The Mechanical Licensing Collective ( MLC ) is suing Pandora for allegedly failing to pay the mechanical royalties necessary to continue operating as a consumer music streaming platform.

As an interactive service, Pandora must pay mechanical royalties for all streaming activities on the service. In the lawsuit filed in federal court in Nashville on Monday, February 12, the Mechanical Licensing Collective (MLC) claims that the company has failed to report and pay everything it owes under its advertising-supported offering, Pandora Free.

"The MLC has repeatedly raised this license compliance issue with Pandora and asked it to correct its report, but it has refused to do so," the MLC writes. "We are taking legal steps to ensure that our members receive all mechanical royalties due to them in connection with Pandora's use of their songs ."

In particular, the MLC has issues with the "unusually low streaming royalties" reported and paid by Pandora, as of 2021. The MLC says this is due to the exclusion of substantial revenue from the service and the total cost of content ( TCC ) for Pandora Free. The TCC refers to the amount paid by streaming services to record labels for the right to play recordings they own. Both the TCC and the service provider's revenue are "essential to calculate the royalties due for this general license."

Additionally, the MLC is concerned about Pandora's lack of retrospective accounting for royalties for 2021 and 2022. The MLC says it has repeatedly reminded Pandora to report its retroactive adjustments for both years, setting a deadline of February 9, 2024, which it claims Pandora failed to meet .

Although Pandora has not yet responded or provided its version of events, it will have the opportunity to do so, after which the court will establish and manage a schedule for the process as necessary. Likewise, Pandora representatives have not yet responded to media requests for comment.

News of the lawsuit filing comes after the MLC announced its first audit of streaming services , which includes Bridgeport Music's audit of the organization itself . Furthermore, just a few weeks ago, the MLC and the Digital Licensing Coordinator (DLC), its counterpart organization, began their first re-designation process, "a routine checkup every five years" to guarantee the efficiency and effectiveness of both organizations.