Smaller Streaming Services Are Getting Shut Out by the MLC, Sources Say

As the Mechanical Licensing Collective (MLC) continues to build itself, sources have revealed that smaller streaming services are pushing back against their perceived lack of input in the development process.

One source, who asked to remain anonymous, reached out to Digital Music News with word of the troubling behind-the-scenes disputes. Mechanical Licensing Collective officials and smaller digital service provider (DSP) execs have been meeting in a “series of online seminars,” according to the source, who was on hand for at least one of the meetings.

The talks turned contentious when representation for smaller players came up. “It got pretty hot,” a participant said of a recent remote discussion.

Napster was among the most vocal of the attending streaming services, though other, more reserved parties appeared to concur with the criticism.

The firmly worded disapproval covered everything from the MLC’s fee schedule (the MLC unveiled its luxurious, 17,800-square-foot Nashville HQ earlier this month) to its “country club” operational style, including purportedly cultivating a transparent public image while failing to involve smaller streaming services in the decision-making process.

At another point, Napster’s representative bluntly asked MLC higher-ups to name any small DSP that they’d consulted during the planning process.  These individuals were unable to provide even one such name, per our source.

The Mechanical Licensing Collective also said that it would record the meeting and upload footage to the web, the same party told us. At the time of this writing, only other “MLC Week” livestreams had made their way online – a fact that didn’t come as a surprise to the professional who filled DMN in on the matter.

“Probably have a fair amount of editing to do before they want to make it public,” they said of the video.

Additionally, Digital Music News was supplied with a list of executives who were part of recent MLC Zoom call.

It’s not clear who ended up dialing in, though the list of invitees was fairly substantial.  Participants included, but weren’t limited to TIDAL director, business affairs and licensing Justin Joel; Napster SVP and general counsel Matthew Eccles; MLC head of business operations Joya Carmichael; Easy Song Licensing director of operations Timothy Kosel, and Viacom senior counsel, business and legal affairs Cassandra Ching.

Napster didn’t respond to a request for comment in time for publishing.

More as this develops.

3 Responses

  1. Avatar
    Dean Hajas

    While the MLC puts these initiatives into infancy action, there’s an issue of value that requires addressing across the board of membership of the PRO’s – the independent musicians who don’t belong to any organization and to the major label – publisher artists. Currently virtual concerts are shaping up with ticket prices as high as $30 to attend.

    In 2001 the legal definition of Streaming was altered with the Supreme Court rubber stamping the removal of Broadcast and Transmission which employed Performance Royalties. The new legal term of Streaming now is referred to as a $Sale at rates of compensation that no artist / musician / author can live on.

    As Covid has killed a large portion of live venues, artists are switching to full on streaming experiences that all sites are utilizing the term “Broadcast” on the online advertising.

    Listen …the distributors of of metadata Bell Rogers Cogeco Telus Viacom etc are actualizing Billions upon Billions in favour of themselves. The streaming services have no inventive or regulation telling them to increase the Streaming value payout per play ..

    My suggestion is to make all streaming a rate of not less then a penny per play, but much like major labels.. it’s up to the artist – author – creator to determine their asking price value, not the CRB nor any other organization. Independent artists are business for self.. we need to have the right to negotiate our own terms of licensing, bottom line.

    In addition. no PRO should be allowed to register any song without proof of Copyright. Full stop.
    The Gov / sub publishers / streaming sites, all know the loop holes I’m referring to, and I’m here to remind you it’s illegal to circumvent and have insider information at all. The Red Flag – Anti-trust -Money Laundering needs to come to an abrupt ending. I want to address the World Court – WIPO and remind them of their responsibilities that are entrusted. You fail to govern and police the policies and treaties that were agreed to, while attempting to add insult to injury.

  2. Avatar
    WTFF

    Here’s the settlement between the MLC and DLC that establishes the fees payable by DSPs whether or not they use the new blanket license. It was not subject to public comment.

    https://www.federalregister.gov/documents/2020/01/08/2019-28233/determination-and-allocation-of-initial-administrative-assessment-to-fund-mechanical-licensing

    DSPs are legally required to pay a share of the startup costs and 2021 operating budget of the MLC, which add up to $62M. As part of this, DSPs are required to pay a minimum fee upfront of either $10k or $120k depending on whether or not the monthly average of unique sound recordings downloaded/streamed on their service is at least 5,000 tracks. That’s just the minimum – the total assessment is dependent on market share, which is basically unpredictable at this point. And that’s on top of mechanical royalties for those who use the blanket license.

    This could potentially wipe out some small DSPs and will create a barrier to entering the market. The DLC represents the interests of its members (i.e., the big DSPs), and the public had no chance to weigh in on this deal. It’s totally outrageous, unfair and anti-competitive. Something must be done and I hope you’ll continue reporting on this important issue.