Within Publishing
The Hidden Song Royalties Inside Streaming
Streaming services generate composition royalties that depend on ownership records and licensing administration.
On this page
- Why streaming creates mechanical royalties
- How blanket licensing systems operate
- Ownership data and delayed payments
Page outline Jump by section
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…
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:
- A streaming service operates under the blanket licence.
- The service submits monthly usage data and royalty payments.
- The licensing collective compares stream records against ownership databases.
- Matching algorithms identify the correct copyright owners.
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- 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…
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…
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…
Endnotes
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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-thatSource snippet
The MLC...21 Mar 2022 — The mechanical royalty has to do with the digital reproduction of the musical work embodied in the audio file, a...
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Source: copyright.gov
Link: https://www.copyright.gov/rulemaking/mma-designations/faq.htmlSource snippet
Copyright OfficeFrequently Asked Questions on the Designation of...The MMA created a new blanket compulsory licensing system for the rep...
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Source: axios.com
Title: Major leap for streaming royalties
Link: https://www.axios.com/local/nashville/2022/02/23/streaming-royalties-music-licensing-collectiveSource snippet
Established under the landmark 2018 Music Modernization Act, the MLC ensures accurate royalty payments from on-demand streaming platforms...
Published: February 23, 2022
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Source: copyright.gov
Link: https://www.copyright.gov/music-modernization/faq.htmlSource snippet
Copyright OfficeMusic Modernization: FAQ | U.S. Copyright OfficeTitle I – The Musical Works Modernization Act, which creates a blanket li...
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Source: medium.com
Link: https://medium.com/%40ARIPO/what-you-should-know-about-the-mechanical-licensing-collective-the-mlc-9a92f5aec1c8Source snippet
What You Should Know About the Mechanical Licensing...DSPs that secure the new blanket license must also pay the mechanical royalties du...
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Source: pitchfork.com
Link: https://pitchfork.com/news/streaming-services-pay-dollar424-million-in-unmatched-royalties-to-mechanical-licensing-collectiveSource snippet
This follows the directives of the Music Modernization Act (MMA), which requires the MLC to distribute unmatched royalties to rightful ri...
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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/Source snippet
The 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
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Source: reuters.com
Link: https://www.reuters.com/legal/litigation/spotify-defeats-us-licensing-groups-lawsuit-over-royalties-2025-01-29/Source snippet
The royalty-gathering nonprofit Mechanical Licensing Collective (MLC) argued that Spotify misreported its revenue to avoid millions of do...
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Source: copyright.gov
Link: https://www.copyright.gov/rulemaking/mma-royalty-statements/Source snippet
licensing collective (MLC) to report and distribute royalties paid...
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Source: copyright.gov
Link: https://www.copyright.gov/music-modernization/related-rulemakings.htmlSource snippet
istributions in a manner consistent with this understanding of the Exception and...Read more...
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Source: themlc.com
Link: https://www.themlc.com/dsp-faqsSource snippet
Mechanical Licensing CollectiveDSP FAQsWhat does the blanket license cover? The Blanket License covers the making of a digital phonorecor...
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Source: themlc.com
Link: https://www.themlc.com/how-it-worksSource snippet
Mechanical Licensing CollectiveHow It WorksThe MLC administers blanket mechanical licenses for eligible streaming and download services i...
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Source: royaltyexchange.com
Title: why transparency matters in music royalties
Link: https://royaltyexchange.com/blog/why-transparency-matters-in-music-royaltiesSource snippet
Royalty ExchangeWhy Transparency Matters in Music Royalties5 Mar 2025 — Currently, outdated systems and missing data lead to billions in...
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Source: themlc.com
Link: https://www.themlc.com/governanceSource snippet
Mechanical Licensing CollectiveGovernance and BylawsIn July 2019, the U.S. Register of Copyrights designated The MLC to be the entity tha...
Published: July 2019
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Source: themlc.com
Link: https://www.themlc.com/Source snippet
Mechanical Licensing CollectiveMechanical Licensing Collective: HomeThe MLC distributes digital audio mechanical royalties to eligible se...
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Source: themlc.com
Link: https://www.themlc.com/digital-music-royalties-landscapeSource snippet
Mechanical Licensing CollectiveThe Digital Music Royalties LandscapeThe MLC is the only organization in the United States authorized to a...
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Source: blogs.loc.gov
Link: https://blogs.loc.gov/copyright/2023/03/mechanical-unmatched-historical-what-are-the-differences-between-all-these-royalties/Source snippet
The Library of Congress“Mechanical,” “Unmatched,” “Historical”: What Are the...13 Mar 2023 — The MLC is now working to identify the copy...
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Source: wsj.com
Link: https://www.wsj.com/articles/the-accounting-behind-music-royalties-in-the-streaming-era-b4fe925fSource snippet
Specialists like Chris Hull and Chris Fazzolari play crucial roles in auditing and ensuring accurate royalty payments to musicians and co...
-
Source: royaltyexchange.com
Title: mechanical royalties
Link: https://royaltyexchange.com/blog/mechanical-royaltiesSource snippet
Everything You Need to Know24 Mar 2026 — Learn how mechanical royalties work, current rates, who pays and collects them, and how investor...
Additional References
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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-licenseeSource snippet
nket royalties, noting that it “has distributed monthly royalty payments for...Read more...
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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/Source snippet
MLC License Availability Date: January 1Jan 19, 2021 — The MLC administers blanket mechanical licenses for musical compositions to eligib...
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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-mlcSource snippet
Mechanical Licensing Collective (The MLC)1 Jan 2021 — The MLC will collect the royalties due under those licenses from the DSPs and pay s...
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Source: aristake.com
Title: songwriters claim mlc money
Link: https://aristake.com/songwriters-claim-mlc-money/Source snippet
The MLC is Sitting On $423 Million, How Songwriters Can...5 May 2021 — It collects mechanical royalties from DSPs (streaming services) a...
Published: May 2021
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Source: luminatedata.com
Title: finance valuation
Link: https://luminatedata.com/case-studies/finance-valuation/Source snippet
Identifying Unclaimed Streaming Activities for Major Financial...27 Oct 2025 — A royalty is a payment made to the rights holder of a cre...
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Source: reddit.com
Link: https://www.reddit.com/r/COPYRIGHT/comments/kplwg0/mma_new_mechanical_license_collective_for_cover/Source snippet
MMA new Mechanical license collective for cover songs...The MLC now makes it easier for digital music service providers operating in the...
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Source: songtrust.com
Link: https://www.songtrust.com/the-mechanical-licensing-collectiveSource snippet
licenses, The MLC invoices DSPs and then distributes mechanical...
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Source: themlc.com
Title: historical royalties
Link: https://www.themlc.com/historical-royaltiesSource snippet
These historical unmatched royalties related to streaming activities that took place between 2007 and 2020, before the blanket license ad...
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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-MLCSource snippet
is the Mechanical Licensing Collective "MLC"?The MLC will collect and pay mechanical royalties collected by eligible Digital Service Prov...
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Source: wipo.int
Link: https://www.wipo.int/edocs/mdocs/mdocs/en/wipo_webinar_cr_2022_12/wipo_webinar_cr_2022_12_pres.pdfSource snippet
on that can collect and distribute the...
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