Apple, Spotify to fund new music royalties collective

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).

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.