accrued unmatched royalties for uses they transferred to The MLC that took place during the Phonorecords 3 rate period once those rates were finalized by the CRB. (The deadline for DSPs to deliver those Phonorecords 3 adjustments was February 9, 2024.)

Note: DSPs that transferred historical unmatched royalties to The MLC (or subsequently reported adjustments to their initial transfers) were required to certify the accuracy of all of the data they delivered 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 any determination by The MLC that the DSP has met the legal requirements necessary to obtain a limitation on liability under the MMA.

DSP Name	Original Date Transferred	Original Total Transferred	Adjustment	Prior Total Transferred	Phono III Adjustment	Current Total Transferred
Amazon.com Services LLC (Amazon Music)	11-Feb-21	$42,741,507.25	$1,571,916.90	$44,313,424.15	($7,736,175.08)	$36,577,249.07
Apple Inc. (Apple Music)	11-Feb-21	$163,338,890.04	$2,389,000.19	$165,727,890.23	($17,432,542.46)	$148,295,347.78
Aspiro AB (Tidal)*	11-Feb-21	$6,975,425.39	$-	$6,975,425.39	$-	$6,975,425.39
Audiomack, Inc	16-Feb-21	$490,123.23	$-	$490,123.23	$-	$490,123.23
Bill Graham Archives, LLC (Wolfgang's)	12-Feb-21	$18,408.94	$-	$18,408.94	($1,214.35)	$17,194.59
Deezer SA	10-Feb-21	$988,337.55	$-	$988,337.55	($73,051.38)	$915,286.17
Fan Label, LLC (FanLabel)	12-Feb-21	$4,748.00	($1,086.05)	$3,661.95	$-	$3,661.95
Google, LLC (Google Play Music / YouTube)	27-Jan-21	$32,855,221.60	$179,341.97	$33,034,563.57	($2,807,211.85)	$30,227,351.72
iHeart Media + Entertainment, Inc (iHeartRadio)*	12-Feb-21	$1,299,328.30		$1,299,328.30	$-	$1,299,328.30
M&M Media, Inc. (Trebel)*	25-Mar-21	$-	$108,557.43	$108,557.43	$-	$108,557.43
MediaNet, Inc. (GTL)	12-Feb-21	$98,344.79		$98,344.79	($41,737.68)	$56,607.10
Midwest Tape (Hoopla)	12-Feb-21	$278,990.69		$278,990.69	($4,602.12)	$274,388.57
Mixcloud Ltd	11-Feb-21	$13,650.44	$-	$13,650.44	($3,362.58)	$10,287.86
Pacemaker Music AB (Pacemaker)	11-Feb-21	$277.73	$-	$277.73	$-	$277.73
Pandora Media, LLC (Pandora)	12-Feb-21	$12,362,076.88	$-	$12,362,076.88	$2,823,933.93	$15,186,010.81
Recisio SAS (Karaoke-Version)	12-Feb-21	$2,087.18	$-	$2,087.18	$-	$2,087.18
Slacker, Inc. (LiveXLive)*	12-Feb-21	$400,000.00	$525,801.00	$925,801.00	$-	$925,801.00
SoundCloud Operations, Inc.	10-Feb-21	$10,171,725.34		$10,171,725.34	($278,302.85)	$9,893,422.49
Spotify USA Inc. (Spotify)	11-Feb-21	$152,226,039.20	($2,278,587.46)	$149,947,451.74	($3,645,819.10)	$146,301,632.92
Weav Music, Inc. (Weav Run)	11-Feb-21	$12,710.80	$-	$12,710.80	$-	$12,710.80
Xandrie USA, Inc. (Qobuz)	11-Feb-21	$106,893.28	$-	$106,893.28	($1,231.30)	$105,661.98
Total		$424,384,786.63	$2,494,943.98	$426,879,730.61	($29,201,316.82)	$397,678,414.07

*These DSPs did not report adjustments to The MLC, despite the February 9 deadline.

Timeline for Processing Historical Unmatched Royalties

After receiving the data on historical unmatched royalties from DSPs in 2021, 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 early 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 also made the data for remaining unmatched royalties available for Members to search using The MLC’s Matching Tool.

The Copyright Royalty Board (CRB) sets the rates and terms used to calculate the value of these historical unmatched royalties, and these 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).

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.

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

What Phono 3 Adjustments did The MLC receive from DSPs?

The rates for the Phono 3 period were not finalized until August 2023 (due to legal appeals). Because the final rates are different from the interim rates, DSPs that reported interactive streams during the Phono 3 period were required to submit adjustments to the royalties they previously paid by February 9, 2024.

After receiving the adjustments from DSPs, The MLC shared a summary of the adjustments received for the Phono 3 blanket license period (2021-2022) and the Phono 3 historical unmatched period (2018-2020), which can be found here. We also answered some questions about how the performance royalties DSP report to The MLC can impact mechanical royalties, found here.

As a reminder, 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:

Phonorecords III Adjustment Categories - Sized for Website

The MLC plans to distribute these adjusted royalties in stages. The MLC began distributing matched Phono 3 historical royalties (from 2018-2020) in the April 2024 distribution. Next, we plan to distribute previously partially paid matched Phono 3 historical royalties (from 2018-2020). After that, we aim to begin distributing the Phono 3 adjustments to blanket royalties (from 2021-2022) this summer. From there, we will continue to distribute matched Phono 3 historical royalties and adjusted Phono 3 blanket royalties throughout the rest of 2024 and likely into 2025.

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. This includes all data for historical and blanket unmatched uses. All of these remaining unmatched uses are 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. The MMA provides a process by which The MLC must eventually distribute those royalties to copyright owners, but there is no deadline by which The MLC must do so. The MLC has not yet distributed any unmatched royalties, nor has it made any decisions about when in the future it might do so.