The Hidden Song Royalties Inside Streaming

Introduction

Streaming appears simple to listeners: press play and a song starts. Behind that single action, however, lies a specialised mechanical licensing system that generates composition royalties for songwriters and publishers. Unlike performance royalties, which compensate the public use of a musical work, streaming mechanical royalties arise because an interactive stream involves reproducing and delivering a digital copy of the composition as part of the listening process. Modern licensing systems exist to connect billions of streams with the correct song ownership records and then distribute the resulting payments. Without those systems, streaming services would have to negotiate licences song by song, and many royalties would never reach the people who wrote the music.[Spotify for Artists]artists.spotify.comfor Artists Collecting Mechanical Royalties Can Be TrickyThe MLC…21 Mar 2022 — The mechanical royalty has to do with the digital reproduction of the musical work embodied in the audio file, a…

Why Streaming Creates Mechanical Royalties

Mechanical royalties originated in the era of piano rolls, records and CDs, where a composition was mechanically reproduced onto a physical format. Digital streaming transformed the technology but not the underlying legal principle. When a listener chooses a track on an interactive service such as Spotify or Apple Music, the service reproduces and delivers the musical work in digital form, creating a mechanical royalty obligation alongside other royalty streams.[Spotify for Artists]artists.spotify.comfor Artists Collecting Mechanical Royalties Can Be TrickyThe MLC…21 Mar 2022 — The mechanical royalty has to do with the digital reproduction of the musical work embodied in the audio file, a…

This creates an unusual situation in which a single stream can generate multiple composition-side payments. A songwriter may receive:

• A performance royalty for the public performance of the composition.
• A mechanical royalty for the reproduction and distribution of the composition within the stream.
• Separate payments on the recording side for owners of the master recording.

The listener experiences one stream, but the rights system treats it as several legally distinct uses.[Spotify for Artists]artists.spotify.comfor Artists Collecting Mechanical Royalties Can Be TrickyThe MLC…21 Mar 2022 — The mechanical royalty has to do with the digital reproduction of the musical work embodied in the audio file, a…

The growth of streaming exposed weaknesses in older licensing methods. Interactive services had to identify and license enormous catalogues containing tens of millions of songs. Errors in ownership records frequently led to unpaid or disputed royalties, creating pressure for a more centralised system.[Axios]axios.comMajor leap for streaming royaltiesEstablished under the landmark 2018 Music Modernization Act, the MLC ensures accurate royalty payments from on-demand streaming platforms…Published: February 23, 2022

How Blanket Licensing Systems Operate

From Song-by-Song Licensing to Blanket Licences

One of the most significant governance changes in streaming royalties came through the United States’ Music Modernization Act (MMA). Before the reform, digital services generally had to secure mechanical licences on a work-by-work basis under section 115 of US copyright law. The MMA replaced much of that process with a blanket licensing framework for eligible streaming and download services.[U.S]copyright.govlicensing collective (MLC) to report and distribute royalties paid…. Copyright Office

Under this model, a qualifying streaming platform can obtain a single blanket licence covering a vast repertoire of musical works rather than pursuing millions of individual licences. The system was designed to reduce licensing failures while making royalty collection more reliable for songwriters and publishers.[U.S]copyright.govlicensing collective (MLC) to report and distribute royalties paid…. Copyright Office

The Role of the Mechanical Licensing Collective

The centrepiece of the US system is the Mechanical Licensing Collective (MLC), a non-profit entity designated by the US Copyright Office to administer the blanket digital mechanical licence. The MLC collects royalties and usage reports from digital service providers, matches stream data to musical works, calculates royalties, and distributes payments to publishers, administrators and self-administered songwriters.[Mechanical Licensing Collective]themlc.comMechanical Licensing CollectiveDSP FAQsWhat does the blanket license cover? The Blanket License covers the making of a digital phonorecor…[Mechanical Licensing Collective]themlc.comMechanical Licensing CollectiveDSP FAQsWhat does the blanket license cover? The Blanket License covers the making of a digital phonorecor…

The workflow is broadly:

1. A streaming service operates under the blanket licence.
2. The service submits monthly usage data and royalty payments.
3. The licensing collective compares stream records against ownership databases.
4. Matching algorithms identify the correct copyright owners.
5. Royalties are distributed to the registered rightsholders.[Mechanical Licensing Collective]themlc.comMechanical Licensing CollectiveDSP FAQsWhat does the blanket license cover? The Blanket License covers the making of a digital phonorecor…[medium]medium.comWhat You Should Know About the Mechanical Licensing…DSPs that secure the new blanket license must also pay the mechanical royalties du… This centralised approach addresses a problem that repeatedly troubled the streaming industry during its early growth: services often knew what had been streamed but lacked complete information about who owned the underlying compositions.[Axios]axios.comMajor leap for streaming royaltiesEstablished under the landmark 2018 Music Modernization Act, the MLC ensures accurate royalty payments from on-demand streaming platforms…Published: February 23, 2022

Ownership Data Is the Real Infrastructure

The most important asset in a modern mechanical licensing system is not the licence itself but the ownership data behind it.

Every stream reported by a digital service must be linked to a specific composition and its corresponding ownership shares. A song may have multiple writers, publishers, administrators and international rights organisations involved. The licensing system therefore depends on accurate metadata, including songwriter names, publisher information, ownership percentages and work registrations.[Mechanical Licensing Collective]themlc.comMechanical Licensing CollectiveDSP FAQsWhat does the blanket license cover? The Blanket License covers the making of a digital phonorecor…[medium]medium.comWhat You Should Know About the Mechanical Licensing…DSPs that secure the new blanket license must also pay the mechanical royalties du… When ownership information is complete, matching is largely automated. When it is incomplete, conflicting or missing, royalties can become “unmatched”. In that situation, the money may be collected but cannot immediately be assigned to a verified copyright owner. The licensing collective must then conduct additional matching efforts and claims processes before distribution.[The Library of Congress]blogs.loc.govThe Library of Congress“Mechanical,” “Unmatched,” “Historical”: What Are the…13 Mar 2023 — The MLC is now working to identify the copy…

The governance challenge is therefore not merely collecting money from streaming services. It is maintaining a sufficiently accurate ownership database so that payments can be directed correctly at scale. Billions of monthly streams generate vast quantities of usage records, making metadata quality a central policy issue rather than a purely administrative detail.[Royalty Exchange]royaltyexchange.comwhy transparency matters in music royaltiesRoyalty ExchangeWhy Transparency Matters in Music Royalties5 Mar 2025 — Currently, outdated systems and missing data lead to billions in…

Ownership Data and Delayed Payments

Why Royalties Become Delayed

Many delayed mechanical royalty payments originate from data problems rather than payment failures.

Common causes include:

• Songs not being registered with the relevant licensing system.
• Conflicting ownership claims between publishers.
• Incomplete songwriter information.
• Ownership splits that differ across databases.
• Catalogue acquisitions that have not been fully updated.[The Library of Congress]blogs.loc.govThe Library of Congress“Mechanical,” “Unmatched,” “Historical”: What Are the…13 Mar 2023 — The MLC is now working to identify the copy…

In these cases, a streaming platform may have paid the required royalties, yet the money cannot be distributed until ownership is verified. The result is a pool of unmatched royalties awaiting identification of the correct recipients.[The Library of Congress]blogs.loc.govThe Library of Congress“Mechanical,” “Unmatched,” “Historical”: What Are the…13 Mar 2023 — The MLC is now working to identify the copy…

The Problem of Unmatched Royalties

The scale of unmatched royalties became highly visible during the implementation of the Music Modernization Act. Streaming services transferred hundreds of millions of dollars in historical unmatched royalties into the new system so that ownership claims could be resolved and payments distributed to the rightful copyright owners.[Pitchfork]pitchfork.comThis follows the directives of the Music Modernization Act (MMA), which requires the MLC to distribute unmatched royalties to rightful ri…

This issue illustrates a common misunderstanding about streaming economics. Missing royalties are not always the result of a platform refusing to pay. Often the money has been collected but remains stranded because ownership information is incomplete or inconsistent across databases. The governance challenge is therefore as much about information management as financial collection. The Library of Congress[Wall Street Journal]wsj.comSpecialists like Chris Hull and Chris Fazzolari play crucial roles in auditing and ensuring accurate royalty payments to musicians and co…

Why Mechanical Licensing Remains a Policy Issue

Although blanket licensing has simplified administration, debates continue over how streaming mechanical royalties are calculated, reported and distributed. Questions about royalty rates, service classifications, reporting obligations and revenue calculations still affect the size of the royalty pool available to songwriters. Recent disputes involving streaming platforms and the Mechanical Licensing Collective have demonstrated that licensing administration remains closely tied to broader policy and regulatory decisions.[Reuters]reuters.comSpotify sued over millions in allegedly unpaid music royaltiesThe lawsuit, filed in New York federal court, claims that Spotify underreported its revenue by nearly half to avoid paying millions of do…Published: May 17, 2024

The key achievement of modern mechanical licensing systems is not that they eliminated complexity. Rather, they moved complexity into a structured governance framework built around blanket licences, centralised data collection and ownership matching. For songwriters, that infrastructure is what turns billions of anonymous streams into identifiable composition royalties that can ultimately be paid to the people who created the songs.[U.S]copyright.govlicensing collective (MLC) to report and distribute royalties paid…. Copyright Office[Mechanical Licensing Collective]themlc.comMechanical Licensing CollectiveDSP FAQsWhat does the blanket license cover? The Blanket License covers the making of a digital phonorecor…

Amazon book picks

Further Reading

Books and field guides related to The Hidden Song Royalties Inside Streaming. Use these as the next step if you want deeper reading beyond the article.

Book

All You Need to Know About the Music Business

By Donald S. Passman

Explains mechanical and streaming royalty structures.

See on Amazon

Book

How to make it in the new music business

By Ari Herstand

Covers streaming economics and digital revenue.

See on Amazon

Book

Music, money, and success

By Jeffrey Brabec, Todd Brabec et al.

Detailed explanation of mechanical royalties and licensing.

See on Amazon

Book

The plain and simple guide to music publishing

By Randall D. Wixen

Clarifies royalty collection and ownership administration.

See on Amazon

Browse more on Amazon: All You Need to Know About the Music Business How to make it in the new music business Music, money, and success

As an Amazon Associate I earn from qualifying purchases.

eBay marketplace picks

Marketplace Samples

Example marketplace items related to this page. Use the search link to explore similar finds on eBay.

Shop location

UsingUSA USA USAUKCanadaAustraliaIreland

Example eBay listing

Black Your Photo Spotify Music Any Song Lyric Wall Art Print

SearcheBay.co.uk: spotify wall art

Browse similar oneBay.co.uk

Example eBay listing

White Your Photo Spotify Music Any Song Lyric Wall Art Print

SearcheBay.co.uk: spotify wall art

Browse similar oneBay.co.uk

Example eBay listing

We Will Rock You - Queen Spotify Sc Framed Wall Art Poster Canvas Print Picture

SearcheBay.co.uk: spotify wall art

Browse similar oneBay.co.uk

Example eBay listing

inner monologue pt 1 spotify Framed Framed Wall Art Poster Canvas Print Picture

SearcheBay.co.uk: spotify wall art

Browse similar oneBay.co.uk

Browse more oneBay.co.uk

Example items shown for inspiration; availability and pricing can change. Branchoria may earn a commission if you purchase through outbound eBay links.

Endnotes

1. Source: artists.spotify.com
Title: for Artists Collecting Mechanical Royalties Can Be Tricky
Link:https://artists.spotify.com/blog/collecting-mechanical-royalties-can-be-tricky-the-mlc-is-here-to-fix-that

2. Source: copyright.gov
Link:https://www.copyright.gov/rulemaking/mma-designations/faq.html

3. Source: axios.com
Title: Major leap for streaming royalties
Link:https://www.axios.com/local/nashville/2022/02/23/streaming-royalties-music-licensing-collective

Published: February 23, 2022

4. Source: copyright.gov
Link:https://www.copyright.gov/music-modernization/faq.html

5. Source: medium.com
Link:https://medium.com/%40ARIPO/what-you-should-know-about-the-mechanical-licensing-collective-the-mlc-9a92f5aec1c8

6. Source: pitchfork.com
Link:https://pitchfork.com/news/streaming-services-pay-dollar424-million-in-unmatched-royalties-to-mechanical-licensing-collective

7. Source: reuters.com
Title: Spotify sued over millions in allegedly unpaid music royalties
Link:https://www.reuters.com/legal/litigation/spotify-sued-over-millions-allegedly-unpaid-music-royalties-2024-05-17/

Published: May 17, 2024

8. Source: reuters.com
Link:https://www.reuters.com/legal/litigation/spotify-defeats-us-licensing-groups-lawsuit-over-royalties-2025-01-29/

9. Source: copyright.gov
Link:https://www.copyright.gov/rulemaking/mma-royalty-statements/

10. Source: copyright.gov
Link:https://www.copyright.gov/music-modernization/related-rulemakings.html

11. Source: themlc.com
Link:https://www.themlc.com/dsp-faqs

12. Source: themlc.com
Link:https://www.themlc.com/how-it-works

13. Source: royaltyexchange.com
Title: why transparency matters in music royalties
Link:https://royaltyexchange.com/blog/why-transparency-matters-in-music-royalties

14. Source: themlc.com
Link:https://www.themlc.com/governance

Published: July 2019

15. Source: themlc.com
Link:https://www.themlc.com/

16. Source: themlc.com
Link:https://www.themlc.com/digital-music-royalties-landscape

17. Source: blogs.loc.gov
Link:https://blogs.loc.gov/copyright/2023/03/mechanical-unmatched-historical-what-are-the-differences-between-all-these-royalties/

18. Source: wsj.com
Link:https://www.wsj.com/articles/the-accounting-behind-music-royalties-in-the-streaming-era-b4fe925f

19. Source: royaltyexchange.com
Title: mechanical royalties
Link:https://royaltyexchange.com/blog/mechanical-royalties

Additional References

20. Source: federalregister.gov
Link:https://www.federalregister.gov/documents/2026/06/03/2026-11117/periodic-review-of-the-designations-of-the-mechanical-licensing-collective-and-digital-licensee

21. Source: copyrightalliance.org
Title: mlc license availability date january 1 what this means
Link:https://copyrightalliance.org/mlc-license-availability-date-january-1-what-this-means/

22. Source: apraamcos.com.au
Title: important update mechanical licensing collective the mlc
Link:https://www.apraamcos.com.au/about-us/news-and-events/important-update-mechanical-licensing-collective-the-mlc

23. Source: aristake.com
Title: songwriters claim mlc money
Link:https://aristake.com/songwriters-claim-mlc-money/

Published: May 2021

24. Source: luminatedata.com
Title: finance valuation
Link:https://luminatedata.com/case-studies/finance-valuation/

25. Source: reddit.com
Link:https://www.reddit.com/r/COPYRIGHT/comments/kplwg0/mma_new_mechanical_license_collective_for_cover/

26. Source: songtrust.com
Link:https://www.songtrust.com/the-mechanical-licensing-collective

27. Source: themlc.com
Title: historical royalties
Link:https://www.themlc.com/historical-royalties

28. Source: support.tunecore.com
Title: 360052000051 What is the Mechanical Licensing Collective MLC
Link:https://support.tunecore.com/hc/en-us/articles/360052000051-What-is-the-Mechanical-Licensing-Collective-MLC

29. Source: wipo.int
Link:https://www.wipo.int/edocs/mdocs/mdocs/en/wipo_webinar_cr_2022_12/wipo_webinar_cr_2022_12_pres.pdf