The US Mechanical Licensing Collective (MLC) has agreed funding terms with digital music services.
From 2021, the body will operate as the US collection agency for streaming royalties. It was established as part of the Music Modernisation Act.
The streaming platforms are represented by the Digital Licensee Coordinator (DLC), who have agreed to pay $33.5 million (£25.95m) for start-up costs and an initial annual assessment for 2021 of $28.5m (£22.1m). All costs will be divided up among licensees, with the largest services paying a greater share.
The MLC will be responsible for collecting and distributing royalties payable to songwriters and copyright owners by digital music services. It will also create a public database that will contain critical copyright information on all musical works.
The DLC is a non-profit body designated by the United States Copyright Office to represent the interests of digital music services under the Music Modernisation Act. The founding members of the DLC board are Amazon, Apple, Google, Pandora and Spotify.
MLC board chair Alisa Coleman and DLC board chair James Duffett-Smith said: “Today’s agreement between the MLC and the DLC represents a landmark achievement for every facet of the music industry. As a result of this accord, the central feature of the Music Modernisation Act will be able to commence operations with the resources necessary to help ensure its success.
“Overall, this agreement is a great step forward for all of us within the music community and clearly builds off the tremendous progress we made with the passage the Music Modernisation Act. With this phase behind us, we will now continue our work together to finalise the operations and other requirements under the law as we prepare to help songwriters get the royalties they are owed.”