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MLC and DLC Begin First Re-Designation Process Since MMA Passage

The United States Copyright Office is giving the Mechanical Licensing Collective (MLC) and the Digital Licensee Coordinator (DLC) five-year check-ups with a re-designation process to ensure both are effectively fulfilling their purposes. Though this is the first time the organizations have been through this process, it is a routine occurrence that will take place every five years.

Under the review, both organizations must show compliance with the Music Modernization Act, which was passed in 2018 to replace the old song-by-song licensing system for digital streaming services with a new blanket license for musical work mechanicals. To administer the new blanket license, the MMA called for a mechanical licensing collective to be established.

At that time two entities applied, and the MLC was chosen because it was the only one that fit the MMA’s “endorsement” criteria, which said that the organization chosen as MLC had to have the support of much of the publishers and songwriters affected by the blanket license. The endorsement was meant to be “based on market share” and “measured by applicable licensing revenue.” Among others, the MLC was notably supported by the National Music Publishers Association (NMPA), which represents the major publishers and many of the sizable indie publishers, giving it a robust coalition of support.

Similarly, the Digital Licensee Collector was intended to represent the majority interests of digital music providers affected by the blanket license in matters related to its administration. The DLC was the sole applicant and was supported by the major music streamers and the Digital Media Association (DiMA) trade organization. Both the MLC and DLC assumed their roles in 2019.

The review process will begin with the MLC and DLC writing self-reports about their performances to date as well as developments they are planning in the future.

In their comments, the two organizations will need to address several key points, as mandated by the Copyright Office. Among them: whether they have ample endorsements for their different sectors, whether they have the administrative capabilities necessary to fulfill their roles, how they govern themselves and more. The MLC must also respond to whether it has made progress on implementing the Copyright Office’s suggestions in their ‘Unclaimed Royalties’ report, and the DLC must explain how it has participated in the Copyright Royalty Board.

This self-reporting will be made available for the public. Songwriters, publishers and digital music providers can also submit their feedback about whether or not the MLC and the DLC should continue as they have been. The MLC and the DLC will then be allowed to respond to public submissions. There could also be “informal” meetings between the copyright office and the organizations to address “discrete issues” prior to making the final re-designation determination.

Last June, Congress gave the MMA a five-year review — inviting a number of stakeholders, including the leaders of DiMA and the MLC — to speak to the strengths and weaknesses of the MMA and the MLC. The comments submitted in this proceeding will likely echo some of what was raised at this hearing.

If the MLC or DLC are rejected, the Copyright Office will ask for proposals for new offices that could handle these roles in the Federal Register. But it is not expected for either organization to be replaced.

“We welcome the announcement of the Register of Copyrights commencing the first review of The MLC’s designation as required by the MMA,” says MLC CEO Kris Ahrend about the re-designation. “We are confident that this review will confirm that The MLC continues to meet all of the criteria set out in the MMA, while affording us the opportunity to highlight the many successes our team and our stakeholders have achieved since launching The MLC’s full operations.”

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