Music Modernization Act Three-Year Review: What Congress Got Right and Wrong

The Music Modernization Act became law on October 11, 2018, and created the Mechanical Licensing Collective to centralize the streaming mechanical royalty system that had previously been a source of mass underpayment to songwriters. By 2021 and 2022, enough operational data existed to evaluate how well the new system actually worked.

What the MMA Was Supposed to Fix

Before the MMA, streaming services operated under a patchwork of mechanical licensing arrangements. They were supposed to license each composition they made available, but the process of identifying who owned what copyright was so complex and the database infrastructure so fragmented that services routinely made recordings available without securing mechanical licenses. The resulting unpaid royalties, sometimes called the "black box," had accumulated into hundreds of millions of dollars by the time the legislation was developed.

The MMA created the Mechanical Licensing Collective as the single centralized entity responsible for receiving streaming mechanical royalties from services and distributing them to rights holders. The theory was straightforward: a single organization with a comprehensive database, funded by the streaming services, would solve the matching problem that had prevented royalties from reaching songwriters and publishers.

According to the Copyright Office's Music Modernization Act resource page, the MLC launched operations on January 1, 2021, and began receiving streaming mechanical royalties from major platforms on a going-forward basis. The historical unclaimed royalties question, addressing the gap between when streaming started and when the MLC launched, was handled through a separate process.

What the Three-Year Data Showed

By late 2022, three operational years of MLC data were available, and the picture was more complicated than the legislation's supporters had projected. The matching rate, meaning the percentage of streaming mechanical royalties that the MLC successfully matched to a rights holder and distributed, was lower than expected.

According to the Wikipedia overview of the Music Modernization Act, one of the ongoing criticisms of the MLC's implementation was the persistence of unmatched royalties in its accounts. Streaming services were delivering royalty payments to the MLC on time and in full. The MLC was receiving the money. But matching those payments to the correct songwriters and publishers required a comprehensive copyright database that was, and continues to be, a work in progress.

Royalty Exchange's mechanical royalty overview documents the practical experience of independent songwriters trying to collect MLC royalties, noting that the match rate varied significantly by how well-registered and documented a songwriter's catalog was before the MLC launched.

What Congress Got Right

The legislation's structural choices were largely correct. Centralizing mechanical licensing in a single entity with mandatory funding from streaming services was the right framework. Before the MMA, mechanical licensing for streaming was effectively voluntary, with services underreporting and underpaying without coordinated enforcement.

The decision to fund the MLC through service contributions rather than songwriter fees was also correct. The problem being solved was a failure of the streaming infrastructure, not a failure of songwriters to register their work. Making services pay to fix the system they had created was the appropriate allocation.

The blanket licensing framework, which allows streaming services to obtain a single license covering all compositions in the MLC's database, was a significant efficiency gain over the prior situation where services theoretically needed individual licenses for each composition.

What Congress Got Wrong

The MLC's governance structure became a point of contention in the years following launch. Major publishers received disproportionate representation on the governing board relative to independent songwriters and small publishers, which created concerns that the matching and distribution methodology would favor large catalog holders.

Additionally, the treatment of unmatched royalties, the money that the MLC could not attribute to specific rights holders within a defined period, was handled through redistribution to matched rights holders rather than held in escrow indefinitely. This meant that correctly matched rights holders received proportionally more of the unmatched pool, which benefited large publishers disproportionately.

Berklee Online's guidance for songwriters preparing for the MMA emphasized the importance of ensuring complete registration before the redistribution process, specifically to avoid having unmatched royalties for your compositions redistributed to other rights holders.

The Registration Imperative

The practical lesson from the three-year MMA review is that songwriter registration quality directly determines royalty collection rates under the MLC system. A song that is registered with accurate metadata, linking the composition's copyright ownership to the correct songwriter identities and publishing entities, will be matched and paid. A song with incomplete or inconsistent registration will generate unmatched royalties that eventually move out of the songwriter's reach.

For independent songwriters, this means the MLC portal should be treated as a required administrative step for every composition, not an optional one. The system is functional for well-registered catalogs. It underperforms for improperly registered ones.

Mollohan Production Inc. and MMA Compliance

Mollohan Production Inc.'s approach to publishing compliance under the MMA framework ensures that all compositions in the MPIArtist catalog are registered and matched through the MLC system. Joshua's awareness of the MMA's operational realities, including the registration quality issue that the three-year review exposed, is part of how From The Stem covers music publishing for working independent artists.

FAQ

Q: What is the Music Modernization Act? The Music Modernization Act, signed into law October 11, 2018, created the Mechanical Licensing Collective and reformed the streaming mechanical licensing system in the United States. It was designed to address the persistent problem of unmatched and unpaid mechanical royalties resulting from the absence of a centralized licensing database. The Copyright Office's MMA page provides authoritative detail.

Q: What is the Mechanical Licensing Collective? The MLC is the organization created by the MMA to receive streaming mechanical royalties from services like Spotify, Apple Music, and Amazon Music, match those royalties to the correct songwriters and publishers, and distribute them. It launched operations on January 1, 2021.

Q: What does "unmatched royalties" mean? When the MLC receives a streaming mechanical royalty payment but cannot determine which songwriter or publisher owns the composition being streamed, those royalties are classified as unmatched. After a defined holding period, unmatched royalties are redistributed to matched rights holders in proportion to their overall share of matched royalties, which disproportionately benefits large catalog holders.

Q: How do I register my songs with the MLC? Visit the MLC portal at the Mechanical Licensing Collective's website and create a songwriter account. Register each composition with accurate metadata including co-writer splits, publisher information, and ISRC or ISWC codes where available. Complete registration is the primary factor determining whether your streaming mechanical royalties are successfully matched and distributed.

Q: Did the MMA succeed in solving the black box royalty problem? Partially. The structural framework it created, centralized matching, mandatory service contributions, and a blanket licensing system, was correct. The execution gaps, particularly around matching rates for independent songwriter catalogs and governance representation, created ongoing issues that the copyright community continued to address through 2022 and beyond.

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