Music Technology Policy

Audits: Only the MLC may audit the blanket licensees.  Only copyright owners may audit the MLC. However, audits must be conducted by certified public accountants and those auditors are obligated to look for overpayments—which probably violates a CPA’s duty of loyalty. As Warner Music Group’s Ron Wilcox testified to the CRJs, “Because royalty audits require exten- sive technical and industry-specific expertise, in WMG’s experience a CPA certification is not generally a requirement for con- ducting such audits. To my knowledge, some of the most experienced and knowledgeable royalty auditors in the music industry are not CPAs.”

It is also important to note that the collective may only audit once a year for the prior three years. Given that there will be bil- lions of transactions subject to audit (and eventually trillions in a three year period), it is unlikely that CPAs will be conducting census level audits. Projections and lump sum payments are likely, and lump sum payments tend to be distributed in the old- school method of market share distributions.