The Mechanical Licensing Collective, which must be able to administer the new U.S. blanket licensing system for mechanical rights by its legislated start-up date of Jan. 1, 2021, estimates that it will need $37.25 million to build and then have a first year operating budget of $29 million.
Those assessments are part of a proposal outlining the structure of the collective and the funding required to carry out the statutory demands of the Orrin G. Hatch-Bob Goodlatte Music Modernization Act, which created the MLC and the blanket mechanical license. That legislation mandates digital services to fund the operation of the MLC.
The MLC’s proposal was submitted to the Copyright Royalty Board, which has been charged by the Music Modernization Act with assessing how much funding will cost.
“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 MLC said in a statement. “The proposed assessment is the right one under the law, and the budget is very reasonable for digital companies to pay to receive the benefits the blanket license will provide them. The MLC’s operating budget and staff must be capable of comprehensively meeting and executing the extensive requirements and responsibilities of the Collective under the law in less than 15 months from now.”
The amounts requested by the MLC are in line with the amounts it had used in its proposal submission to the U.S. Copyright Office when the MLC group was competing to be chosen to set up the collective. Back then, the group that eventually was chosen by the Copyright Office said it anticipates start-up costs of anywhere from $26 million to $48 million, with an annual operating cost of $25 million to $40 million a year. Moreover, the annual budget is also in line with the $30 million projection made by the Congressional Budget Office as part of the process to ensure the then-pending legislation would be fully funded.
Looking ahead to when the MLC is functioning, “we have a mandate to not just administer the mechanical licensing process, but to improve it, make it more transparent, and to better serve songwriters and publishers of all sizes and around the world,” MLC Board Chairman Alisa Coleman said in a statement.
Coleman added, “We have outlined for the Judges what is necessary to achieve these goals and significantly advance the industry, and to fulfill Congress’ mandate to end the status quo where undisclosed millions of dollars owed to music creators are not paid. 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.”