Edit 3/9/21: Clarified that MLC deals only with digital mechanical licenses, not physical.
– Please note that this article is focused on U.S. royalties. This is meant to be an easy-to-digest overview, not an exhaustive resource. I will write about other markets in upcoming blogs. Comment to let me know which market you’re in!
– Thanks to Michèle Vice-Maslin for helping me clarify and correct the distinction between MLC and HFA. Indie writers can also join HFA if they create a publishing company. I have updated that section and reflected the changes where appropriate.
Ok. This is going to be a little on the boring side, but if you’re a sync-focused writer/producer/artist, you probably want to stick around. My friend Michelle Lockey and I exchanged a few texts back and forth about the MLC and how confusing it can be to wrap our heads around all the collection societies and the specific royalties they collect. Having worked on catalog management for a publisher the past 6 months or so, I thought maybe I could simplify it and save you all some headaches. I will try to really just give you the gist of who pays who for which type of license. I will also include links for further reading at the end, if you are so inclined.
If my music is on ____ then I get royalties from ____
Interactive streams & Downloads from services like Spotify/Apple Music/iTunes:
Publishing side: PRO, MLC
Master side: distributor
Non-interactive streams/satellite radio like Pandora, iHeartRadio, TuneIn, SiriusXM
Publishing side: PRO
Master side: SoundExchange
Publishing side: PRO, HFA
Master side: distributor
Background music at a public place/live performance
Publishing side: PRO
Master side: n/a
Publishing side: Client pays your publisher/agent or you directly
Master side: Client pays your label/agent or you directly.
Publishing side: PRO
Master side: n/a in the U.S.
Sync & distributor publishing admin deals
If you are focusing on creating for sync (i.e you want to sign your songs to a publisher or library), then you need to be careful with your aggregator choices and what features you opt in.
I’ve been told that music supervisors/agents do not want to deal with it if you use a publishing admin like SongTrust/CDBaby/Tunecore. That said, I prefer not making a blanket statement like this because it’s not an automatic deal breaker per se, it just makes your song potentially a bit more work to clear. If they have another song that’s just as great for the scene, then you might loose the sync.
I do steer clear of them myself, because I want my songs to be as easy-clear as they come. But I could see it make sense if your overseas streaming/download numbers were insane and most of those songs were not sync-friendly and not handled by a publisher with overseas sub-publishers, for instance. You could use them for your non-sync stuff. It is up to you to do your research on what is best for your business.
Do not opt-in for the “Pro Publishing” feature of TuneCore or CD Baby or similar if you are going to sign with a publisher exclusively.
Even though CD Baby Pro (and the company it uses, SongTrust) is non-exclusive, an exclusive publisher/library cannot take your song if you’re with them. You can use them if you only plan to use non-exclusive libraries and agents. If you do use them, then you do not need to sign up for the MLC. That said, even some non-exclusive libraries advice against using them.
TuneCore’s publishing deal is exclusive, so you wouldn’t even be able to sign a non-exclusive deal with an agent, and they would get a cut of any sync you get on your own as well. DO NOT use their publishing service unless you’re ok with them being your exclusive publisher. If you use that service, you do not need to sign up for the MLC.
Distrokid does not currently have a publishing admin feature, but likely will eventually. Just be careful what boxes you check when you upload new songs on there so that you don’t accidentally sign up for their admin deals unless you really want to.
SoundExchange, MLC, Harry Fox, PROs, do I need it all?
In a nutshell: YES.
If your song is signed to an exclusive publisher/library, they will register with the MLC, HFA and PRO for you, but not SoundExchange.
If your song is under a label, then they will take care of SoundExchange, but not MLC/HFA/PRO.
If your song is with a non-exclusive agent, or not signed, you need to do it all yourself.
If you use SongTrust, CDBaby Pro, TuneCore Publishing or other publishing admin services, it’s like having a publisher. You do not need to register with the MLC, HFA or PRO but still need to register with SoundExchange.
Who pays what royalties to songwriters and publishers?
Types of licenses generated by compositions that songwriters and publishers earn royalties from:
- Public performance royalty license for musical composition
- Paid by PRO such as ASCAP, BMI, SESAC, GMR
- Live performances
- Background music in bars, malls, restaurants, etc.
- Radio broadcast
- TV broadcast
- Streaming, online/satellite radio, download from Spotify, iTunes, Apple Music, iHeartRadio, Pandora, Sirius XM, etc, as well as physical sales. Note that your distributor only pays you the master side directly. They pay the composition side to your PRO, who then pays it to you.
- Mechanical royalty license for musical composition on digital service providers in the U.S.
- Paid by MLC, used to be by the HFA
- streaming, download
- Other sources of mechanical royalties
- Paid by the HFA
- Sources: CD, vinyl, sheet music,
- Paid by the HFA
- Synchronization licenses for musical composition being synchronized to visual media
- Paid for by the licensee/client
These royalties are generated by the use/broadcast/replication of the composition. Not the recording itself.
Who pays what royalties to labels, featured artists, performers?
Types of licenses generated by sound recordings (masters) that labels, featured artists, other eligible performers can earn royalties from:
- Digital performance royalty on for sound recording
- Paid by SoundExchange
- Includes internet/satellite radio, webcasts, i.e. non-interactive streams/ not on demand.
- Eg. Pandora, Sirius XM
- Neighboring rights: Outside the U.S., radio play generates royalties for the sound recording owners.
- Reproduction/Distribution license
- Negotiated and paid by distributors.
- As an indie artist, you get this directly from your distributor (DistroKid, CD Baby, TuneCore, etc).
- This is analogous to mechanical licenses for the composition side, but is not a compulsory license at a set rate.
- Streaming services pay ~3.5x more for reproduction licenses than they do for mechanical licenses.
- Synchronization / Master Use license for the recording being synchronized to a visual media
- Paid for by the licensee/client.
What’s the difference between the Harry Fox Agency (HFA) and the Mechanical Licensing Collective (MLC)?
They essentially do the same thing. In fact, HFA is the vendor that will be doing most of the initial onboarding for the MLC. The difference is that MLC is only concerned with digital mechanical royalties, whereas the HFA also handles physical.
The MLC will only collect mechanical royalties for digital U.S. streams and downloads for the DSPs that have signed a blanket license with the MLC. HFA continues to handle the other types of mechanical royalties.
When “Songtrust” and other publishing admin services came up, the indie artists were finally able to collect mechanical royalties more easily. However, as we mentioned at the start of this article, this isn’t a great solution if you’re focused on sync. So, here we are.
You may have seen that in Feb 2021, the MLC collected over $424 million dollars in unmatched royalties. How can they be unmatched?
Well, before the MMA, there was no blanket mechanical license, so the DSPs had to get streaming/digital mechanical licenses from different places and match them to their owners, which quickly became intractable given the sheer volume of music out there.
In the U.S., those mechanical licenses would be granted by HFA. But since your song was probably not in the HFA database, your streaming mechanicals have probably been sitting patiently in royalty purgatory.
Going forward, HFA users will be able to opt in and ported over to the MLC, which will be the central clearing house for collecting blanket digital mechanical licenses. HFA will continue to administer all other types of mechanical licenses.
I hope this was helpful. If it was, please consider subscribing, tipping, and/or sharing with your music friends.
How to get all your royalties by Ari Herstand
Mechanical Royalties Guide 2019 by RoyaltyExchange
In-depth distributor/aggregator comparison by Ari Herstand
Music Royalties 101 by RoyaltyExchange
PS: Pre-save my duo’s upcoming single “Au Soleil”. That really helps and is free!!