The Mechanical Licensing Collective (MLC) Requests $66.25 Million In Funding — Just to Get Started

Spotify Has Lost Nearly $1 Billion In the Past Two Years, Financials Show
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So, how much does it cost to get a mechanical licensing collection agency off the ground?

That would be $37.25 million before the agency opens its doors, and another $29 million to get through the first year.  All in, the as-yet-unformed Mechanical Licensing Collection (MLC) is asking the U.S. Copyright Office to green-light a whopping $66.25 million — just to get off the ground.

That’s a jaw-dropping number — even by unicorn-chasing Silicon Valley standards.  Indeed, that kind of money in such a short time period usually means that investors are looking for a billion-dollar exit.  But in this case, the aim is just to create an agency that collects, processes, and pays mechanical streaming licenses — specifically to US-based publishers and songwriters.

In a proposal made public on Tuesday (September 17th), the major publishers backing the MLC insisted that their estimate was both “efficient” and “effective”.

“The CRB submission is the result of months of research on the most efficient and effective way to run this unprecedented new collective that will serve the needs of both the songwriters and their music publishers as well as the digital music services from Day One,” the group explained.

“The proposed start-up assessment is $37.25 million, with an annual assessment starting at $29 million in 2021, when the MLC commences its blanket licensing operations.”

We’re not sure how much of that $66.25 million will go towards salaries, though we’re expecting a few seven-figure executive positions to emerge.  Already, SoundExchange CEO Michael Huppe is strongly rumored to be advancing towards a big MLC role.  Huppe has been roundly criticized for pulling a salary north of $1 million, despite waning revenues at SoundExchange and a number of chronic payout issues.

The MLC was created by the Music Modernization Act (MMA), which was inked into law by President Trump in October of 2018.

In short order, the proposal backed by major publishers Sony/ATV, Warner Chappell, and Universal Music Publishing Group won the bid to run the MLC, edging out a rival group that ran on a more cost-effective platform.

All of which means the MLC is now in a position to enjoy the spoils.  But one interesting wrinkle is that the U.S. Government won’t be footing this bill — at least not the lion’s share.  Instead, major streaming platforms and tech behemoths like Spotify, Apple, Amazon, Google/Alphabet, and others will pay the modest ‘startup’ fortune.

That sounds like the beginning of another fight, with ‘partners’ like Spotify quickly turning into adversaries once the MMA was passed.  Presently, a consortium of music publishers are battling against Spotify, Amazon Music, Pandora, and Google over the rate that streaming services should pay for mechanicals.

So perhaps this just becomes another battleground.

“We are going to continue to work tirelessly in these CRB proceedings to ensure the tech giants who joined with us to pass the MMA continue that partnership to fully fund the most important piece of the legislation, the entity that will actually implement the requirements of the legislation,” warned MLC Board Chairman Alisa Coleman.

Already, signs of tense relations are surfacing.  Behind the scenes, rumors are swirling that major streaming platforms are being asked by major music publishers to withhold streaming mechanical payments to songwriters and publishers who claim them.  Instead, those payouts would be reallocated towards starting up the $66.25 million MLC machine.

The MLC officially gets started on January 1, 2021.

More as this develops. 



8 Responses

  1. Sam

    A modest ask, despite critics’ claim to the contrary.

    The needs are huge and important: Rate hearing advocacy is extremely expensive, as is assembling and maintaining a never-ending global database that’s never been built before.

    • Anonymous

      “A modest ask”

      Oh god ceaser you run a Welfare tax bracket for rich bros if I ever heard one lol

  2. Esteban

    It would be a lot easier to understand why they need what they say they need if they didn’t black out so many attachments or “exhibits”. What are they hiding? Why shouldn’t songwriters, publishers and overseas songwriters and collectives be able to understand exactly what the plan is. They left in all these real estate agent brochures that all seem to say that they shouldn’t be in an expensive town like Nashville! Maybe they should or shouldn’t spend the money but why hide what’s really going on? They aren’t getting paid until after they launch? How does that work?

  3. $66M Scam In Progress

    What a scam this is. Everyone knows the infrastructure for this already exists. Music Rights, Audiam (SOCAN), even HFA (SESAC) + various others have the backend already built.

    I repeat: this mechanical agency backend is already built and in use processing millions of songs as we speak. Absolute most this clone should be $6M and even that’s a stretch.

    Funny you mention Michael Huppe. Now that’s the ultimate scam artist, Sound Exchange needs to be investigated.

  4. Amanda

    This topic is getting so tired. Can’t we just go back to physical copies? LOL

  5. Dave

    Your contradict yourself.

    If as you write the new MLC is bringing more than a few seven-figure executive salaries, wouldn’t that explain why SX and NMPA and RIAA and others pay — and the market demands — a seven-figure salary?

    By your own logic, the market for execs calls for a salary on this order, still sub-market for DC/NY/LA IP partners at law firms, which is among the competition for these roles.

    Neither would it make sense for Huppe to leave when he just signed a deal, a wise deal unless you want to lose the exec that has led you to *growing* revenues, not your false claim of declining numbers.

    You are purveying gibberish here, but that’s not news, eh? Shame on you.