The Mechanical Licensing Collective (MLC) has issued notifications of its intention to conduct audits on digital service providers (DSPs) that began operating under the compulsory blanket license managed by The MLC in 2021. This auditing initiative covers the period from January 1, 2021, to December 31, 2023, encompassing the initial three years of The MLC’s operations since its establishment through the Music Modernization Act. The MLC, in fulfilling its responsibilities, has sent audit notices to both the United States Copyright Office and DSPs to verify the accuracy of reported usage and royalty payments.
According to the notice, audits provide an additional means for The MLC to ensure the precision of usage reports and royalty payments from DSPs. In its efforts to guarantee accurate reporting, The MLC already scrutinizes monthly usage reports from music streaming services. Members of The MLC will not bear any audit costs, as these will be covered by the organization’s operational budget.
In cases where audits reveal underpayments, The MLC commits to distributing the full recovered amount to affected rights holders, without deducting any audit-related costs or fees. Kris Ahrend, CEO of The MLC, emphasized that accurate royalty reporting by DSPs is a statutory responsibility under the Music Modernization Act. To oversee DSP audits, The MLC has appointed Jane Bushmaker, a music industry audit veteran and member of The MLC’s Analytics & Automation team, and external audit firms will conduct the audits. This audit right is historic, marking the first instance in the 115-year history of the U.S. compulsory mechanical license, providing enhanced protection for songwriters and music publishers. The audit notices filed by The MLC mark the initiation of this vital function.
