Spotify, Apple, and other major music streaming services have agreed to fund a new licensing collective created by the Music Modernization Act to collect and distribute so-called mechanical royalties to songwriters and publishers, reports Law360 (a subscription is required to read the entire article).
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The collective will collect royalties from streaming services such as Apple Music and Spotify and distribute the money to songwriters, publishers, and other music copyright holders.The streamers will pay $33.5 million for startup costs and anticipates $28.5 million for costs in 2021, the first year that the Mechanical Licensing Collective (MLC) will be active, the collective and the streamers, represented by a newly designated nonprofit Digital Licensee Coordinator, said in a Nov. 14 statement.
Bloomberg Law says this is a critical step toward ensuring rights holders receive their share of streaming revenue, which now composes 63%of all music revenue, according to the Recording Industry Association of America. The existing system, where streaming services must seek permission from individual rightsholders to use their songs, created a trail of unpaid musicians and lawsuits that left all parties seeking a legislative solution.