The MLC took two notable steps forward this past quarter in our work on processing historical unmatched royalties. First, after we completed our initial attempt to match these historical uses, we began making the remaining unmatched data available for our Members to search using the Matching Tool in The MLC Portal. This remaining unmatched data covers all historical time periods. Second, we paid out our first two sets of royalties for matched historical uses in our June and July royalty distributions.
Historical Unmatched Data and the Matching Tool
In late May, we announced that the first set of historical unmatched data — data that remained unmatched following completion of our initial matching process — is now available for Members of The MLC to search and review using the Matching Tool in The MLC Portal. The initial set of data consists of all the remaining unmatched data for all historical time periods from six DSPs: Deezer, Hoopla, Pandora, SoundCloud, Tidal and iHeart. Several weeks later, we announced the availability of a second set of historical unmatched data from four additional DSPs — Apple, Pacemaker, Recisio and Weav — that Members can also search and review using the Matching Tool.
Now, when Members utilize the Matching Tool to search for unmatched data that corresponds to their musical works, they will be searching the data from these 10 DSPs for both the remaining blanket unmatched data and the remaining historical unmatched data. To provide greater transparency around this process, unmatched usage data is now identified in the search results within the Matching Tool as follows:
- An “H” icon will indicate historical unmatched usage that took place before January 1, 2021 (the blanket license effective date)
- A “B” icon will indicate blanket unmatched usage that took place on or after January 1, 2021
- Search results that display both icons will identify unmatched usage that took place both before and after January 1, 2021
To the extent Members propose matches that cover data from any of these 10 DSPs, once accepted, The MLC will reference these matches when we process (or reprocess) blanket royalties and historical royalties in future distributions.
Looking ahead, we will continue to make the remaining unmatched data for additional groups of DSPs available for Members to search in the Matching Tool on a monthly basis until we have made the data for all of the remaining unmatched uses available to be searched.
Matched Historical Royalty Payments
As you may recall, The MLC received nearly $427 million in accrued historical unmatched royalties and more than 4,000 data files from 21 DSPs in February of 2021. Those royalties and the corresponding data files related to unmatched uses dating back to 2007. There are several different sets of rates that apply to uses that took place during this 13-year period. The most recent set of rates — for the Phonorecords 3 rate period (which applies to historical unmatched uses that took place between January 1, 2018 and December 31, 2020) — have still not been finally determined by the Copyright Royalty Board (CRB). As a result, we are starting by distributing royalties for matched historical uses that took place in the earlier rate periods. Here’s a breakdown of the $427 million in accrued historical unmatched royalties we received from DSPs by rate periods:
The MLC’s June 2022 monthly royalty distribution included the first set of matched historical royalties transferred to The MLC by the following five DSPs: Deezer, Hoopla, Pandora, SoundCloud and Tidal. The July 2022 monthly royalty distribution included the second set of matched historical royalties transferred to The MLC by Apple Music.
Rate Determinations and Next Steps
Over the next several months, we expect to distribute additional matched royalties from other DSPs for uses that took place during the Phonorecords 1 and 2 periods (as applicable). Once the CRB issues a final determination of the rates that will apply to the Phonorecords 3 period, we hope to be in a better position to estimate how much time DSPs will have to pay The MLC any additional payments they may owe under the new Phonorecords 3 rates. That, in turn, will inform when The MLC might be able to begin distributing matched royalties for historical uses that took place during the Phonorecords 3 period.