Periodic Review of the Designations of the Mechanical Licensing Collective and Digital Licensee Coordinator

Federal RegisterJun 3, 2026

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LIBRARY OF CONGRESS

[Docket No. 2024-1]

Periodic Review of the Designations of the Mechanical Licensing Collective and Digital Licensee Coordinator

AGENCY:

U.S. Copyright Office, Library of Congress.

ACTION:

Notice of continuing designation.

SUMMARY:

The U.S. Copyright Office, as required by the Music Modernization Act, has completed its first periodic review of the existing designations of the mechanical licensing collective and digital licensee coordinator and has determined that both designations should be continued.

DATES:

Effective June 3, 2026.

FOR FURTHER INFORMATION CONTACT:

Rhea Efthimiadis, Assistant to the General Counsel, by email at

USCOGeneralCounsel@copyright.gov

or telephone at (202) 707-8350.

SUPPLEMENTARY INFORMATION:

I. Introduction

Prior to the passage of the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (“MMA”) in 2018, there was “a widespread perception that our [music] licensing system [was] broken,”

especially as “music copyright and licensing laws [were] too difficult to comply with and d[id] not adequately reward the artists and professionals responsible for creating American music.”

The cornerstone of the MMA's reforms was the creation of the new section 115 statutory blanket license. To administer this license, the MMA provided for the establishment of a “mechanical licensing collective,” a new entity that could centralize the collection and distribution of blanket license royalties and establish and maintain a publicly accessible database of musical works, their owners, and the sound recordings in which the musical works are embodied.

U.S. Copyright Office,

1 (2015),

https://www.copyright.gov/policy/musiclicensingstudy/copyright-and-the-music-marketplace.pdf.

Report and Section-by-Section Analysis of H.R. 1551 by the Chairmen and Ranking Members of Senate and House Judiciary Committees, at 1 (2018) (“Conf. Rep.”),

https://www.copyright.gov/legislation/mma_conference_report.pdf.

A “musical work” is “a song's underlying composition along with any accompanying lyrics” and a “sound recording” is “a series of musical, spoken, or other sounds fixed in a recording medium, such as a CD or digital file, called a `phonorecord.'”

What Musicians Should Know about Copyright,

U.S. Copyright Office,

https://www.copyright.gov/engage/musicians/

(last visited May 26, 2026); 17 U.S.C. 101.

The MMA directs the Register of Copyrights (“Register”) to designate an entity as the “mechanical licensing collective”; it also allows, but does not require, the Register to designate a “digital licensee coordinator” to coordinate the activities of digital music providers (“DMPs”).

The Register is required to revisit these designations every five years. In July 2019, the Register made her initial designations; designating the entity “Mechanical Licensing Collective” (“MLC”) as the statutory mechanical licensing collective and the entity “Digital Licensee Coordinator, Inc.” (“DLC”) as the statutory digital licensee coordinator.

17 U.S.C. 115(d)(5)(B);

see also

37 CFR 210.23 (discussing the designation of the MLC and DLC). In this notice, the currently designated digital licensing coordinator will be designated as the “Digital Licensing Coordinator” or “DLC” and the statutory digital licensing coordinator will be designated in lowercase. Similarly, the currently designated mechanical licensing collective will be designated as the “Mechanical Licensing Collective” or “MLC” and the statutory mechanical licensing collective will be designated in lowercase.

Despite general optimism that the MMA's reforms would improve the section 115 license, some made the point that “once the bill is signed the real hard work begins,” especially as “build[ing] an industry-wide, comprehensive public database that will match compositions to recordings [would be] an ambitious undertaking that has yet to be successfully completed in past industry attempts.”

From its initial designation until it began operations, the MLC had the formidable task of ensuring that it had all administrative and technological capabilities in place to open for business on the statutory “license availability date” of January 1, 2021. This included establishing a governance structure, including bylaws, Board membership, committee membership, policies, procedures, practices, and guidelines, and building out technological services, including establishing a musical works database, claiming portal, and payment and other financial processes. It also had to hire staff, construct physical space, engage in outreach and education, and invest in vendors, to fulfill its statutory duties.

The MLC completed all these tasks and made its first royalty distribution, on time, in April 2021.

Ed Christman,

President Trump Signs Music Modernization Act Into Law With Kid Rock, Sam Moore As Witnesses,

Billboard (Oct. 11, 2018),

https://www.billboard.com/pro/president-trump-signs-music-modernization-act-law-bill-signing/.

17 U.S.C. 115(d)(3(C).

In January 2024, the Copyright Office initiated the first five-year review of the MLC's and DLC's designations. The Office issued a Notification of Inquiry (“NOI”) seeking public comment on whether the existing designations should be continued, subject to certain statutory criteria.

The goal is to evaluate the efforts the MLC and DLC have made to realize Congress's vision of improved efficiency, transparency, and fair administration of the section 115 statutory blanket license.

89 FR 5940 (Jan. 30, 2024) (“NOI”).

As discussed in detail below, the Register has determined that the current designations for the entities operating as the digital licensee coordinator and mechanical licensing collective should be continued. Overall, the administration of the MMA's blanket mechanical license has been a great success for publishers, songwriters, and DMPs. The MLC has compiled ownership data for more than 53 million works, increased its membership to over 80,000 copyright owners,

and improved the ratio of total royalties matched to royalties reported to approximately 92%.

It has also implemented many of the Office's recommendations of best practices to effectively identify and locate copyright owners with unclaimed royalties of musical works, encourage copyright owners to claim accrued royalties, and ultimately reduce the incidence of unclaimed royalties.

One of the MLC's most important success metrics is its distribution of approximately $3.9 billion in royalties, constituting a reliable and significant income source for songwriters and publishers.

The MLC Quarter Note: Q1 2026,

MLC,

https://emails.themlc.com/the-mlc-quarter-note-q1-2026

(last visited May 26, 2026).

Blanket Royalties,

MLC,

https://www.themlc.com/blanket-royalties

(last visited May 26, 2026).

See

U.S. Copyright Office,

Unclaimed Royalties: Best Practice Recommendations for the Mechanical Licensing Collective

(2021) (“

Unclaimed Royalties Report”

https://www.copyright.gov/policy/unclaimed-royalties/unclaimed-royalties-final-report.pdf.

While most commenters expressed satisfaction with the MLC and DLC, some suggested ways that the designees could improve their respective services. In some cases, these comments reflected non-pervasive or nascent areas of concern. In others, they offered immediate opportunities for improvement. The Office appreciates the opportunity to work with both designees to appropriately address the suggestions and concerns. While the MLC and DLC have executed their statutory duties well over the first five-year period, this redesignation process provides an important opportunity for a comprehensive review. The Office has considered commenters' concerns and suggested several areas of improvement to ensure the continuance of the designees' successes and assist them as they build upon them.

Finally, some commenters objected to certain provisions of the MMA itself or its implementing regulations. Generally, those topics are outside this proceeding's scope and will not be addressed here. While the Office has adopted numerous regulations to implement the MMA, we retain regulatory authority to administer many of its provisions and will consider any potential regulatory changes separately from this proceeding.

II. Statutory and Regulatory Background

A. Statutory Background

Title I of the MMA

created a statutory blanket mechanical license for the reproduction and distribution of nondramatic musical works by DMPs in the form of digital phonorecord deliveries, including permanent downloads, limited downloads, and interactive streams (referred to in the statute as “covered activity” where such activity qualifies for the blanket license), and eliminated the song-by-song “notice of intention” process for such uses.

Public Law 115-264, 132 Stat. 3676 (2018).

The MLC and DLC play important roles in the administration of this license. To evaluate whether either's designation should be continued, the Office considered each entity's separate statutory designation criteria, authority, and functions.

1. The MLC's Designation Criteria, Authorities, and Functions

The entity designated as the MLC must be: (i) a single nonprofit entity that is created by copyright owners to carry out its statutory responsibilities that is (ii) “endorsed by, and enjoys substantial support from, musical work copyright owners that together represent the greatest percentage of the licensor market for uses of such works in covered activities, as measured over the preceding 3 full calendar years,”

(iii) able to demonstrate to the Copyright Office that it has the administrative and technological capabilities to perform the required functions, and governed by a board of directors (“Board”) which includes a mix of voting and nonvoting members as directed by the statute.

17 U.S.C. 115(d)(3)(A)(ii).

Id.

at 115(d)(3)(A), (d)(3)(D)(i).

The MMA enumerates several required functions for the MLC.

Among other duties, its core functions include administering the blanket statutory mechanical license, identifying musical works and copyright owners, matching those works to sound recordings (and addressing disputes), and ensuring that copyright owners are paid correctly. To that end, the MMA requires the MLC to maintain a free, public database of musical work and sound recording ownership information and administer processes by which copyright owners can claim ownership of musical works (and shares of such works).

The MLC also participates in proceedings before the Copyright Royalty Judges (“CRJs”) to establish the administrative assessment that funds its activities and in proceedings before the Copyright Office with respect to activities related to the statutory license.

Id.

at 115(d)(3)(C)(i), (iii) (enumerating thirteen functions, in addition to permission to administer voluntary licenses).

Id.

at 115(d)(3)(E).

Id.

at 115(d)(3)(C)(i)(IX)-(X).

By statute, the MLC's Board consists of fourteen voting members and three nonvoting members. Ten voting members must be representatives of music publishers that have been assigned exclusive rights of reproduction and distribution of musical works with respect to covered activities, and four others must be professional songwriters who have retained and exercise exclusive rights of reproduction and distribution for musical works they have authored. There are also three nonvoting members that represent the interests of songwriters, music publishers, and digital licensees via representatives of relevant trade associations or, in the case of licensees, the DLC.

Id.

at 115(d)(3)(D)(i).

In addition, the Board must maintain three committees: an Operations Advisory Committee, an Unclaimed Royalties Oversight Committee, and a Dispute Resolution Committee. The Operations Advisory Committee makes recommendations concerning the operations of the collective, “including the efficient investment in and deployment of information technology and data resources.”

The Unclaimed Royalties Oversight Committee establishes policies and procedures necessary to undertake a fair distribution of unclaimed royalties.

The Dispute Resolution Committee establishes policies and procedures to address disputes relating to ownership interests in musical works, including a mechanism to hold disputed funds pending the resolution of the dispute.

Id.

at 115(d)(3)(D)(iv). By statute, this committee has an equal number of musical work copyright owners and DMP representatives, respectively appointed by the MLC and DLC.

Id.

at 115(d)(3)(D)(v), (d)(3)(J)(ii). By statute, this committee of ten has an equal number of musical work copyright owners and professional songwriters.

Id.

at 115(d)(3)(D)(vi), (d)(3)(H)(ii), (d)(3)(K). By statute, this committee consists of at least six members, again equally divided among musical work copyright owners and professional songwriters.

2. The DLC's Designation Criteria, Authorities, and Functions

The DLC must be a single nonprofit entity created to carry out certain statutory responsibilities, endorsed by DMPs and significant nonblanket licensees (or “SNBLs”) that together represent the greatest percentage of the licensee market for uses of musical works in covered activities (as measured over the preceding three years), and possess the administrative capabilities to carry out its functions.

Those statutory functions include: establishing a governance structure, criteria for membership, and membership dues; enforcing notice and payment obligations for the administrative assessment; participating in certain proceedings before the Copyright Office or CRJs; and assisting in publicizing the MLC's existence and the ability of copyright owners to claim royalties with the MLC.

Id.

at 115(d)(5)(A)(i)-(iii).

Id.

at 115(d)(5)(C)(i).

B. Regulatory Background

1. Initial Designation

In 2018, the Office published a notice in the

Federal Register

soliciting proposals from parties who wished to be designated as the mechanical licensing collective and digital licensee coordinator, and requesting information pertaining to the criterion set forth above.

The Office also requested public comments on the parties' proposals.

83 FR 65747 (Dec. 21, 2018).

The Office received one proposal for designation as the digital licensee coordinator and two proposals for designation as the mechanical licensing collective. After reviewing the proposals along with the statutory designation criteria, considering over 600 public comments, and hosting

ex parte

meetings with interested parties,

we concluded that the entity “Digital Licensee Coordinator, Inc.,” incorporated in Delaware on March 20, 2019, “me[t] each of the statutory criteria required of the digital licensee coordinator,” and would be designated

as the DLC.

With respect to the mechanical licensing collective, we concluded that, while both candidates “[met] the statutory criteria,” the MLC “made a better showing as to its prospective administrative and technological capabilities” and was the only candidate that met the statute's “endorsement” criterion.

Therefore, the Register designated the entity “Mechanical Licensing Collective, Inc.,” incorporated in Delaware on March 5, 2019, as the mechanical licensing collective.

Ex Parte Communications,

U.S. Copyright Office,

https://www.copyright.gov/rulemaking/mma-designations/ex-parte-communications.html

(last visited May 26, 2026) (hosting

ex parte

meeting summary letters related to the Office's initial designations).

Initial Designation at 32292, 32296; 37 CFR 210.23.

Initial Designation at 32276, 32296.

37 CFR 210.23; Initial Designation at 32296.

2. First Periodic Review

On January 30, 2024, the Office issued an NOI regarding the periodic review of the designations.

The currently designated mechanical licensing collective and digital licensee coordinator provided information regarding their past performance and capabilities, as well as future plans, in support of their requests that their current designations should be continued. The public was invited to comment on these submissions and the Office received over 60 comments. We also provided the currently designated entities an opportunity to submit replies in response to the comments, and held

ex parte

meetings with the MLC, DLC, and members of the public to address issues that had been raised.

NOI.

All activity, including public submissions and comments, can be accessed via navigation from

https://www.copyright.gov/rulemaking/mma-designations/2024/.

Records of

ex parte

communications, including those referenced herein, along with guidelines for such communications, are available at

https://www.copyright.gov/rulemaking/mma-designations/2024/ex-parte-communications.html.

References to the public comments are by party name (abbreviated where appropriate), followed by “Submission,” “Reply Submission,” “Initial Comments,” “Reply Comments,” or “

Ex Parte

Letter,” as appropriate.

The NOI also explained that once the Office evaluated the record in this proceeding, the Register would “determine whether the current MLC and DLC designations should be continued,” and if she concluded that either designation should be continued, she would publish that determination in the

Federal Register

NOI at 5942. The NOI noted that if either designation would not be continued, the Office explained that it intended to solicit proposals for a new MLC or DLC designation in the

Federal Register

. Id.

As both designations are being continued, soliciting proposals for new designees is unnecessary.

III. Evaluation of the Mechanical Licensing Collective

The MMA tasked the mechanical licensing collective with significant responsibility in administering a complex and novel licensing system. In the seven years since its designation, the MLC has worked diligently to develop one of the largest databases of musical work ownership in the world, improve matching rates and quality, and educate the music community regarding the MMA. In response to the NOI, most commenters endorsed the MLC's continued designation, though some offered critiques or made suggestions for improvement in particular areas. While the Office has considered and addressed these comments in the sections below, they do not affect our conclusion that the MLC has been a success. We find that it has met the statutory qualifications and possesses the administrative and technological capabilities to perform the required functions to continue its designation as the mechanical licensing collective.

A. Nonprofit Status

The MLC provided a “Statement of Good Standing” from the Delaware Division of Corporations to demonstrate that it is a “a single entity that is a nonprofit entity, not owned by any other entity, that is created by copyright owners to carry out responsibilities” under the MMA.

No comments raised any issue about the MLC's nonprofit status. Accordingly, the MLC has satisfied the first statutory criterion for designation.

17 U.S.C. 115(d)(3)(A)(i);

see

MLC Initial Submission Ex. 1, at 1.

B. Indicia of Endorsement and Support

As proof that it satisfies the second criterion for designation, the MLC collected 1,129 endorsements from its current members, and provided compiled market share data for covered activities over the past 3 years for those endorsers.

The MLC confirmed that the endorsing members represent a clear majority of the market over the past three years, as measured by their licensing revenue from covered activities during this period.

The MLC also provided

Music & Copyright's

annual survey showing that endorsing members Sony Music Entertainment, Universal Music Publishing Group, and Warner Chappell Music together had an average combined global market share of 69.2% for 2024.

The MLC noted that copyright owners have shown their substantial support over the past three years through their willingness to contribute their time and expertise as unpaid representatives on the MLC's Board and various committees, and their involvement in campaigns to build industry partnerships and improve the MLC's tools and resources.

No submitted comments contested the MLC's satisfaction of the endorsement criterion.

MLC Initial Submission at 7 and Ex. 2, at 1-28.

Id.

MLC

Ex Parte

Letter at 7-8 (July 21, 2025) (citing

Market share results reveal the 2024 recorded-music and music publishing winners and losers,

Music & Copyright (Apr. 23, 2025),

https://musicandcopyright.wordpress.com/category/market-share-2/

MLC Initial Submission at 8.

As the MLC has established that it is “endorsed by, and enjoys substantial support from, musical work copyright owners that together represent the greatest percentage of the licensor market for uses of such works in covered activities, as measured over the preceding 3 full calendar years,”

it satisfies the second statutory criterion for designation.

17 U.S.C. 115(d)(3)(A)(ii).

C. Administrative and Technological Capabilities

The third criterion for designation involves evaluating the MLC's administrative and technological capabilities to perform its statutory functions, including its governance structure. The Office's NOI requested a detailed description of the MLC's administrative and technological capabilities as well as other aspects of its operations. We also requested an update on the MLC's efforts to implement recommendations contained in the Office's

Unclaimed Royalties Report,

including which ones have been implemented to date, what efforts are in progress, any plans to implement recommendations in the future, and any recommendations it is not planning to implement.

NOI at 5942.

1. Musical Works Database, Registering Works and Shares, and the Claiming Portal

The statute requires the MLC to create and maintain a free online database to publicly disclose information about musical works, their owners, and the sound recordings in which they are embodied.

The database must include the following musical work information: the MLC's standard identifier; the work's title and any alternative or parenthetical titles; the international

standard musical work code (“ISWC”); the name(s) of the copyright owner(s) and songwriter(s); International Standard Name Identifiers (“ISNIs”) and Interested Parties Information (“IPIs”) for each musical work copyright owner, and, if different, songwriter, and administrator.

The database must also include the following sound recording information: the recording title; the international standard recording code (“ISRC”); and any unique identifier(s) assigned by a blanket licensee.

17 U.S.C. 115(d)(3)(E), (e)(20).

Id.

at 115(d)(3)(E)(ii)-(iii); 37 CFR 210.31(b)(1), (c)(1).

17 U.S.C. 115(d)(3)(E)(ii)-(iii); 37 CFR 210.31(b)(2), (c)(2).

The statute also requires the MLC to create and maintain an “online facility” (what the MLC and stakeholders refer to as its “claiming portal”) listing “unmatched musical works (and shares of works), through which a copyright owner may assert an ownership claim with respect to such a work (and a share of such a work).”

17 U.S.C. 115(d)(3)(J)(iii)(I) (requiring the MLC to “maintain a publicly accessible online facility with contact information for the collective that lists unmatched musical works (and shares of works), through which a copyright owner may assert an ownership claim with respect to such a work (and a share of such a work)”).

The Office's NOI requested information about how the MLC is fulfilling its statutory and regulatory requirements with respect to its maintenance of the musical works database. We also requested an update on the MLC's efforts to implement recommendations related to the database's usability contained in the

Unclaimed Royalties Report.

These recommendations included establishing “flexible and robust searching, sorting, and filtering features,”

efficient song registration processes that include bulk mechanisms,

portal access to represented songwriters,

and quality assurance mechanisms to review, verify, and quality-check data reported to the database.

NOI at 5942.

Unclaimed Royalties Report

at 42.

Id.

at 48.

Id.

at 52-54.

Id.

at 60-62.

The MLC confirmed that it continues to satisfy the statutory requirements, asserting that it “maintains one of the largest databases of musical work ownership information in the world, with data for more than 35.5 million musical works.”

According to the MLC, the database features identifying information for each registered musical work including the work's title, the owner(s) of the work, the percentage ownership shares claimed by each owner, owner contact information, the MLC's standard identifier, or song code, assigned to each work, the musical work's ISWC (if provided by rightsholders), and “information for any associated sound recording uses The MLC has matched to the work.”

The MLC also stated that it has built “novel” tools and features for users to “(1) enhance their individual user experience (

e.g.,

structured search fields and filters) and (2) support the needs of high-volume and power-user Members (

e.g.,

on-demand bulk data export and submission tools).”

MLC Initial Submission at 12.

Id.

Some commenters praised the database as “a definitive source [that] allows . . . members (publishers, songwriters and administrators) to easily and efficiently manage their works.”

For example, one called the database “one of the most complete repositories of musical work metadata that is available to the public.”

Others offered specific critiques regarding the database's tools and resources, songwriter access, and data quality.

Big Machine Music Initial Comments at 1; NSAI Initial Comments at 2 (describing the database as clear, concise, and easily navigable).

Reservoir Initial Comments at 1 (describing the database as “one of the most complete repositories of musical work metadata that is available to the public”).

Abby North Initial Comments at 2, 5; A2IM Initial Comments at 2; BMAC & MAC Reply Comments at 3; CleaRights Initial Comments at 2.

a. Tools and Resources

In the NOI, the Office asked the MLC to describe any efforts it has undertaken to enhance database and claiming portal functionality, including with respect to searching the database, sorting and filtering queries, and sharing and exporting results, as well as specific plans to develop additional functionality over the next five years. We also asked whether the MLC had any plans to address disputes and situations where multiple claimants have claimed shares totaling over 100% on a musical work via a module within its portal.

In response, the MLC highlighted several enhanced functionalities in tools available to its members and the public.

NOI at 5943.

i. Member tools

Among the tools available to the MLC's members, the MLC highlighted (1) its Member Portal, which allows members to “register, edit and review their musical works data, create and submit registrations for any new musical works, manage and update their contact information, banking details and tax forms, and associate one or more authorized users with their MLC Member accounts”;

(2) its Claiming Tool, which allows members to search for unclaimed shares of works and claim the shares they administer; (3) various work registration tools, which provide for individual registrations, bulk registrations, and registration via Common Works Registration (“CWR”) format; (4) its Matching Tool, which allows members to search data derived from monthly usage reports about recordings the MLC has been unable to match to registered musical works, and propose matches; (5) its Catalog Export Tool, which allows members to download all, or a portion of, their musical works data registered with the MLC;

and (6) its Overclaims Tool, which allows members to resolve overclaims and disputes regarding newly registered works for which the total shares claimed by all members amount to over 100%.

MLC Initial Submission at 15.

Id.

at 16-17.

MLC Reply Submission at 11.

ii. Public tools

The MLC identified the following publicly available tools and resources that aid in matching. Its Public Work Search is a search tool that “allows anyone to retrieve ownership information for every musical work contained in [t]he MLC's database.”

According to the MLC, “search results show ownership data for each rightsholder that has claimed a share of the work concerned, the total percentage of shares of the work that each owner has claimed, the represented songwriters (where rightsholders have provided it), and the sound recording products that [t]he MLC has matched to each musical work.”

This tool enables searching by work title, songwriter, and publisher, and also “allows users to filter results by additional criteria, including ISWC, MLC Song Code, writer IPI, and Publisher IPI.”

MLC Initial Submission at 13.

Id.

at 13.

Id.

Its Public Search API is an additional search tool that “allows any member of the public to retrieve information about musical works in [t]he MLC database” through the use of an application program interface (“API”).

Id.

at 14. Users can register for access on the MLC's website.

Data Programs,

MLC,

https://www.themlc.com/dataprograms

(last visited May 26, 2026).

Its Missing Member Lookup resource is a public, searchable database containing the names of rightsholders

that are not members of the MLC, but that may be entitled to royalties.

MLC Initial Submission at 14.

Its Distributor Unmatched Recording Portal (“DURP”) is a tool that allows music distributors, aggregators, and other eligible sound recording distributors to view data derived from monthly usage reports about recordings the MLC has been unable to match to registered musical works. The MLC explained that it created this tool “to address the unique challenges related to matching and distributing works written by independent or DIY artists.”

Id.

at 14-15.

iii. Additional resources

In addition to these tools, the MLC created additional resources to assist in matching. It provides its members its “Top Unmatched Recording List,” which is a spreadsheet of the top 3,000 unmatched sound recording uses as reported to the MLC by DMPs based on calculated royalty value.

To the public, and as required by the statute, the MLC offers a Bulk Data Access Subscription, which provides access to the MLC's musical work database in a bulk, machine-readable format.

It also created a Data Quality Initiative (“DQI”), which, as discussed further below, is a service that “provides participants with reports that highlight the discrepancies between the two sets of data so that they can more easily address those discrepancies and improve the quality of [t]he MLC's data related to their works.”

Id.

at 17.

Id.

at 13;

see also

17 U.S.C 115(d)(3)(Е)(v) (“The mechanical licensing collective shall make such database available in a bulk, machine-readable format . . . .”).

MLC Initial Submission at 14.

iv. Commenters' Views and MLC Response

Several commenters praised the MLC's tools and resources, describing the mechanisms for “registering and managing catalogue information” as “user-friendly and efficient.”

Reporting its experience, Big Machine Music stated that “efficiency of submitting the matches, the approval process of our claims and the timely manner in which they are then tied back to our account is yet another positive change” the MLC has delivered.

NMPA Initial Comments at 4 (“NMPA members have found the MLC's tools for registering and managing catalogue information to be user-friendly and efficient.”); Big Machine Music Initial Comments at 1 (stating that the MLC's “centralized database of song ownership information . . . has become a definitive source and allows for members (publishers, songwriters and administrators) to easily and efficiently manage their works”); NSAI Initial Comments at 2 (“The MLC built a publicly accessible database that is clear and concise, easily navigable and provides as much information as the MLC can publicly disclose.”); Peermusic Initial Comments at 3 (“In the areas in which we felt there was room for The MLC to build upon its initial successes, progress has to date been quick and highly visible: in the services provided to members, for example, including iterative improvements in portal access, client services, and new and creative methods to improve the quality of the musical works database.”).

Big Machine Music Initial Comments at 1.

Other commenters were more critical. Some expressed general concern regarding the registration process and the length of time it took the MLC to register and claim works.

Word Collections Initial Comments at 10 (“The MLC's workflows for submitting and claiming works are woefully inefficient, unwieldy, unreliable, non-intuitive, and appear to vary in execution based on member creating a veritable black hole that negates the entire purpose of submitting works to The MLC in the first place.”); George Johnson Initial Comments at 1 (describing the MLC's bulk song registration process as “almost impossible and time consuming”);

see also

A2IM Initial Comments at 3 (“Limits on API access, registration, and claims create bottlenecks that hinder the efficiency,” thus, “[t]he MLC should expand API access and simplify the registration and claiming processes to facilitate easier and faster transactions that will benefit the entire music ecosystem, not just those with greater resources.”); Abby North Initial Comments at 5 (encouraging the Office to provide guidelines for the MLC “regarding reasonable times from delivery of a match or claim by a member to processing”).

Others highlighted certain inefficiencies in the MLC's Matching Portal.

The A2IM stated that “the current matching tool is not versatile enough to effectively match many titles, leaving a significant number of songs unmatched and contributing royalties to the black box.”

Hameys Songs reported that it has had to submit its catalog “multiple times” to claim unmatched songs, and that “[m]any of these attempts have been unsuccessful and many of the titles are still in the unclaimed section of [t]he MLC website.”

Abby North Initial Comments at 5; Go to Eleven Entertainment Initial Comments at 1 (“With regard to submitting matches to unmatched works, their system is not ideal in any way as you cannot print out a complete excel list of such works by title, but can only make a claim on a song-by-song basis”); Lindvall, Lowery & Morgan Initial Comments at 13 (“[I]t appears that in order to use the Matching Tool, one must first be a Member and have registered your catalog. This slows down the matching process.”).

A2IM Initial Comments at 2.

Hameys Songs Initial Comments (“By resubmitting, we mean sending in the same titles and metadata information over and over again!”).

Commenters also took issue with certain aspects of the Overclaims Tool. Some noted that it only permits resolution of claims made within the last 90 days.

Another called the tool “rudimentary for newly registered works,” calling for “further enhancements that includes all overclaims and disputes.”

Go to Eleven Entertainment Initial Comments at 5; Abby North Initial Comments at 3.

Spirit Music Group Initial Comments at 2.

Finally, commenters offered several suggestions regarding the MLC's public tools and resources. For example, while Spirit Music Group praised the MLC's Missing Member Lookup resource's usefulness to “identify members that have not claimed royalties, and to identify errors for the writers and publishers” it represents, they suggested that there should be a way to also identify and quantify the corresponding recordings.

One commenter noted issues with the royalty report format,

although another praised the ease of processing such reports.

Id.

Hameys Songs Initial Comments at 1 (explaining that the MLC uses .tsv files while other collective management organizations (“CMOs”) use PDF, Excel, or CSV). Relatedly, another commenter expressed concern that, although the bulk data access service is public, the data is provided in DDEX format such that, according to her, “there is no way you can use the bulk list unless you pay to convert it to a CSV” format. Go to Eleven Entertainment Initial Comments at 1-2.

Warner Chappell Music Reply Comments at 2-3 (“The MLC provides members with detailed electronic statements via the portal. These statements are easier to process than many of the other CMO statements received by Warner Chappell around the world.”).

In its reply comments, the MLC reiterated its commitment to making continued enhancements to its tools and resources, noting upgrades to its “Claiming Tool, improvements to the individual and bulk registration tools, and refinements to the Matching Tool.”

Related to its work registration process, the MLC reported that it “consistently processes between 80% and 90% of the incoming registrations it receives in any given month within 21 days after the end of the month during which they are received,” and “now provides detailed rejection reasons for any incoming registration that it does not approve directly in the Registration History section of its Member Portal.”

Finally, while the MLC defended its bulk data format choice (DDEX), by stating that it is the most accessible and industry-standard format for bulk data, it encouraged members to contact customer service for formatting and accessibility concerns.

MLC

Ex Parte

Letter at 3 (July 21, 2025).

Id.

at 6.

MLC

Ex Parte

Letter at 5 (Nov. 20, 2025) (“The MLC's support team is trained to assist Members unfamiliar working with these and other formats and The MLC's Help Center already includes related step-by-step technical guidance.”).

The Office supports the MLC's continued efforts to improve its database tools and resources. In light of commenters' suggestions, we encourage

it to make its data as accessible as resources permit for users of all levels of sophistication.

b. Songwriter Access

The Office also asked the MLC to describe its efforts to develop portal access for songwriters who are not self-administered (

e.g.,

those represented by a publisher, administrator, or collective management organization (“CMO”)), to permit them to access, provide, or correct information about themselves and their works, including the ability to flag data issues with their publisher or other representative, to provide data directly to the MLC, and to have permissions-based access to view information such as stream counts and revenue.

This inquiry built upon the Office's earlier recommendations in our

Unclaimed Royalties Report.

Multiple comments echoed the Office's recommendation, urging the MLC to develop “a portal within its website for published and/or administered songwriters to deliver data regarding their works.”

NOI at 5943.

Unclaimed Royalties Report at 50-51 (recommending that “represented songwriters be able to sign up with the MLC to gain appropriate access to the portal (or a tailored version of the portal), through which they can easily view and interact with information about their works, including the ability to alert [the MLC and] their publishers, administrators, or other representatives to have them register with the MLC (if they have not already done so) and/or to have them address any potential data issues flagged by the songwriter, including where information is missing, outdated, or incorrect”).

Abby North Initial Comments at 2; Artist Rights Alliance Reply Comments at 2; BMAC & MAC Reply Comments at 3-4.

In October 2025, the MLC released its new Songwriter Hub, which is available to any songwriter with registered works. In this portal, songwriters are able “to construct a catalog of their registered works, filter and search their catalog for specific works, and export the data for their catalogs on demand in a variety of formats.”

Songwriters may also submit correction requests to update writer names and IPI numbers. While the Songwriter Hub does not appear to permit alerts or corrections to any other data, the MLC reports that it “plans to develop additional tools and functionality tailored for songwriters to enable them to participate more easily in the administration of their songs.”

MLC

Ex Parte

Letter at 3 (July 21, 2025).

Id.

The Office appreciates the MLC's responsiveness to member concerns and looks forward to the ongoing enhancements that will be made to the Songwriter Hub during the MLC's continued designation.

c. Data Quality and Management

Data quality is foundational to the MLC's ability to perform its statutory role successfully. Accordingly, the NOI asked several questions related to the MLC's data management. It also asked the MLC to provide an update on its progress implementing the Office's recommendations from the

Unclaimed Royalties Report,

which instructed the MLC to develop mechanisms for error and fraud detection, employ third-party uses of data beyond DMP reporting to ensure that its data is in sync with the data held and submitted by authoritative sources, and incorporate broad use of standard unique identifiers.

Unclaimed Royalties Report

at 56-71.

Addressing the accuracy of its repertoire data, the MLC highlighted its DQI. It explained that the DQI “provide[s] a streamlined way for music publishers, administrators, self-administered songwriters and foreign CMOs to compare large schedules of their musical works' data against” the MLC's data.

The MLC provides participants with reports that highlight discrepancies between two sets of data so that users can resolve those discrepancies and improve the quality of the MLC's data. In addition to working with participating publishers, self-administered songwriters, and administrators, it created a Data Quality Initiative Partner Program to partner with organizations that specialize in different aspects of music data services.

MLC Initial Submission at 14.

Data Programs,

MLC,

https://www.themlc.com/dataprograms

(last visited May 26, 2026).

Regarding fraud detection, the MLC affirmed that it “proactively investigates instances of potential streaming fraud and pursues collaboration with [DMPs], distributors, aggregators, and other stakeholders within the music industry ecosystem to combat” such conduct.

While it noted that it must keep specific detection and prevention strategies confidential to preserve their effectiveness, the MLC explained that it engages with third-party vendors with fraud detection expertise and pursues collaboration with other industry stakeholders to bolster prevention and detection efforts.

MLC Initial Submission at 29.

Id.

at 29-30.

Finally, the MLC confirmed that it “employs standard unique identifiers to the broadest extent reasonably appropriate, including in the works registration, share claiming, and matching processes, and for general data maintenance activities.”

This includes employing ISWC numbers, “if provided by rightsholders.”

Id.

at 10.

Id.

at 12.

While some commenters praised the MLC's data management,

others proposed specific improvements. Chiefly, commenters called for the MLC to require and prioritize use of standard identifiers, like the ISWC and the IPI, in their work registrations.

Spirit Music Group asserted that “[e]xpanding the identification process using song titles and CISAC codes,

i.e.,

the IPI and ISWC can enhance matching, improve results, and reduce unmatched recordings.”

Another commenter suggested the MLC should require “publishers to use IPI numbers of songwriters in their registrations” to prevent duplicate registrations.

Peermusic Initial Comments at 2 (“On an operational level, the transparency, reliability, and accuracy of reporting has been exceptional, opening new opportunities for peermusic to understand, analyze, and build on the data we receive”);

see also

Warner Chappell Music Reply Comments at 2 (calling the database “best in class”).

Abby North Initial Comments at 6; BMAC & MAC Reply Comments; Christian Castle Reply Comments; Spirit Music Group Initial Comments at 2.

Spirit Music Group Initial Comments at 2.

Go to Eleven Entertainment Initial Comments at 4.

In response, the MLC agreed that unique identifiers like ISWC and IPI numbers are valuable, and clarified that it requests ISWC and IPI information from all DMPs who report usage and from all members who register their works.

It confirmed that it “utilizes a number of data points and identifiers in its matching processes, including ISWC, ISRC, and IPI numbers.”

It does not, however, “exclusively rely on these identifiers for a variety of reasons, including the fact . . . that not all of the data it receives from [DMPs] in their usage reports and/or in the works registrations data it receives from rightsholders includes these identifiers, and sometimes the identifiers submitted to [t]he MLC by [DMPs] and rightsholders are not accurate.”

MLC Reply Submission at 19.

Id.

at 21.

Id.

The Office believes that the MLC's approach strikes the appropriate balance between the goal to reduce the number of unmatched works by employing standardized metadata and the goal of maintaining broad access to the database by not making such metadata a prerequisite for engagement. As the MMA's legislative history notes, “[u]sing standardized metadata such as ISRC and ISWC codes, is a major step forward in reducing the number of

unmatched works.”

100

With that aim, the Office had encouraged the MLC to employ standardized metadata “to the broadest extent reasonably appropriate, including in its registration and claiming processes, matching processes, and general data maintenance activities.”

101

We agree, however, that some flexibility remains necessary in the context of registration and claiming, as requiring members to submit ISWCs, or other standard identifiers, may inhibit broader participation by publishers or songwriters who do not know or have access to that information.

100

Conf. Rep. at 7.

101

Unclaimed Royalties Report

at 65.

i. Matching Practices

One of the MLC's statutory duties is to match the sound recordings used by DMPs to their underlying musical works and match those musical works to their copyright owners, who must be identified and located.

102

To assist our review of the MLC's execution of this duty, the Office requested detailed information about its matching practices, including how it measures match accuracy. Specifically, the NOI asked how the MLC has worked to improve automated and manual matching since the blanket license became available, and how it plans to further enhance matching over the next five years, both matching sound recordings to musical works and matching musical works to identified and located copyright owners. We also asked it to explain how it is using quantifiable measurements to monitor its match rate confidence, and how it adjusts confidence levels without using numerical metrics.

103

102

17 U.S.C. 115(d)(3)(C)(i)(III).

103

NOI at 5943;

see

The Mechanical Licensing Collective, 2022 Annual Report 9 (2023) (“MLC 2022 Annual Report”),

https://www.themlc.com/hubfs/The%20MLC%202022%20Annual%20Report.pdf

(stating that the MLC “does not use numerical metrics to monitor match rate confidence”).

The MLC's response described a “multilayered” matching methodology, which includes automated and manual matching, a dedicated Matching Team, a quality-assurance process, and additional matching initiatives.

104

Its methodology begins with employing automated “elastic search” technology provided by one or more of its vendors to match sound recording information received from DMPs to musical work information in the MLC's database.

105

In its automated process, unmatched sound recordings are also rerun against subsequent monthly snapshots, which incorporate newly submitted registration data, to see if new data results in new matches.

106

104

MLC Initial Submission at 18-21.

105

Id.

at 18.

106

Id.

at 19.

Sound recordings that are not matched during this process are manually reviewed by the Matching Team, which uses “custom-built technology and public resources to research missing data elements and make manual matches.”

107

During this process, MLC staff conducts quality assurance, using “CMO databases, music credit databases, DMP websites, content owner websites, and other niche and genre-specific sources” to cross-reference multiple sources to validate manual matches.

108

107

Id.

108

The Mechanical Licensing Collective, 2024 Annual Report 53 (2025) (“MLC 2024 Annual Report”),

https://www.themlc.com/hubfs/The%20MLC%202024%20Annual%20Report.pdf.

Any sound recordings that remain unmatched are presented in the MLC's Matching Tool “to allow [m]embers to search for and identify sound recordings and independently propose matches. The Matching Team then manually verifies the accuracy of each [m]ember-proposed match.”

109

The MLC also highlighted additional matching initiatives. For example, it pointed to its Supplemental Matching Network, which is a network of vendors that use “complementary technologies” to supplement its internal matching activities.

110

Currently, the network consists of organizations that specialize in: music data and licensing (Blokur); compiling music credits from record labels, distributors, publishers and industry associations (Jaxsta); audio recognition technology (Pex); and data matching and administration (Salt and SX Works).

111

109

MLC Initial Submission at 19.

110

Id.

at 19-20.

111

Id.

at 19, 31-32.

According to the MLC, this methodology has resulted in high match rates. It reported that, as of its initial submission date, its “current overall match rate across all usage periods stands at 91.6%, with year-specific match rates of 93.7% for 2021, 93.0% for 2022, 91.9% for 2023, and 90.3% for 2024.”

112

These rates are based on “the total amount of royalties matched to registered musical works compared to the total royalties reported to [t]he MLC by [DMPs].”

113

112

MLC

Ex Parte

Letter at 2 (July 21, 2025).

113

MLC Initial Submission at 20.

To measure the accuracy of its match rates, the MLC explained that it routinely “runs a number of different analytical processes of the matches it has made and conducts systematic, regular testing of its matches.”

114

Its Matching Team regularly examines random sample sets of automated matches and analyzes the results.

115

The MLC stated that its match rate confidence is further bolstered by comparing the matches produced by its internal processes with the matching data provided by its Supplemental Match Network vendors.

116

114

Id.

at 22.

115

Id.

116

Id.

Finally, the MLC highlighted other planned efforts to improve its match rate confidence and its ability to match sound recordings to the musical works they embody. For example, it noted that it is “working with other large CMOs on pilot programs to exchange matching data, in order to create yet another point of comparison that both organizations can use to assess the accuracy of their respective matches and to identify supplemental matches.”

117

It explained, “[t]his approach of assembling multiple points of comparison offers a compelling way for [t]he MLC to monitor the efficacy and accuracy of its internal processes.”

118

In addition, it noted that, in response to user feedback, it is developing mechanisms for members with larger catalogs to deliver proposed matches in bulk.

119

These proposed matches would then be reviewed by a supplemental matching vendor for automated verification.

120

117

Id.

118

Id.

119

Id.

at 20.

120

Id.

at 20, 22.

Many commenters highlighted the match rate as evidence that the MLC's matching methodology has been successful.

121

The NMPA commented that “[t]he MLC has . . . worked diligently to reduce the incidence of unmatched and unclaimed royalties through better ownership data, the use of manual matching and partnerships with other technology vendors, resulting in an historically high average match rate of over 90%.”

122

One coalition of music publishers stated that they “believe that there is a direct correlation between the tools offered by the MLC . . . and our respective publishers' Song Match Rate.”

123

121

CMPA Initial Comments at 2.

122

NMPA Initial Comments at 4-5.

123

CMPA Initial Comments at 2.

Other commenters, however, took issue with how the MLC defines its match rate.

124

Attorney Gwendolyn Seale stated, “As the most popular musical works are the ones generating the bulk of mechanical royalties over a

given month and are typically owned and/or controlled by the major music publishers with the resources and capabilities to constantly monitor activities concerning their clients' musical works and engage in manual matching, the current definition of match rate (

i.e.,

the royalty-based definition) does not mean very much by itself.”

125

Seale continued, “It would be useful for the MLC to also provide the monthly match rate on a recordings-to-musical works-matched basis,” or a works-based calculation,

126

and argued that such data would “shine a light on the efficacy of the MLC's and its vendors' matching technology and would help to ensure the musical works of countless self-published songwriters are being matched to reported sound recordings.”

127

124

Gwendolyn Seale Initial Comments at 3-4; George Johnson Initial Comments.

125

Gwendolyn Seale Initial Comments at 3-4.

126

Id.

127

Id.

The MLC explained that a royalties-based calculation is standard for most CMOs. While it disagreed that a works-based calculation was warranted, in light of commenter concerns the Office requested further information regarding its match rate by royalty value. In response, the MLC defined five royalty tiers representing the cumulative amount of mechanical royalties earned by a given work since it began operating in January 2021: (1) greater than $5,000; (2) between $1,000 and $5,000; (3) between $500 and $1,000; (4) between $100 and $500; and (5) under $100.

128

The MLC's current average match rates for the top three tiers are each above 90%, and for the highest tier it is over 99%. For works with a cumulative royalty value between $100 and $500, it is approximately 83%. And for works with a cumulative royalty value under $100, it is 63%.

129

128

MLC

Ex Parte

Letter at 5 (July 21, 2025).

129

Id.

The Office asked whether the MLC has identified any notable trends or patterns in reported usage that it has been unable to match through its efforts to date. It also asked the MLC about its attempts to address these trends or patterns, and specifically, to describe any targeted efforts it has undertaken or plans to undertake in the next five years.

130

NOI at 5943.

In response, the MLC explained, “[s]ound recordings with high stream counts that generate higher royalties are more likely to be matched to a work registered with [t]he MLC, while sound recordings with low stream counts and minimal royalties . . . are less likely to be matched—often because the works featured in those recordings have not been registered with [t]he MLC.”

131

The MLC's data appears to validate this trend. According to the data, over 500 million unmatched reported sound recordings have less than one dollar in accrued mechanical royalties across all blanket periods to date (with the average being approximately five cents).

132

The MLC reasoned that rightsholders of these “long tail” works

133

“have less of a financial incentive to complete the work registration process since those works generate minimal royalties.”

134

131

MLC Initial Submission at 23.

132

Id.

at 23 n.46.

133

The MLC refers to “long tail” works as those works “with low stream counts and minimal royalties . . . [that] are less likely to be matched.”

Id.

134

Id.

The MLC further stated that it created the DURP program to address the “unique challenges related to matching and distributing works written by independent or DIY artists,”

e.g.,

“songs with lower stream counts and royalties.”

135

As noted above, the DURP program engages independent distributors, aggregators, and other eligible sound recording distribution companies to identify the rightsholders for the works embodied in sound recordings with lower stream counts.

136

As of May 2026, the initiative includes at least 125 enrolled distributors.

137

135

MLC 2024 Annual Report app. at 53; MLC Initial Submission at 14, 23.

136

MLC Initial Submission at 23.

137

DURP Partners,

MLC,

https://www.themlc.com/durp-partners

(last visited May 26, 2026).

Based on the Office's review of the MLC's submissions, its matching processes and quality assurance analysis appear to function well. In accordance with our

Unclaimed Royalties Report

recommendations, the MLC reports employing both automated and manual matching processes that engage a broad array of resources. Its efforts include searching public and private third-party databases and leveraging its membership and industry partners. The Office supports the expansion of initiatives that contribute to improving the MLC's methodology and match rate confidence, including DURP and the Supplemental Matching Network.

The Office applauds the MLC's efforts to improve match rates for “long tail” works. Its disclosure of match rates by the royalty value tiers provided during this proceeding provides a helpful additional metric. If the MLC were to provide this information going forward, it would better assist with gauging the effectiveness of its matching methodology and initiatives for works earning different ranges of royalties.

ii. Collection and Distribution of Royalties, Including Unclaimed Accrued Royalties

To assess the MLC's performance related to its duty to collect and distribute royalties, the Office requested information about its royalty distributions. Specifically, we asked the MLC for an update on its efforts to implement

Unclaimed Royalties Report

recommendations, which included the recommendation to adopt transparent, practical, and equitable policies, practices, and procedures, especially with respect to holding and distributing unclaimed accrued royalties.

138

NOI at 5942 n.36 (citing the

Unclaimed Royalties Report

The MMA makes the MLC responsible for “[c]ollect[ing] and distribut[ing] royalties from [DMPs]” using the statutory mechanical license.

139

Any “royalties that cannot be distributed due to” “an inability to identify or locate a copyright owner of a musical work (or share thereof)” or “a pending dispute before the [D]ispute [R]esolution [C]ommittee of the [MLC],” must be “deposit[ed] into an interest-bearing account.”

140

For those works for which royalties have accrued but the copyright owner is unknown or not located, the MLC holds such royalties for a minimum time period, as designated by the statute. In general, this period is “not less than 3 years after the date on which the funds were received by the [MLC].”

141

At the end of the statutory minimum holding period, accrued royalties for musical works (and shares) that remain unmatched become eligible for distribution by relative market share “to copyright owners identified in the records of the collective,” at which point they become “unclaimed accrued royalties.”

142

139

17 U.S.C. 115(d)(3)(C)(i)(II).

140

Id.

at 115(d)(3)(G)(i)(III).

141

Id.

at 115(d)(3)(H)(i);

see also

Conf. Rep. at 11 (“For unmatched works, the collective must wait for the prescribed holding period of three years before making such distribution. This is intended to give the collective time to actively search for the copyright owner.”).

142

17 U.S.C. 115(d)(3)(J)(i), (e)(34).

The statute also includes a “transition period” for the period following the MMA's enactment in October 2018, and before the blanket license became available on January 1, 2021.

143

During the transition period, if the musical work copyright owner was unknown, anyone seeking to obtain a compulsory license to make digital phonorecord deliveries could rely on a limitation on liability that required the DMP to “continue[ ] to search for the musical

work copyright owner” using good-faith, commercially reasonable efforts and bulk electronic matching processes.

144

If the musical work copyright owner was not found before the end of the transition period, the DMP had to account for and transfer the accrued royalties (called “historic royalties”) to the MLC in 2021 for further processing. According to the MLC, twenty-one DMPs submitted reporting and transferred royalties related to streaming activities that took place between 2007 and 2020.

145

Unclaimed historic royalties are subject to a future market-share distribution, like unclaimed blanket license royalties.

143

H.R. Rep. No. 115-651, at 10 (2018); S. Rep. No. 115-339, at 10 (2018).

144

17 U.S.C. 115(b)(2)(A), (d)(9)(D)(i), (d)(10)(A)-(B);

see

H.R. Rep. No. 115-651, at 4, 10; S. Rep. No. 115-339, at 3, 10, 22.

145

Historical Unmatched Royalties,

MLC,

https://www.themlc.com/historical-unmatched-royalties

(last visited May 26, 2026).

The MLC provided an overview of its relevant metrics and achievements in response to the Office's inquiry. First, it provided distribution metrics for blanket license royalties, historical royalties, and voluntary licenses. As of its June 2025 distribution, the MLC reported processing “over $3.11 billion in total royalties, comprising approximately $2.865 billion in blanket royalties directly distributed by [t]he MLC and $246 million in voluntary royalties (valued at the applicable statutory rates) processed by the MLC, but distributed by DMPs to licensors under voluntary license arrangements.”

146

Each year since its inception, the MLC has completed every royalty distribution “on time or early” for the usage that took place in each relevant year.

147

It reports that it has “matched nearly $314 million of the $397.20 million in historical unmatched royalties that DMPs transferred in February 2021 (or 79% of the total amount transferred) and distributed approximately $223.42 million (or more than 56% of the total transferred).”

148

146

MLC

Ex Parte

Letter at 1-2 (July 21, 2025).

147

The Mechanical Licensing Collective, 2021 Annual Report 1 (2022),

https://www.themlc.com/hubfs/Marketing/23856%20The%20MLC%20AR2021%206-30%20REFRESH%20COMBINED.pdf;

MLC 2022 Annual Report at 2; The Mechanical Licensing Collective, 2023 Annual Report 2 (2024),

https://www.themlc.com/hubfs/2023%20MLC%20Annual%20Report.pdf;

MLC 2024 Annual Report at 1.

148

MLC

Ex Parte

Letter at 2 (July 21, 2025).

The MLC previously reported that, of the $568,945,432.36 in royalties held related to 2021-2024 usage, $243,856,456.84 is related to unclaimed royalties.

149

And, of the $397,196,646.86 in historical unmatched royalties collected, $195,779,461.26 remain unmatched and $74,473,413.08 remain unclaimed.

150

149

MLC 2024 Annual Report app. at 17.

150

Id.

at 18.

The MLC has not yet distributed unclaimed royalties. In early 2026, however, it announced that it has begun developing a policy to distribute the remaining unmatched and unclaimed blanket royalties.

151

While the MLC has, to date, prioritized the growth and engagement of its membership and the continued improvement of data necessary to facilitate accurate matching, it also recognizes that Congress did not contemplate the indefinite retention of blanket royalties.

151

Looking One Year Ahead: Market Share Distributions,

MLC,

https://pages.themlc.com/looking-one-year-ahead-market-share-distributions

(last visited May 26, 2026).

Starting in early 2027, the MLC plans to start making market share distributions of unmatched and unclaimed royalties on a monthly, per-song and “pro rata basis for each [DMP] and offering”; in other words, “[e]very song that earned monthly royalties . . . will receive its pro rata share of the remaining royalties for that month.”

152

The MLC reports that the “current amount of remaining unmatched and unclaimed royalties from January 2021 that would be eligible to be included in [the] first monthly distribution in 2027 is less than $7 million.”

153

Due to continued reprocessing, along with its continued matching efforts focused on the remaining 2021 royalties, it estimates that the remaining amount will likely be lower by January 2027. It plans to begin processing the remaining historical (

i.e.,

pre-January 2021) unmatched royalties at a later date.

152

Id.

153

Id.

Many commenters praised the MLC's collection and distribution of blanket royalties, noting that it “has distributed monthly royalty payments for all [DMPs] on time or early every month since the first distribution in April 2021,” which “has allowed U.S. mechanical streaming income to become one of the most predictable and transparent revenue sources in the music industry.”

154

Certain other commenters, however, reported payment delays due to processing errors and frivolous ownership disputes.

155

While the Office acknowledges the reported payment delays and alleged errors, it appears the MLC maintains an infrastructure capable of troubleshooting such issues. It has established common sense policies that address disputes and catalog transfers through a thoughtful and deliberate process. When a copyright owner believes that there has been a payment error, we expect the MLC to review and resolve any issues in a timely and fair manner.

154

Big Machine Music Initial Comments at 2;

see

NMPA Initial Comments at 3 (“Since its inception, the MLC has distributed over $2 billion in royalties to thousands of rightsholders, making every monthly royalty distribution on time.”); NSAI Initial Comments at 2; Recording Academy Reply Comments; Reservoir Initial Comments.

155

See, e.g.,

Word Collections Initial Comments at 17 (stating that MLC's Dispute Policy favors those claimants who “show[] up first,” to the detriment of “uneducated songwriters” less familiar with how the MLC operates”); Music Copyright Consultant Group II Initial Comments (reporting payment errors and delays due to MLC's method of calculating royalties for medleys and music works that include interpolations and samples); Go to Eleven Entertainment Initial Comments at 4-5 (claiming that the MLC does not freeze payments for works in dispute until resolution, and suggesting that to avoid payment issues” “[t]he minute [t]he MLC is served notice of via a Catalog Transfer Form, all royalties should be put on hold until the transfer is confirmed and set up by [t]he MLC”).

Overall, the Office applauds the MLC's collection and distribution efforts, which have resulted in over $3.9 billion in royalties paid to copyright owners. These efforts have had a significant and measurable impact on songwriters' and publishers' income, providing increased revenue reliability and predictability.

The Office also supports the MLC in commencing a process to develop policies governing the distribution of unclaimed royalties pursuant to the statute. We look forward to working with the MLC to ensure that its policies and processes are transparent, fair, and equitable for all songwriters and publishers.

iii. Fraud and Frivolous Disputes

Next, the Office requested information about the MLC's efforts to combat fraudulent ownership claims, frivolous ownership disputes, and streaming fraud, specifically: (1) “any steps that the [MLC] is taking to protect against the incidence of fraudulent ownership claims and frivolous ownership disputes”; (2) “whether these steps have been successful”; and (3) “whether and to what extent the [MLC] is working with DMPs, distributors, aggregators, or others to protect against streaming fraud and the status of such efforts, including their success or failure.”

156

NOI at 5943.

Regarding frivolous ownership disputes, the MLC asserted that its Ownership Dispute Policy is designed to “efficiently address ownership disputes between or among copyright owners” and “deters” frivolous claims because it “require[s] parties that initiate disputes to provide written documentation substantiating their

claim(s) within a fixed time frame.”

157

It explained that this requirement “reduces the likelihood that parties without legitimate ownership claims can affect timely distribution of related royalties.”

158

157

MLC Initial Submission at 29.

158

Id.

Concerning fraudulent ownership claims, the MLC states that it “has implemented a multi-faceted strategy for identifying and mitigating fraudulent ownership claims” that involves multiple internal teams monitoring incoming data for signs of fraud at every stage of the MLC's royalty distribution process.

159

When MLC staff observe data anomalies, they escalate those observations for greater scrutiny.

160

159

Id.

at 28-29.

160

Id.

at 29.

Finally, regarding streaming fraud, the MLC confirmed that it “proactively investigates instances of potential streaming fraud and pursues collaboration with [DMPs], distributors, aggregators, and other stakeholders within the music industry ecosystem to combat streaming fraud.”

161

While the MLC kept its specific detection and prevention strategies confidential “to preserve their effectiveness,” it explained that its strategies include, in addition to its own internal efforts, “engaging third-party vendors with expertise in detecting fraud” and “actively pursuing collaboration with other industry stakeholders.”

162

161

Id.

162

Id.

at 29-30.

The Office supports the MLC's proactive work to combat fraud. Its collaborative initiatives in this area are important and appear to be contributing to improved data accuracy and integrity. We will continue to monitor these efforts as they progress.

2. Investment in Resources and Vendor Engagement

As noted above, to perform its statutory duties, the MLC invests in relevant resources and arranges for services of outside vendors. The NOI inquired about these activities, including the MLC's reliance on third-party vendors to support its operations and fulfill its statutory obligations.

163

The Office also asked the MLC to provide information about its Supplemental Matching Network vendors, “including the specific functions that they perform, or have been asked to perform, the vendors' relevant experience with clients and projects involving similar scale and type, or their industry-specific knowledge.”

164

163

NOI at 5941.

164

Id.

at 5943. Office regulations also require the MLC to provide in its annual report the MLC's “selection of new vendors during the preceding calendar year, including the criteria used in deciding to select such vendors, and key findings from any performance reviews of the mechanical licensing collective's current vendors.” 37 CFR 210.33(b)(10). The information must “include a general description of any new request for information (RFI) and/or request for proposals (RFP) process, either copies of the relevant RFI and/or RFP or a list of the functional requirements covered in the RFI or RFP, the names of the parties responding to the RFI and/or RFP.”

Id.

The MLC's initial response provided general information about its third-party vendors' business capabilities.

165

DIMA, the DLC, and other commenters advocated for greater transparency,

166

and in subsequent meetings with the MLC, the Office requested further information. In response, the MLC elaborated that it “evaluates vendor performance through multiple, standard mechanisms that establish expectations for responsiveness, turnaround times, fulfillment, and consistency.”

167

It explained that “the vendors that comprise its Supplemental Matching Network provide a range of matching-related services” and “collectively assist [t]he MLC with matching tasks (with the specific allocation of work among them subject to adjustments to meet [t]he MLC's evolving matching needs).”

168

These “matching tasks” include “(a) supplementing [t]he MLC's core matching by applying independent work-to-recording and recording-to-work matching services; (b) validating and expanding matches between sound recordings and musical works; (c) finding additional versions of the same recordings across [DMPs] so all related uses are captured and tied to works already matched; [and] (d) identifying non-musical content so it can be removed from the royalty pool.”

169

165

MLC Initial Submission at 30-32.

166

See, e.g.,

DLC & DIMA Initial Comments at 15; Gwendolyn Seale Initial Comments at 7; Spirit Music Group Initial Comments at 3.

167

MLC

Ex Parte

Letter at 5 (Nov. 20, 2025).

168

Id.

169

Id.

The Office understands the MLC's need to maintain flexibility as it allocates matching tasks among its vendors. The information provided is sufficient for purposes of this designation proceeding. To the extent additional transparency is warranted, we will address those considerations elsewhere, including in the context of the MLC's annual reporting obligations. We will continue to monitor how the MLC evaluates vendor performance and determines whether to continue engagement.

3. Funding

The MMA directs the MLC to report on procedures “to guard against fraud, abuse, waste, and the unreasonable use of funds.”

170

In evaluating whether the current MLC designation should be continued, the MMA's legislative history directs the Office to consider any “evidence of fraud, waste, or abuse, including the failure to follow the relevant regulations adopted by the Copyright Office.”

171

Accordingly, the Office requested information about the MLC's “procedures to safeguard its use of the assessment funds against abuse, waste, and other unreasonable expenditures.”

172

We also asked the MLC to discuss “whether it ha[s] become more efficient over time[,] . . . address[ing] with specificity any expenditure categories (

e.g.,

personnel costs, information technology, professional fees, outreach, education, communication & events, insurance, rent, computer equipment, & office expenses) that have significantly increased since January 2021,” and providing a detailed explanation for any such increase.

173

In addition to the MLC's submission in this proceeding, its annual reports aid in the Office's evaluation.

174

They include information on the MLC's “[b]udgeting and expenditures,” “total costs for the preceding calendar year,” projected annual budget, and “[e]xpenses that are more than 10 percent of the annual mechanical licensing collective budget.”

175

170

17 U.S.C. 115(d)(3)(D)(ix)(II)(bb)(BB) (directing the MLC to ensure that periodic audit reports address the implementation and efficacy of certain procedures). As noted above, the DMPs fund the MLC's operations through an administrative assessment that is established by the Copyright Royalty Judges.

171

H.R. Rep. No. 115-651, at 6.

172

NOI at 5944. Note that the MMA requires the MLC to retain a qualified auditor to examine its books, records, and operations and prepare a report on these topics for the MLC's Board.

See

17 U.S.C. 115(d)(3)(D)(ix)(II). The auditor's letter to the MLC's Board can be found on the MLC's website. Letter from WithumSmith+Brown, P.C. to the Board of Directors of the MLC (Dec. 22, 2023),

https://www.themlc.com/hubfs/Auditor%20Letter%20to%20Board%20re%20MMA%20Audit%20Provision%20(115(d)(3)(D)(ix)(II)).pdf.

173

NOI at 5944.

174

The MLC's annual reports and public financial statements are available at

https://www.themlc.com/governance.

175

37 CFR 210.33(b)(3)-(5), (7).

a. Safeguarding Use of Assessment Funds and Efficiency

The MLC identified internal and external controls that ensure responsible use of assessment funds.

176

Its internal controls include “structured approval

processes for expenditures and payments, emphasizing checks at multiple levels to ensure accountability.”

177

According to the MLC, monitoring mechanisms are in place to review vendor payments, employee-related financial transactions, and budgeting.

178

It stated that its Budget and Performance Advisory, Audit, and Compensation committees provide further “oversight to ensure judicious use of resources and prevention of abuse, waste, and unreasonable expenditures.”

179

176

MLC Initial Submission at 33-35.

177

Id.

at 33.

178

Id.

179

Id.

at 34.

The MLC also described its external controls, which include the statutorily required quinquennial outside audit, which was last completed in 2023.

180

The external auditor concluded that it had “ ‘obtained reasonable assurance that the financial statements as a whole were free from material misstatements, whether caused by fraud or error, in accordance with AU-C Section 240 Consideration of Fraud in a Financial Statement Audit, as issued by [the American Institute of CPAs].’ ”

181

Additionally, the MLC has “engage[d], on a voluntary basis, a qualified and independent outside auditor to examine its books and records,” and each year since 2021, “[e]ach audit has resulted in an unqualified opinion (typically known as a `clean audit report') that the financial statements presented fairly the position of [t]he MLC in all material aspects in accordance with accounting principles generally accepted in the U.S. (‘GAAP’).”

182

180

Id.

at 33-34.

181

Id.

at 34 (quoting Letter from WithumSmith+Brown, P.C. to the Board of Directors of the MLC (Dec. 22, 2023)).

182

Id.

Finally, the MLC noted that it “publicly discloses detailed analysis of its annual budget, annual collective total costs, and annual expenditures applied against assessment fees collected, as well as publicly disclosing copies of each annual IRS Form 990 filings.”

183

Id.

at 34-35.

Very few commenters addressed the MLC's handling of administrative assessment funds.

184

The DLC and DIMA, however, questioned its expenditure of resources to match sound recordings that have less than one dollar in accrued mechanical royalties across all blanket periods to date.

185

They argued that “it is highly inefficient for MLC[] to expend substantial resources to match these works, with what can't even be described as marginal benefits to creators.”

186

Finally, they raised concerns related to transparency and access to information about certain vendor contracts and administrative assessment data.

187

184

See, e.g.,

Abby North Initial Comments at 3-4 (stating that the MLC should “spend more money on correcting incorrect party data and mismatched recording data so that the correct parties receive the distributed royalties”); NMPA Initial Comments at 7-8 (highlighting that “the deal struck between music publishers and DMPs during the drafting of the MMA was the agreement that DMPs would fund `the collective total costs' of the MLC” (emphasis omitted)).

185

See

DLC & DIMA Initial Comments at 19.

186

Id.

187

Id.

at 15.

With regard to its efforts to match “long tail” works, the MLC noted the Office's previous encouragement to “be careful in adopting and applying thresholds or cost/benefit analyses to appropriately balance the need to be cost-effective and fiscally responsible with the core duty to vigorously match.”

188

It explained that “[i]t is precisely [the DMP's] disregard for the value of robust and comprehensive matching efforts that caused many of the problems that the MMA sought to address, and it validates the prescient decision of Congress to take control over the royalty administration process away from [DMPs] and give it instead to a statutory collective governed by a Board consisting almost entirely of rightsholders.”

189

188

MLC Reply Submission at 25 n.66 (quoting

Unclaimed Royalties Report

at 82).

189

Id.

at 24.

As further evidence of its fiscal efficiency, the MLC highlighted administrative fee ratios it publishes in its annual reports. These ratios “are calculated by dividing the respective administrative assessment for the calendar year by royalty metrics, with the metric most relevant for comparison with industry benchmarks being total royalty pools reported to [t]he MLC.”

190

In its initial submission, the MLC reported administrative fee ratios at 4.23% in its first year of operation, 3.97% in 2022, and 3.07% in 2023.

191

For the 2024 calendar year, the MLC reported an administrative fee ratio at 3.86%.

192

These ratios are comparable to or lower than those of other collective management organizations.

193

190

MLC Initial Submission at 35.

191

Id.

at 35.

192

MLC 2024 Annual Report app. at 15.

193

According to the MLC's CEO, “no other collective management organization has ever reported an administrative cost percentage less than 5%, and most similar organizations around the world report percentages between 10% and 20% or more.” MLC Initial Submission at 35-36 (quoting

Five Years Later—The Music Modernization Act Before the Subcomm. on Courts, Intell. Prop. & the internet of the H. Comm. on the Judiciary,

118th Cong. (2023) (responses to questions on the record of Kris Ahrend, CEO, Mechanical Licensing Collective)). The Office notes that SoundExchange has reported administrative rates between four and six percent.

Why should I register with SoundExchange?,

SoundExchange,

https://www.soundexchange.com/faq/why-should-i-register-with-soundexchange/

(last visited May 26, 2026).

Some commenters rejected the MLC's assertion that administrative fee ratios are appropriate measures of efficiency in the context of the blanket license.

194

The DLC and DIMA argued that “[g]iven the high fixed costs of administering the section 115 license, focusing only on the administrative expense ratio leads to the conclusion that MLC[] is more efficient or less efficient merely because DMPs generated more or less revenues.”

195

The DLC and DIMA contended that the MLC's spending should correlate to the advancement of its statutory duties, such as “`matching' tracks to underlying musical works, and setting up systems to receive usage reports and make payments,” notwithstanding how much revenue the services generate.

196

194

DLC & DIMA Initial Comments at 17; Abby North Initial Comments at 3-4.

195

DLC & DIMA Initial Comments at 17-18.

196

Id.

at 17;

see also

Abby North Initial Comments at 3-4 (“The goals should be to have the highest match and claim rate, the cleanest data, and the most accurately paid members, not the lowest admin fee.”).

Fiscal responsibility and efficiency remain core values in the Office's assessment of the MLC's past performance, especially as Congress envisioned the MLC “operat[ing] in a transparent and accountable manner.”

197

The Office acknowledges the MLC's efforts to function accordingly. Indeed, since its initial designation, it has delivered to the Office an annual report detailing all budgeting information required under the statute and the Office's regulations. In addition to the MLC's internal efforts to guard and expend funds responsibly, such public reporting permits stakeholders to remain vigilant against waste.

197

S. Rep. No. 115-339, at 7.

The Office recognizes that there may be a point at which expenditures associated with matching activity could become disproportionate to the value of royalties distributed. At present, however, the record does not indicate that the MLC is approaching such a threshold. To the contrary, its continued efforts to match works, including those with low accrued royalties, are consistent with its statutory obligation to identify and pay rightsholders, particularly prior to making any market-based distribution of unmatched funds.

The Office further concludes that commenters have not established that

the MLC's current metrics for assessing efficiency are unreasonable. While there are multiple ways to evaluate efficiency, administrative fee ratios are a commonly used and informative metric among CMOs. The MLC's reported ratios fall within a range that supports a finding of responsible stewardship. Therefore, we find no basis to disturb the MLC's designation for that reason.

b. Increased Expenditures

Next, the Office asked the MLC to provide information on any expenditure categories that have significantly increased since January 2021. In response, the MLC addressed two expenditure increases. First, it explained that “overall staffing expenses have significantly increased since January 2021 as [t]he MLC has continued to build out its internal teams by hiring new team members.”

198

Second, it explained that expenses related to education and outreach increased after 2022, because “the COVID-19 pandemic prevented [t]he MLC from conducting numerous activities that [t]he MLC would have otherwise conducted from the outset,” and during that time it engaged in educational programs and activities exclusively on a virtual basis.

199

As pandemic-related restrictions relaxed, the MLC pivoted to add more outreach and education through hosting and participating in in-person events, which increased costs.

200

198

MLC Initial Submission at 37.

199

Id.

200

Id.

Based on the information provided, the Office finds that the MLC has reasonably explained the identified increases in expenditures, including those related to staffing and outreach activities. These explanations are consistent with its ongoing efforts to build operational capacity and engage with stakeholders pursuant to its statutory duties. At the same time, the Office emphasizes the importance of continued attention to the efficient use of assessment funds, particularly as certain expenditures have grown. Thus, we encourage the MLC to consider whether additional or more granular metrics may assist in evaluating the effectiveness and efficiency of such spending, with particular focus on education and outreach activities. The Office will continue to monitor these issues, including through review of the MLC's annual reports and other disclosures.

4. Governance

In the NOI, the Office requested information related to the MLC's governance, including,

inter alia:

a copy of the MLC's bylaws; an explanation of how it approaches dispute resolution with interested parties “regarding interpretation of the MMA or the Office's regulations”; an explanation of how it has been ensuring that “its policies, procedures, and practices are transparent and accountable” and “that all board and committee members have equal access to information in the [MLC's] possession”; the “status of any policies or procedures related to the distribution of unclaimed accrued royalties and accrued interest”; and any other “policies addressing its statutory duties, procedures, practices, and guidelines.”

201

NOI at 5944.

Overall, the Office finds that the MLC's governance meets the MMA's requirements and supports the MLC's continued designation. On this topic, comments noting concerns or improvements focused on the MLC Board's composition, the Board's Songwriter Trade Group Director, the MLC's authority to interpret the MMA or Copyright Act, transparency, and certain MLC policies.

a. Bylaws, Board, and Committees

The MLC's Board and statutory committee members are selected in accordance with its bylaws.

202

When a nonvoting MLC Board member is selected, that candidate “is then referred to the Register of Copyrights for evaluation, along with an explanation of how the candidate satisfies the MMA's eligibility requirements” and becomes elevated to the Board only after the Librarian of Congress's appointment.

203

The MLC provided a copy of its bylaws and detailed information on its Board and statutorily required committee members.

204

It also provided information on its non-statutory committees, including their purposes, members, and selection processes.

205

These additional committees are the Budget Performance Advisory Committee, Audit Committee, Compensation Committee, Songwriter Nominating Committee, and Publisher Nominating Committee.

206

202

MLC Initial Submission Ex. 3, secs. 6.1, 6.2, 7.2 (“MLC Bylaws”).

203

MLC and DLC Contact Information, Boards of Directors, and Committees,

U.S. Copyright Office,

https://www.copyright.gov/music-modernization/mlc-dlc-info/

(last visited May 26, 2026).

204

MLC Initial Submission at 39-60 and Ex. 3.

205

Id.

at 60-64.

206

Id.

i. Board and Committees

The Office received several comments addressing the statutory composition of the MLC's voting directors, which is divided between four self-published songwriters and ten music publisher representatives.

207

The Office appreciates these comments, but does not have the power to change the Board's statutory composition by regulation.

207

See

BMAC & MAC Reply Comments at 2; Gwendolyn Seale Initial Comments at 8; Lindvall, Lowery, & Morgan Initial Comments at 17; SGA, SCL & MCNA Initial Comments at 4; SONA Initial Comments at 7.

Other comments raised concerns about current Board and committee membership, with some suggesting that members do not adequately represent the publishing and songwriting community, especially smaller publishers and independent songwriters.

208

The Office agrees that participation on the MLC's Board or committees is a serious responsibility and that these positions should, as a whole, represent the varied interests of the greater publishing and songwriting community. Although, other than the Songwriter Trade Group Director position (discussed below), commenters did not make specific proposals to this end, we encourage the MLC to consider ways to address concerns regarding adequate representation of stakeholder groups on its Board and committees.

208

See

Abby North Initial Comments at 6-7; BMAC & MAC Reply Comments at 2; George Johnson Reply Comments at 12; SONA Initial Comments at 7. For example, Go to Eleven Entertainment suggested that the MLC would benefit from having members on the MLC's Nominating Committees (committees not required by the MMA) who are not on the MLC's Board, because “the [B]oard controls the makeup of new members indefinitely and they often do not pick people who would challenge [the Board's] opinions.” Go to Eleven Entertainment Initial Comments at 3-4.

ii. Bylaws Governing the Songwriter Trade Group Director

Songwriter groups specifically addressed how the MLC's bylaws implement the statutory nonvoting Board seat for “a representative of a nationally recognized nonprofit trade association whose primary mission is advocacy on behalf of songwriters in the United States”

209

(the “Songwriter Trade Group Director”). According to the bylaws, this director is “elected by a vote of all Class A Members [

i.e.,

the Board's voting “Songwriter Directors”], with each Class A Member having one (1) vote. A tie vote shall be broken by a vote of the full Board, or if still tied after such vote, by the vote of the Chair of the Board.”

210

The Songwriter Trade Group Director's term “shall continue

until a vote of the majority of the Class A Members at any Annual Meeting of Members (or by a unanimous written consent of all Class A Members delivered to the full Board) calls for election of a replacement, at which point the term of the Songwriter Trade Group Director shall expire at the next Annual Meeting of Members.”

211

209

17 U.S.C. 115(d)(3)(D)(i)(V).

210

MLC Bylaws sec. 4.2(c)(1).

211

Id.

sec. 4.3. The bylaws also state that “if a vacancy arises with respect to the Songwriter Trade Group Director, the Songwriter Directors shall appoint a replacement Director.”

Id.

sec. 4.4.

Since the MLC's formation, the Songwriter Trade Group Director has been a representative from NSAI. BMAC, MAC, and SONA suggested that having varying songwriter group representatives fill the role would be beneficial for songwriters as a whole.

212

BMAC and MAC stated that the MLC's bylaws “make it challenging for different songwriter trade groups to be considered for this position.”

213

SONA echoed this claim.

214

These groups also asked for “clarification” related to the “eligibility, nominating process, term length, and term limits” for the Songwriter Trade Group Director position.

215

212

BMAC & MAC Reply Comments at 1-2 (“While we appreciate the intent behind this role, we believe the current implementation falls short of providing adequate representation for the diverse songwriter community.”); SONA Initial Comments at 7;

see also

SGA, SCL & MCNA Initial Comments at 4; Letter from Rep. Scott Fitzgerald to Shira Perlmutter, Register of Copyrights and Director, U.S. Copyright Office at 3-4 (Aug. 29, 2024) (noting stakeholder concerns on this topic).

213

BMAC & MAC Reply Comments at 2.

214

SONA Initial Comments at 7 (“Due to a lack of clarity, the nature of the bylaws of The MLC make it virtually impossible for any other songwriter trade group to be contemplated.”).

215

BMAC & MAC Reply Comments at 1-2; SONA Initial Comments at 7.

It is important to emphasize that neither BMAC, MAC, nor SONA criticized the current Songwriter Trade Group Director or NSAI, the Director's trade group. In fact, SONA expressed its “gratitude for all the work that NSAI has dedicated to the position.”

216

The Office echoes the appreciation for NSAI's work to support the MMA's goals, including through its participation on the MLC's Board.

216

SONA Initial Comments at 7.

The Office does, however, recommend some changes to the MLC's bylaws governing the Songwriter Trade Group Director. We believe that the bylaws' current provision governing the Songwriter Trade Group Director's term is inconsistent with the statute, as the term does not have a fixed duration, but continues until the Songwriter Directors call for the election of a replacement Songwriter Trade Group Director.

217

The MMA gives the MLC the authority to establish rules governing “the

length of the term

for each member of the board of directors,”

218

and that phrase suggests a fixed duration.

219

217

MLC Bylaws sec. 4.3. The bylaws also state that “if a vacancy arises with respect to the Songwriter Trade Group Director, the Songwriter Directors shall appoint a replacement Director.”

Id.

sec. 4.4.

218

17 U.S.C. 115(d)(3)(D)(ii)(I)(aa) (emphasis added).

219

See Term,

Black's Law Dictionary (12th ed. 2024) (defining “term,” in part, as a “fixed period of time”).

While the rules governing the Songwriter Trade Group Director's nomination and election provisions do not conflict with the letter of the law, as the MMA gives the MLC discretion in their implementation, the Office believes that there would be significant benefits to expanding the pool of songwriters who could nominate and elect the Songwriter Trade Group Director. Amending the bylaws to allow for greater songwriter input also would be consistent with the MMA's legislative history, which states “that songwriters should be responsible for identifying and choosing representatives that faithfully reflect the entire songwriting community on the Board.”

220

Conf. Rep. at 4.

The Office encourages the MLC's Board to make these changes as soon as reasonably practicable.

iii. Authority To Interpret the MMA or Copyright Act

Some commenters questioned the MLC's authority to establish various policies, including those that interpret the MMA or Copyright Act. For example, Artist Rights Institute and Abby North noted their concern over “appeal rights in the policies and practices of [t]he MLC . . . that effectively make the MLC a [rulemaking] body not authorized by the Music Modernization Act.”

221

Attorney Gwendolyn Seale stated that “[a]dditional transparency regarding some of the MLC's positions taken since 2021 is warranted, particularly with respect to its (1) investment policy, (2) copyright terminations policy, and (3) historical royalties distributions decisions.”

222

221

Artist Rights Institute & Abby North Reply Comments at 1.

222

Gwendolyn Seale Initial Comments at 8 (noting also that “the MLC should be disclosing its organizational meeting minutes to the public, so the public is aware of the rationale behind its decisions”).

Nothing in the statute gives the MLC authority to interpret the Copyright Act or MMA.

223

Moreover, it is the Office, with the Librarian of Congress's approval, that has the authority to promulgate regulations to effectuate the mechanical license and the CRJs who have the authority to set the statutory mechanical license's rates and terms, establish the administrative assessment, and promulgate regulations related to that assessment.

224

At the same time, Congress granted the MLC its own specified authorities and functions, including the ability to establish its own bylaws.

225

While not every decision, practice, or dispute involving the MLC requires the Office's legal guidance,

226

we have made clear that we will provide such guidance when there is a dispute over the correct interpretation of the Copyright Act or MMA.

227

To the extent that stakeholders have concerns about specific MLC practices or legal interpretations, we encourage them to bring those concerns to our attention.

223

Cf.

17 U.S.C. 702 (“The Register of Copyrights is authorized to establish regulations not inconsistent with law for the administration of the functions and duties made the responsibility of the Register under this title.”); 89 FR 56586, 56610 (July 9, 2024).

224

17 U.S.C. 801(b)(1), (b)(8);

id.

at 115(c)(1)(E)-(F), (d)(12)(A).

225

Id.

at 115(d)(3)(C), (d)(3)(D)(ii).

226

The Office also recognizes that Congress intended that the Office's regulations would “balance[] the need to protect the public's interest with the need to let the new collective operate without over-regulation.” Conf. Rep. at 12.

227

The CRJs are responsible for clarifying any confusion over their own regulations.

See, e.g.,

85 FR 22518, 22529-30 (Apr. 22, 2020) (noting, in the context of a dispute over the CRJ's regulatory definition of “offering,” that “[t]his issue does not seem appropriate for the Office to opine on one way or the other . . . [and] concerns should be addressed to the CRJs” and on the issue of the CRJ's late fee regulations, “any clarification should come from [the CRJs]”).

b. Transparency, Accountability, and Access

As Congress observed, the MLC “is expected to operate in a transparent and accountable manner” and that the MMA “specifically requires that the [MLC] shall ensure that its policies and practices are transparent and accountable.”

228

The NOI asked for an explanation of how the MLC has been ensuring that “its policies, procedures, and practices are transparent and accountable” and “that all board and committee members have equal access to information in the [MLC's] possession.”

229

228

Conf. Rep. at 6.

229

NOI at 5944.

The MLC provided examples of how it meets this requirement. First, it noted that copies of its policies, “detailed information about its procedures and practices,” and “Annual Reports and annual IRS filings” are all available on its website.

230

It also noted that it “has built and deployed numerous tools and resources to facilitate access to and

usage of [t]he MLC's public data by its [m]embers and members of the public,” which “provide users with significant transparency and promote accountability.”

231

It stated that it “provides detailed royalty statements every month to [m]embers receiving royalty payments” and “engages in diligent efforts to publicize throughout the music industry the existence of The MLC and the ability for rightsholders to register new works, claim shares in registered works, and submit proposed matches to unmatched usage, providing transparency and broad accountability on usage and ownership records.”

232

230

MLC Initial Submission at 69-70.

231

Id.

at 70-71;

see also

SGA, SCL & MCNA Initial Comments at 5-8 (stating that certain data reported by the MLC is “confusing”).

241

DLC & DIMA Initial Comments at 14 (“[T]he MLC should ensure that all stakeholders are made aware of its activities and decision-making processes.”); Gwendolyn Seale Initial Comments at 2, 8 (“Additional transparency regarding some of the MLC's positions taken since 2021 is warranted, particularly with respect to its (1) investment policy, (2) copyright terminations policy, and (3) historical royalties distributions decisions. . . . I believe the MLC should be disclosing its organizational meeting minutes to the public, so the public is aware of the rationale behind its decisions.”); Recording Academy Reply Comments at 5;

see also

Abby North Initial Comments at 8 (“When [t]he MLC envisions a new policy, members should be provided a mechanism to provide input related to this policy, prior to it being adopted.”).

The Office appreciates the MLC's efforts to provide higher levels of transparency into its policies, procedures, and practices. We also appreciate that it has responded to our requests by providing additional information in meeting summaries or in its annual reports.

242

The Office expects the MLC to seriously consider commenters' requests for additional transparency on the topics noted above. In particular, it should consider ways that songwriters and publishers who are not on the MLC's Board or Committees can be better informed of those groups' activities,

243

and have the opportunity to submit data or opinions relevant to policies, procedures, and practices before they are finalized.

244

242

See, e.g.,

MLC

Ex Parte

Letter at 1-2, 5-6 (July 21, 2025) (providing the Office with additional requested data); MLC 2024 Annual Report at 36-37 (reflecting the Office's request for the MLC to clarify how it uses the terms “unmatched royalties” and “unclaimed royalties”).

243

Unclaimed Royalties Study at v (“The MLC should be transparent about its activities and should continue to engage regularly with stakeholders. Toward this end, among other things, the MLC should make relevant material publicly available on its website, including: (1) full and complete copies of policies, practices, and procedures (

e.g.,

those concerning holding and distributing royalties, data quality, and matching activities) accompanied by clear layperson's explanations as well as discussions of its decision-making processes. . . .”).

244

As Congress indicated in the context of discussing the MLC's statutory committees, “[g]iven their importance, the three committees established by the collective must operate in a transparent manner to the greatest extent possible in order to avoid unnecessary litigation as well as to gain the trust of the entire music community.” Conf. Rep. at 4.

c. Unclaimed Royalties Policy

The MMA directed the MLC's Unclaimed Royalties Oversight Committee to “establish policies and procedures for the distribution of unclaimed accrued royalties and accrued interest,” in accordance with the statute.

245

In response to the Office's earlier request for a status update,

246

the MLC indicated that it had not yet adopted such policies and that it intended to do so in advance of any distribution.

247

As discussed above, it has now announced that it is developing a policy governing the distribution of unclaimed accrued royalties and accrued interest, with distributions expected to begin in January 2027.

245

17 U.S.C. 115(d)(3)(J)(ii).

246

NOI at 5944.

247

MLC Initial Submission at 68.

The comments received provide useful context for the development of that policy. Commenters generally

supported the MLC's decision to hold unclaimed royalties beyond the minimum statutory period, so that it can improve its matching and claiming efforts.

248

At the same time, some emphasized the importance of transparency and increased stakeholder engagement in advance of any market share distribution.

249

For example, the Recording Academy stated, “[w]hen the time does finally come to distribute unmatched royalties, the MLC must proceed with the . . . spirit of full transparency. A detailed explanation of the proposed process for distribution should be circulated well in advance with ample opportunity for stakeholders to weigh in.”

250

Similarly, while Representative Scott Fitzgerald praised the MLC's work to identify copyright owners of historical royalties, he noted that “questions remain about whether the eventual market share based distribution serves as a disincentive to continue innovation” and “encourage[d] the Copyright Office to define clear timeframes and transparency measures in the distribution process as a condition of redesignation.”

251

248

See, e.g.,

A2IM Initial Comments at 2 (“The Copyright Office should consider conditioning MLC redesignation on further delay in the distribution of these funds . . . until the MLC fully implements improvements to the system that result from this periodic review.”); BMAC & MAC Reply Comments at 3 (“We strongly believe that the distribution of unmatched royalties based on market share should not occur until significant improvements are made to the MLC's matching technology and processes.”); Recording Academy Reply Comments at 4-5; SONA Initial Comments at 4.

249

NSAI Initial Comments at 3 (“NSAI believes that The MLC needs to prioritize creating a strategy around its eventual market distribution of historic unmatched royalties. There is a necessary sequence of events that must begin in earnest in order to appropriately fulfill the obligation of the law. . . . It will be necessary to formulate and publish a written timeline of when and how unclaimed royalties from specific periods will be distributed. Public notice of an impending distribution will be the only way to motivate owners who have not prioritized claiming their royalties.”); SGA, SCL & MCNA Initial Comments at 5, 11 (requesting the establishment of certain rules governing the distribution of unclaimed royalties by market share and stating that “[e]nsuring fairness in market share-based distribution decision-making by the MLC board has thus already become a challenge of overwhelming importance that can only be met by genuine transparency . . . .”).

250

Recording Academy Reply Comments at 5.

251

Letter from Rep. Scott Fitzgerald to Shira Perlmutter, Register of Copyrights and Director, U.S. Copyright Office at 4 (Aug. 29, 2024).

The Office supports the MLC's efforts to develop policies and procedures governing the distribution of unclaimed accrued royalties well in advance of the tentative January 2027 distribution. As those policies are developed, we encourage the MLC to take into account the considerations raised by commenters. Advance publication of policies and procedures related to the distribution will provide rightsholders an opportunity to offer input. The Office looks forward to working with the MLC on this matter, and will continue to monitor its progress.

d. Other Statutory Policies, Procedures, Practices, and Guidelines

In addition to inquiries regarding the MLC's Unclaimed Royalties Policy, the NOI requested “[c]opies of all the [MLC's] policies addressing its statutory duties, procedures, practices, and guidelines,” along with “the location of these policies, procedures, and practices on its website if they are currently available to the public, and a summary of changes made, if any, from earlier versions of these policies, procedures, practices, and guidelines.”

252

The MLC's initial submission provided this information for its Conflict of Interest Policy, Musical Work Ownership Dispute Policy, Statutory Termination Policy, and Guidelines for Adjustments.

253

It also provided this information for its Investment Policy Statement and Cash Management Policy Statement, which are discussed in depth below. After the Office concluded our rulemaking on “Termination Rights, Royalty Distributions, Ownership Transfers, Disputes, and the Music Modernization Act,”

254

the MLC updated its Statutory Termination Policy.

255

In September 2024, it established its Catalog Transfer Policy, which it revised in November 2024.

256

252

NOI at 5944.

253

MLC Initial Submission at 64-65, 67 and Exs. 5, 6, 9.

254

89 FR 56586.

255

See

MLC

Ex Parte

Letter at 3 (July 21, 2025).

256

See id.

i. Conflict of Interest Policy

Fewer comments addressed the MLC's Musical Work Ownership Dispute Policy, Statutory Termination Policy, Catalog Transfer Policy, or Guidelines for Adjustments.

257

The DLC and DIMA, however, objected to the MLC's Conflict of Interest Policy, stating that the MLC “has excluded [the DLC's] statutorily designated board member from its board discussions, pursuant to [the] policy.”

258

They went on to state that “[s]uch exclusions are plainly improper, as the MMA specifically and purposefully requires a [DLC] representative to serve on [the MLC's] board of directors” and that “[e]ven as a non-voting member, that representative should, as a rule, be entitled to participate in [the MLC's] board meetings and be aware of its discussions and decisions.”

259

257

The Office notes, for the MLC's further consideration, several comments related to specific aspects of these policies. Gwendolyn Seale Initial Comments at 8-9 (addressing Statutory Termination Policy); Go to Eleven Entertainment Initial Comments at 4 (addressing Statutory Termination Policy); NSAI Initial Comments at 3 (addressing Statutory Termination Policy); Spirit Music Group Initial Comments at 3 (“The MLC's adjustment policy does not allow for debits and credits of rightsholders in the event of an error. Additionally, credits to the entitled rightsholder are not delivered unless the funds are received from the party paid in error. CMOs around the world have policies in place to handle adjustments and the MLC should have similar procedures in place.”); Go to Eleven Entertainment Initial Comments at 5 (characterizing the MLC's current conflicts procedures as “not efficient” due in part to the lack of deadlines in the “`informal reach out'” stage); SGA, SCL & MCNA Initial Comments at 11 (urging the MLC to “revamp[] . . . rules governing the ability of music creators to demand proper and accurate changes to the MLC database if the copyright owner of a work refuses to respond to written correction requests within a thirty-day period”).

258

DLC & DIMA Initial Comments at 14.

259

Id.

The DLC and DIMA also opined that “the Copyright Office should issue a regulation that clearly outlines the instances (if any) in which a given member of the board, whether voting or non-voting, may be properly excluded from a board meeting.”

Id.

at 29.

The MLC's Conflict of Interest Policy states that it “is intended to supplement but not replace applicable state and federal laws governing conflicts of interest.”

260

The MLC has also explained that “the policy is employed to appropriately manage actual, potential, or perceived conflicts in accordance with applicable legal requirements” and “serves its broader commitment to accountability and transparency.”

261

260

MLC Initial Submission Ex. 5, art. I.

261

MLC

Ex Parte

Letter at 7 (July 21, 2025).

In response to the DLC and DIMA's comments, the MLC stated that it “notified the DLC representative when there will be a discussion of . . . topics [that involve a conflict for the DLC Board Member], and the DLC representative has been recused from that portion of the meeting,” but it “has not insisted on specific disclosure of every actual, potential or perceived conflict, and has not sought penalties against the DLC representative for failure to disclose all such conflicts,” notwithstanding “the obviousness of the conflicts that exist for the DLC representative.”

262

It provided the following example of where the DLC Board Member would be excluded from participating in an MLC Board meeting:

262

MLC Reply Submission at 33-34.

[T]he DLC representative on the Board is without question a representative of third parties who have Transactions (as that term is defined in the Conflict of Interest policy) with The MLC—including the DLC itself, which has negotiated and entered into multiple agreements with [t]he MLC concerning the administrative assessment

. . . . When a meeting of The MLC Board is to include a discussion of whether to accept the DLC's proposed terms for the administrative assessment, the DLC representative is obviously not entitled to sit in on that discussion.

263

Id.

at 33 n.89.

The MLC also emphasized that “when acting in their capacity on the Board,

all

Board members of [t]he MLC have a fiduciary duty of loyalty to [t]he MLC,” including the DLC Board Member.

264

Finally, it added that the DLC's Board Member “has not before sought to create a dispute over this practical way of handling conflicts.”

265

264

Id.

at 34.

265

Id.

At this time, the Office is not making any recommendations concerning the MLC's Conflicts of Interest Policy, to permit further discussion and potential refinement of the issues. We will continue to consider this issue and any possible recommendations, as appropriate; we also encourage the MLC and DLC to find a mutually agreeable resolution.

ii. Anti-Comingling Policy

The MMA also directs the MLC to “establish an anti-comingling policy for funds not collected under [17 U.S.C. 115] and royalties collected under [17 U.S.C.

115],”

266

i.e.,

a policy to avoid combining royalty funds collected under the statutory blanket license with any other funds. Those other funds could include its own operational funds (

i.e.,

funds under the administrative assessment, voluntary contributions from DMPs and SNBLs, or fees charged for services) or royalties for voluntary licenses that it administers.

266

17 U.S.C. 115(d)(3)(D)(ix)(I)(cc); MLC 2024 Annual Report app. at 5 (noting that its Investment Policy “contain[s] an anti-commingling policy” as required by the MMA).

While the MLC does not have a stand-alone anti-comingling policy, its Investment Policy Statement and its Cash Management Policy Statement (both discussed in more detail below) each include anti-commingling policies.

267

Neither policy, however, accounts for the commingling of funds collected by the MLC when administering voluntary licenses.

268

While the MLC does not currently administer voluntary licenses, it should adopt a standalone anti-commingling policy to account for this possibility.

267

MLC Initial Submission Exs. 7, at 3, and 8, at 2.

268

Id.

at Exs. 7, at 3, and 8, at 2.

5. Governance—Financial Management

a. Background

The final governance issue involves the MLC's financial management of royalties for (1) unmatched works and (2) matched works that have not yet been distributed (what the MLC calls “royalties pending distribution”). The MMA provides some direction on how the MLC should manage royalties in its possession. The statute authorizes it to “[c]ollect and distribute royalties from digital music providers,” and “[e]ngage in such other activities as may be necessary or appropriate to fulfill [its] responsibilities.”

269

This authorization, however, is subject to “more particular requirements,”

270

including a requirement that the MLC “deposit into an interest-bearing account” any royalties that cannot be distributed due to “an inability to identify or locate a copyright owner of a musical work (or share thereof); or . . . a pending dispute before the [D]ispute [R]esolution [C]ommittee.”

271

269

17 U.S.C. 115(d)(3)(C)(i)(II), (XIII).

270

Id.

at 115(d)(3)(C)(i).

271

Id.

at 115(d)(3)(G)(III)(aa), (bb).

The statute further details the process: “Accrued royalties for unmatched works (and shares thereof) shall be maintained . . . in an interest-bearing account that earns monthly interest—(I) at the Federal, short-term rate; and (II) that accrues for the benefit of copyright owners entitled to payment of such accrued royalties.”

272

Once the MLC has located the owner of an unmatched work—and provided that it has not already distributed the royalties as unclaimed—it must pay the “royalties and a proportionate amount of accrued interest associated with that work (or share thereof) to the copyright owner.”

273

The MMA does not contain comparable language addressing whether or how the MLC should generate or pay interest for royalties pending distribution.

272

Id.

at 115(d)(3)(H)(ii).

273

Id.

at 115(d)(3)(I)(ii).

In the NOI, the Office requested copies of any MLC policies addressing statutory duties, procedures, practices, and guidelines, including those governing the “collection, processing, holding, and distribution of royalties,” and “investments.”

274

In response, the MLC provided its “Investment Policy Statement” and “Cash Management Policy Statement.”

275

274

NOI at 5944.

275

MLC Initial Submission Exs. 7 and 8.

The Investment Policy Statement covers (1) “royalties for sound recording uses that have not yet been matched to an underlying musical work”; (2) “royalties for sound recording uses that have been matched to an underlying musical work, but for shares of that work where the identity and/or sufficient payment instructions for the copyright owner are not yet known”; and (3) “royalties that have been matched, and where one or more copyright owner claims have been made, but where royalties are not yet payable, including due to ownership disputes, reviews over eligibility for payment, regulatory guidance or legal claims.”

276

In other words, it covers royalties the MLC considers to be subject to the “Statutory Interest” requirements described above.

277

In contrast, the Cash Management Policy Statement covers all other royalties, chiefly those pending distribution, which are held in money market or bank deposit accounts “for a relatively brief period of time, until they can be processed as part of regular monthly royalty distributions.”

278

276

Id.

at Ex. 7, at 1.

277

Id.

278

Id.

at Ex. 8, at 1, 3.

Regarding its Investment Policy, the MLC submitted that “the MMA effectively requires . . . an investment program.”

279

It claimed that “[t]here is no deposit account where [t]he MLC can maintain royalty funds and earn interest at the [F]ederal short-term rate, without risk to the principal or interest.”

280

It noted that the Federal short-term rate typically exceeds the return available from bank and money market accounts; the MMA did not create a deposit account that offers that rate; and the government has not made such an account available to the MLC.

281

Absent the ability to directly obtain the rate designated by the MMA, the MLC “developed an investment program intended to earn the necessary interest rate while keeping risk at a minimum,” with guidance from a fixed-fee financial advisor.

282

279

Id.

at 66.

280

Id.

281

Id.; id.

at Ex. 7, at 3.

282

Id.

at 66.

The Investment Policy Statement provides the MLC with two options for holding unmatched royalty funds: “(1) exceptionally diversified, high quality, short-term, fixed income and cash equivalent strategies via short-term fixed income funds and money market funds managed by reputable and experienced institutional investment firms that have been diligently vetted and/or (2) [Federal Deposit Insurance Corporation] insured bank deposit accounts with reasonable levels of

insurance for the funds placed.”

283

For royalties pending distribution, the Cash Management Policy Statement retains the same bank deposit option, but modifies the investment option to: “high-quality cash equivalent strategies via money market funds managed by reputable, experienced institutional investment firms that have been diligently vetted.”

284

Both policies require the MLC to “regularly” meet with its financial advisors to review its strategy and monitor the performance of investments to “ensure they continue to align with [the relevant] policy.”

285

283

Id.

at Ex. 7, at 3.

284

Id.

at Ex. 8, at 3.

285

Id.

at Exs. 7, at 4, and 8, at 3.

Beyond these policy statements, the MLC provided limited information about the details of its investments. According to the MLC, it “has investments in a handful of mutual funds managed by significant and experienced institutional investment firms that our financial advisors have thoroughly vetted,” and has at times “held a small amount of funds in deposit accounts at a handful of commercial banks willing to offer very competitive interest rates.”

286

It further stated that “[f]unds are never placed in investments that would be classified as having heightened or high risk.”

287

286

Id.

at 66.

287

Id.

Although prior versions of the policy statements detailed specific investments, the MLC withheld those statements from the public,

288

concluding that it would be “inappropriate to disclose . . . specific recommendations in a public document.”

289

It had “security concerns and concerns that such information could be used alongside [its] public royalty distribution timelines to engage in market timing to the detriment of [t]he MLC.”

290

Before publicly disclosing its policy statements, it amended them to remove information about specific investments.

291

288

The Office also has not been provided with copies of those statements.

289

MLC Initial Submission at 67.

290

Id.

at 67 n.93.

291

Id.

at 67.

b. Commenters' Views and the MLC's Response

Many commenters addressed the MLC's investment policies, and generally called for greater transparency.

292

Discussing the statutory language, the Artist Rights Institute concluded, “[w]hatever Congress meant, it did not provide a broad discretionary authority to invest `hundreds of millions of dollars' of other peoples' money in the open market and then not disclose their holdings.”

293

Go to Eleven Entertainment said “[i]t is our money that they are investing, and I'd like to know the details as would many other publishers”;

294

while attorney Gwendolyn Seale commented “I do not understand why the MLC is secretive about how it is investing songwriters' and publishers' . . . royalties.”

295

“[J]oin[ing] other filers,” A2IM “call[ed] for increased transparency around the MLC's investment policies and the revenue generated from those investments” and cautioned that “when transparency fails, it breeds skepticism.”

296

292

See

Artist Rights Institute Initial Comments at 2-8; A2IM Initial Comments at 3-4; BMAC & MAC Reply Comments at 2; SGA, SCL & MCNA Initial Comments at 10; DLC and DIMA Initial Comments at 26-28; DLC & DIMA Reply Comments at 9-10; Christian L. Castle Reply Comments at 2 n.3; Gwendolyn Seale Initial Comments at 8; Go to Eleven Initial Comments at 4; George Johnson Initial Comments at 28-29; George Johnson Reply Comments at 8; Hameys Songs Initial Comments at 2.

293

Artist Rights Institute Initial Comments at 5.

294

Go To Eleven Entertainment Initial Comments at 4.

295

Gwendolyn Seale Initial Comments at 8.

296

A2IM Initial Comments at 3-4;

see also

the SGA, SCL & MCNA Initial Comments at 10 (“[W]e remain highly disappointed by the apparent lack of authority or ability of such administrators to provide us with straightforward details concerning issues [such as] investment of held royalties . . . .”); BMAC & MAC Reply Comments at 2 (commenting that there “lacks transparency to songwriters and artists regarding how this investment fund will impact them”).

Several commenters asked for details on specific investments, with some expressing concerns over potential conflicts of interest or other possible mismanagement.

297

Responding to the MLC's claim that it cannot disclose such information due to security and market timing risks, multiple commenters noted that at least one major investment is (or was) already made public, albeit from public financial disclosures by the investment fund and not the MLC itself.

298

297

See, e.g.,

Artist Rights Institute Initial Comments at 5-8 (“Does [t]he MLC[ ] hold any shares of its board members companies or any licensees? If so, how many share in which ones?”); A2IM Initial Comments at 3-4 (“The MLC must disclose how they invest funds [and] the revenue generated . . . .”); George Johnson Initial Comments at 28 (“

Where is

the black-box money invested is another question and

how much

have they made off their

secret investments

?”).

298

See

Gwendolyn Seale Initial Comments at 8; Artist Rights Institute Initial Comments at 6-7; George Johnson Initial Comments at 28-29; George Johnson Reply Comments at 8 n.16; Christian L. Castle Reply Comments at 2 n.3.

Commenters also sought greater transparency on the MLC's policies beyond the policy statements. Many asked some variant of: “what happens when profits are made or, more importantly, when losses are incurred,”

299

or when and how will investment revenues be distributed to rightsholders?

300

Some questioned how investments would be transferred in the event the MLC were not redesignated, with the Artist Rights Institute asking “[i]n whose name are the securities held?”

301

299

Gwendolyn Seale Initial Comments at 8 (emphasis omitted);

see also

Artist Rights Institute Initial Comments at 7 (“If Congress authorized this investment program, who bears the losses and who earns the profit on those investments?”).

300

See

A2IM Initial Comments at 3-4 (“The MLC must disclose . . . how they will disburse those revenues to rightsholders.”); BMAC & MAC Reply Comments at 2 (“[T]here exists uncertainty surrounding . . . investment fund losses or distribution impact on payments of unmatched royalties . . . .”); Artist Rights Institute Initial Comments at 7 (“Have there been any distributions of trading profits from the investment corpus? If so, to whom were these distributions made?”).

301

Artist Rights Institute Initial Comments at 7;

see also

BMAC & MAC Reply Comments at 2 (noting uncertainty surrounding “policies for transfer or ownership of the securities if the MLC in [sic] not redesignated.”).

Separate from these transparency issues, the Artist Rights Institute also suggested that the MLC may lack the statutory authority to invest royalty funds at all.

302

It claimed that had Congress intended the MLC to invest funds, it “would have taken more care to specify which bank, what kind of bank, what happens to shortfalls or windfalls, and so on.”

303

Instead, the Artist Rights Institute suggested the statutory interest should function as a penalty “similar[ ] to the royalty late fee,” which could be paid out of the administrative assessment.

304

302

See

Artist Rights Institute Initial Comments at 2-5, 7;

see also

Gwendolyn Seale Initial Comments at 8 (“It must be said that there is no specific language in the MMA which directs the MLC to invest the historical royalties in its possession.”).

303

Artist Rights Institute Initial Comments at 3.

304

Id.

Conversely, the DLC and DIMA observed that collective management organizations “often generate interest or other investment income on the funds they collect. Typically, interest is used to either offset administrative costs of the organization or is added to the total pool of funds to be distributed.”

305

While recognizing that the MMA is explicit about the disposition of interest on royalties for unmatched and disputed works, they argued that it is “silent as to all of the other categories of interest or other investment income,” including that “earned as part of the ordinary churn of royalties.”

306

They suggested that this income could be

significant and should be used to offset the MLC's administrative costs.

307

305

DLC & DIMA Initial Comments at 26.

306

Id.

at 27.

307

Id.

In its reply comments, the MLC acknowledged that commenters had raised questions about its investment policy, and responded by citing to its Initial Submission and policies, saying they provided “an extensive explanation of why [t]he MLC is effectively required by the MMA to have an investment program and how it works.”

308

It also reiterated that it “does not publicize the details of specific investments, which involve security and market manipulation concerns.”

309

308

MLC Reply Submission at 22.

309

Id.

The MLC and others further discussed these issues at a series of

ex parte

meetings with the Office.

310

Initially, the MLC emphasized its commitment to minimizing risks and preserving funds, quoted policy provisions related to the independence of investment decisions, and noted that it interprets “Federal short-term rate” as the rate proscribed in 26 U.S.C. 1274(d).

311

At the final

ex parte

meeting, it provided details on several operational issues.

312

310

See

MLC

Ex Parte

Letter at 6-7 (July 21, 2025); MLC

Ex Parte

Letter at 6-7 (Dec. 10, 2025); Artist Rights Institute

Ex Parte

Letter at 6-10 (Aug. 22, 2025); DLC

Ex Parte

Letter Ex. 1 (Sept. 22, 2025).

311

MLC

Ex Parte

Letter at 6-7 and 6 n.11 (July 21, 2025).

312

MLC

Ex Parte

Letter at 6-7 (Dec. 10, 2025).

On the composition of its investment portfolio, the MLC explained that “consistent with best practices among nonprofit organizations managing similar funds . . . , it has retained expert, fee-based financial advisors to provide specialized guidance.”

313

According to the MLC, it has been advised “that an investment strategy composed exclusively of purchasing U.S. Treasury securities would be highly unlikely to meet the Statutory Interest Rate over time.”

314

This is “due to several factors, including that the target benchmark reflects current market yields while any portfolio holds securities purchased at prior yields, causing systematic underperformance during periods of rising rates; there is no guarantee that offsetting rate movements would occur during the MLC's investment horizon; . . . ongoing distribution obligations require liquidations even during unfavorable conditions; and fund returns are net of fund expenses and so will systematically lag the yield of any underlying bundle of treasuries.”

315

Accordingly, the MLC pursues a strategy designed by their advisors to generate sufficient returns “while prudently managing risk and maintaining adequate liquidity.”

316

313

Id.

at 6.

314

Id.

(footnote omitted).

315

Id.

at 6 n.13.

316

Id.

at 6.

On investment expenses and costs, the MLC explained that “fees paid to its fee-based advisors are covered by assessment funds” but that “mutual fund expense ratios are not investment fees paid by [t]he MLC” and “are part of a fund's net asset value, with no distinct investment fee payable by fund investors.”

317

When asked whether it could structure its investments such that management fees are paid out of the administrative assessment, it responded that it was “not aware of any such foreclosure by [Generally Accepted Accounting Principles], but [t]he MLC chose to pursue the strategy that its fee-based advisors recommended.”

318

317

Id.

at 6-7.

318

Id.

at 7.

On potential investment gains and losses, the MLC stated that it holds investment returns that exceed the Federal short-term rate, and the cash management interest on royalties pending distribution, to “ensure that it can meet its statutory obligation to pay interest on unmatched royalties.”

319

The MLC described these funds as “reserves,” claiming that it “has not identified any excess funds beyond reasonable reserves for its statutorily mandated interest obligations in the future.”

320

As to a potential distribution of excess reserves, it stated it “has not created any policies for distribution or liquidation of royalty funds beyond the distribution provisions set forth in the MMA.”

321

319

Id.

at 6 n.14.

320

Id.

Although the MLC did not disclose the amount of its reserves, it stated that it had “approximately $153.7 million in interest income” at the end of October 2025.

Id.

321

Id.

Finally, the MLC discussed whether its royalty investments would be protected from non-royalty creditors in the event of insolvency.

322

It “stressed that it has no basis to expect any such situation to occur, and reiterated comments shared with Congress.”

323

It said it “ `would have to address the matter based upon the specific details at hand,' ” and it is its “`intention and expectation that there will never be a shortfall.' ”

324

It also stated that “royalty funds in its custody are subject to statutory safeguards under the MMA.”

325

322

Id.

at 7.

323

Id.

324

Id.

325

Id.

(citing 17 U.S.C. 115(d)(3)(D)(ix)(I)(cc), (d)(3)(G)(ii), (d)(3)(H)(ii), (d)(11)(D)).

c. Analysis

As discussed above, the MMA requires the MLC to “deposit” certain royalty funds into “an interest-bearing account” that “earns monthly interest . . . at the Federal, short-term rate.”

326

Interest “accrues for the benefit of copyright owners entitled to payment of . . . accrued royalties,”

327

and the MLC must pay out a “proportionate” amount or share when making a distribution.

328

Interpreting this language presents several challenges.

326

17 U.S.C. 115(d)(3)(G)(i)(III).

327

Id.

at 115(d)(3)(H)(ii).

328

Id.

at 115(d)(3)(I)(ii), (J)(i).

i. The Federal Short-Term Rate

The phrase “Federal, short-term rate” is not defined or cross-referenced in the Copyright Act or MMA. Beyond title 17, the phrase does appear in the Internal Revenue Code at sections 1274(d)(1)(C)(i) and 6621(b)(3); however, these sections supply different definitions for different purposes. Section 1274 describes the process for determining an imputed principal amount for certain debt instruments that lack “adequate stated interest.”

329

It defines “[f]or purposes of this section” a short-term rate that is “based on the average market yield . . . on outstanding marketable obligations of the United States with remaining periods to maturity of 3 years or less.”

330

In contrast, section 6621 describes the process for determining interest rates corresponding to the underpayment and overpayment of tax.

331

It defines, “[f]or purposes of this section,” a short-term rate that is calculated “in accordance with section 1274(d),” except it is rounded to the nearest full percentage.

332

329

See

26 U.S.C. 1274(a).

330

Id.

at 1274(d)(1)(C)(i).

331

See id.

at 6621(a).

332

Id.

at 6621(b)(3).

The MLC takes the position that the section 1274 Federal short-term rate is the rate contemplated by the MMA.

333

The following factors support this position. First, the MMA is explicit that interest is earned “monthly,” and revenue rulings from the Treasury Department under section 1274 provide the short-term rate calculated for different compounding periods, including monthly, whereas rulings under section 6621 are based on daily compounding.

334

Second, the short-term rate defined in section 6621 is based on

the rate defined under section 1274. In the absence of an explicit cross-reference to section 6621—something Congress has done in other statutes—it is reasonable to infer that the base rate was intended. Third, the short-term rate in section 6621 is rarely cross-referenced directly. Instead, the Internal Revenue Code uses it to define separate overpayment and underpayment rates, and it is those rates that are most frequently cited by other statutes.

335

333

MLC

Ex Parte

Letter at 6 n.11 (July 21, 2025).

334

Compare

Rev. Rul. 2025-14,

https://www.irs.gov/pub/irs-drop/rr-25-14.pdf

(last visited May 26, 2026),

with

Rev. Rul. 2024-25,

https://www.irs.gov/pub/irs-drop/rr-24-25.pdf

(last visited May 26, 2026).

335

See, e.g.,

30 U.S.C. 1721.

But see

Public Law 113-291, 3021(c)(2) (Dec. 19, 2014) (amending prior version of section 1721 to refer to the “Federal short-term rate determined under section 6621(b)”).

ii. Achieving the Statutory Rate

Assuming section 1274 applies, the statute is not clear as to

how

the MLC should achieve that rate. The MLC takes the position that the MMA directs it to maintain an internal account or ledger for unmatched and disputed royalties, and to calculate interest owed pursuant to the Federal short-term rate, but that the statute does not govern how it must fund the interest obligations.

336

It claims that in the absence of deposit accounts that offer the Federal short-term rate, the statute “effectively” requires an investment program that obtains a return that “matches or exceeds [the] required amount.”

337

The problem with this “ledger” approach is the plain language of the statute, which directs the MLC to “deposit” funds “into” an “interest-bearing account” that “earns monthly interest.” The ledger interpretation would seem to render several of these statutory terms meaningless.

338

336

See

MLC Initial Comments at 66 and Ex. 7, at 3; MLC Reply Comments at 22; MLC

Ex Parte

Letter at 6 (July 21, 2025); MLC

Ex Parte

Letter at 6 (Nov. 20, 2025).

337

MLC Initial Comments at 69, 191.

338

The Office also rejects the Artist Rights Institute's claim that the MLC should do nothing with royalty funds at all and pay the interest out of the administrative assessment as some form of penalty. There is no indication that Congress intended this approach.

The Office has no reason to doubt the MLC's assertion that there is no standard financial product that would allow it to consistently earn monthly interest at exactly the Federal short-term rate. The section 1274 rate is based on the average market yield on government debt instruments, mainly U.S. Treasuries, with remaining maturity periods up to three years, and is calculated based on the preceding month.

339

This rate will often exceed rates available from traditional bank accounts and money market funds because the underlying securities are subject to greater duration risk.

340

339

The rate is calculated each calendar month, for the “following calendar month,” based on “the average market yield (during any 1-month period selected by the Secretary and ending in the calendar month in which the determination is made) on outstanding marketable obligations of the United States with remaining periods to maturity of 3 years or less.” 26 U.S.C. 1274(d)(1)(C)(i);

see also About Treasury Marketable Securities,

TreasuryDirect,

https://www.treasurydirect.gov/marketable-securities/

(last visited May 26, 2026).

340

Cf.

17 CFR 270.2a-7(d)(1) (limiting the average maturity of investments held by money market funds). At times, including in recent years, some deposit accounts have offered rates that exceeded the Federal short-term rate. This can happen when the treasury yield curve is inverted,

i.e.,

when one-month treasuries offer a higher yield than three-year treasuries.

Cf. 10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity,

Federal Reserve Bank of St. Louis,

https://fred.stlouisfed.org/series/T10Y3M

(last visited May 26, 2026) (charting the historical spread between 10-year and 3-month Treasury yields). But when the yield curve has a positive slope—as is often the case, including when the MLC began administering the blanket license—the Federal short-term rate will likely exceed rates available from deposit accounts. This means the MLC cannot

reliably

achieve the short-term rate from a traditional deposit account.

The MLC must place royalty funds

somewhere.

Even if it used traditional deposit accounts, such accounts are not entirely risk-free, especially as they are not insured at the scale of the MLC's holdings.

341

And Congress directed the MLC to earn interest “at” the Federal short-term rate—not above or below it. While exceeding the short-term rate could lead to greater interest payments or an accumulated “reserve,” it also means greater risk exposure. If the MLC cannot obtain the short-term rate in a deposit account directly, one reasonable response would be to invest in assets that mirror the risk and return of the short-term rate,

i.e.,

a blend of U.S. Treasuries with remaining maturities up to three years.

342

Whether it has done so, and how, presents a different set of questions.

341

Subject to more specific provisions and adjustments, the Federal Deposit Insurance Corporation's “standard maximum deposit insurance amount” is $250,000.

See

12 U.S.C. 1821(a)(1)(E). Depositors may be able to obtain greater coverage in certain circumstances, but those methods do not appear to be a practical solution for the MLC.

342

This would be somewhat analogous to the Copyright Office's investment of cable, satellite, and digital audio recording devices or media royalty fees in “interest-bearing United States securities”.

See, e.g.,

17 U.S.C. 111(d)(2) (“The Register of Copyrights shall . . . deposit the balance in the Treasury of the United States, in such manner as the Secretary of the Treasury directs. All funds held by the Secretary of the Treasury shall be invested in interest-bearing United States securities for later distribution with interest . .”);

id.

at 119(b)(3) (same);

id.

at 1005 (same).

Initially, it is difficult to fully assess the MLC's investment practices because its policies were adopted without public debate and with limited public disclosure. The MLC has not publicly disclosed its financial advisor, the fund(s) it invests in, the portfolio(s) held by the fund(s), the amount(s) invested, or its policy for gains or losses. Likewise, it has not identified the amount of interest earned on royalties pending distribution under its cash management practices, or a written policy on the distribution or use of this interest. However, based on the information that is available, the Office has several concerns.

The MLC claims that disclosing specific investments would pose security and market timing risks.

343

Yet, it appears that the identity of a major investment has already been publicly disclosed via routine Securities and Exchange Commission filings, and the MLC has not responded or updated its practices. If there are substantial security and market timing risks from that disclosure, it should take steps to address them. If there are not, it should not cite them as a reason for withholding information.

343

See, e.g.,

MLC Initial Submission at 67 n.93; MLC Reply Submission at 22.

To the extent there are market timing risks, they would also seem to arise from the MLC's decision to invest beyond U.S. Treasuries. The treasury market is a multi-trillion-dollar market with high liquidity and massive trading volumes. It is unlikely that the MLC could influence such a market. Further, investing solely in U.S. Treasuries would have a separate advantage—they are government-backed assets that are relatively uncontroversial. While the Office has no reason to question the propriety of the MLC's investments, and it certainly appears that the underlying fund(s) hold relatively standard and diversified fixed income securities, the decision to go beyond U.S. Treasuries and the accompanying lack of transparency has fostered suspicion among some stakeholders

344

and may be inconsistent with Congressional intent in choosing an interest rate explicitly tied to marketable U.S. government debt.

344

For example, some commenters questioned whether the MLC invests within the music industry or in some other improper manner.

See, e.g.,

Artist Rights Institute Initial Comments at 5, 7-8; George Johnson Initial Comments at 28.

The MLC asserts that it cannot limit investments to U.S. Treasuries or funds that mirror the treasuries used to calculate the short-term rate.

345

It points to guidance from financial advisors that such a strategy would be “highly unlikely” to meet the short-term rate over time.

346

Specifically, it claims that the short-term rate reflects “current market yields,” and therefore a portfolio of treasuries purchased at prior yields

would underperform “during periods of rising rates.”

347

This underperformance might not be corrected during the “MLC's investment horizon” and its distribution obligations could require liquidation during unfavorable conditions.

348

Finally, since investment funds provide returns net of expenses, they would systematically lag the yield of underlying treasuries.

349

345

MLC

Ex Parte

Letter at 6 (Nov. 20, 2025).

346

Id.

at 6 n.13.

347

Id.

348

Id.

349

Id.

The MLC is correct on the first two points: U.S. Treasuries have interest rate risk, lose value when rates rise, and might not generate sufficient funds to cover the short-term rate during a period of rising interest rates.

350

The problem is that this is also true of fixed income funds with broader portfolios, which are subject to interest rate

and

greater credit risks.

351

Conversely, both generally perform well during periods of falling rates. In either instance, the MLC could be forced to liquidate funds at a loss or gain; and this does not explain why a rolling treasury portfolio would not more closely mirror the risk and return of the treasuries underlying the short-term rate.

350

However, contrary to the MLC's claim, the Federal short-term rate does not reflect “current market yields”; it is calculated based on a preceding month.

Cf.

26 U.S.C. 1274(b) and (c)(1).

351

For example, following a year of rising interest rates, the MLC had over $6 million in net unrealized losses on investments at the end of 2022.

See The MLC's Form 990 for 2022,

MLC (2022),

https://www.themlc.com/hubfs/990-2022-Combined.pdf; Federal Funds Effective Rate,

Federal Reserve Bank of St. Louis,

https://fred.stlouisfed.org/series/fedfunds

(showing an increase in the federal funds effective rate from 0.08% in January 2022 to 4.10% in December 2022).

The MLC's third point, however, does explain why treasuries might be infeasible. Investment funds generally charge a fraction of a percent of the investment in annual management fees and other expenses, and as the MLC notes, their returns are “net” these expenses.

352

Accordingly, the return on a treasury-based fund similar in composition to the treasuries used to calculate the short-term rate would inevitably lag the rate due to expenses—unless those expenses were paid separately.

352

MLC

Ex Parte

Letter at 6 n.13 (Nov. 20, 2025).

iii. Investments and Administrative Costs

The Office questioned the MLC on how its investment expenses relate to the MMA's provisions on administrative costs. The MMA provides that “collective total costs” shall be funded by the administrative assessment and voluntary contributions from DMPs and significant nonblanket licensees,

353

and defines those costs as “the total costs of establishing, maintaining, and operating the mechanical licensing collective to fulfill its statutory functions,” including “costs of . . . royalty administration.”

354

The MLC responded that its financial advisor fees are paid out of the assessment funds “consistent with the treatment of other administrative costs,” but “that mutual fund expense ratios are not investment fees paid by [t]he MLC,” and there is “no distinct investment fee payable by fund investors.”

355

When asked whether it could structure its investments so that expenses were paid out of the administrative assessment, the MLC did not identify any specific barriers but said that it pursued a strategy recommended by its financial advisors.

356

353

See

17 U.S.C. 115(d)(7)(A).

354

Id.

at 115(e)(6)(A)(v).

355

MLC

Ex Parte

Letter at 6-7 (Nov. 20, 2025).

356

Id.

at 7.

iv. Gains, Losses, and Reserves

An important consequence of the MLC's current practice of investing in relatively higher-risk, higher-return investments, is the potential for gains that exceed statutory interest obligations. Further, under its cash management practices, the MLC earns interest on royalties pending distribution with no corresponding statutory obligation. The MLC indicated that it holds excess investment returns and the cash management interest as “reserves

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