The MLC will apply the rates from Phonorecords II proceedings until the appeal on Phonorecords III is fixed

By Emmanuel Legrand

The Mechanical Licensing Collective (MLC), which has launched on January 1, 2021 and is tasked with licensing and collecting mechanical rights for the use of music by digital platforms, has consulted with the US Copyright Office (USCO) regarding the rates and terms that should be applied under the new blanket mechanical license.

  Under the Music Modernisation Act, the mechanical royalty rates and terms applied to The MLC are set by the Copyright Royalty Board (CRB). The clarification was made necessary because the rates set by the CRB through the rate proceeding known as Phonorecords III for the period 2018-2022 has been appealed to the United States Court of Appeals for the DC Circuit by digital service providers such as Spotify and Amazon Music.

Apply rates retroactively

  Last year, the appeal court Circuit vacated and remanded in part the CRB’s Phonorecords III determination, sending it back to the CRB for further proceedings, but The MLC points out that "neither the DC Circuit nor the CRB have explicitly stated the interim rates and terms that are applicable pending the outcome of the CRB’s remand proceeding" leaving the new rights society in a bind in the absence of interim rates.

  Following consultation with the USCO, The MLC will apply the rates and terms established under the Phonorecords II proceeding for a period starting January 1, 2021 until the outcome of the CRB’s Phonorecords III remand proceeding. 

  "Once there is a final determination of rates and terms by the CRB pursuant to the remand, those final rates and terms will be used by The MLC and will also apply retroactively back to January 1, 2018," noted The MLC in a statement.