Apple, Spotify, Others Pay $424M In Music Licensing Fees — Move Seen As 'Massive Win' For Artists

Spotify Technology SA (NYSE:SPOT) and other digital service providers paid nearly $424 million to the Mechanical Licensing Collective, the non-profit said in a statement Tuesday. 

What Happened: MLC administers mechanical licenses to eligible streaming services and pays the resulting royalties to songwriters, composers, and others in the music industry. 

The body said it had received “unmatched” accrued royalties from a total of 20 DSPs under the terms set by the 2018 Music Modernization Act. 

“As of January 2021, mechanical royalties from streaming in the U.S. will be processed and paid out by The MLC at no cost to songwriters or music publishers,” said MLC.

Spotify dished out $152.22 million, Apple Inc (NASDAQ:AAPL) transferred $163.33 million and Amazon.com, Inc (NASDAQ:AMZN) paid $42.74 million.

Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) unit Google which runs Google Play Music and YouTube paid $32.85 million to MLC.

Why It Matters: In addition to the transfer of the funds, DSPs also delivered more than 1,800 data files, which contain more than 1.3 terabytes and nine billion lines of data, said MLC.

MLC said that with royalties and usage reports now in its possession, the body can “begin the process of reviewing and analyzing the data in order to find and pay the proper copyright owners.” 

The National Music Publishers Association CEO David Israelite called the development a “massive win for music creators and the streaming services themselves,” Variety reported. “Songwriters and music publishers have for years fought to ensure they were paid accurately and fully by digital streaming services."

Spotify Q4 revenue was higher by 24.4% on a year-on-year basis at $2.58 billion but missed the estimate of $2.59 billion.

Price Action: Spotify shares closed nearly 4.1% higher at $353.73 on Tuesday.