"A needle drop is a version of a music album that has been transferred from a vinyl record to digital audio or other formats"
The purpose of a needle drop is to report to the publishing company, such as ASCAP, what music has been transferred so that royalties can be paid to the artist. You are responsible for reporting this and paying a fee. (only is enforced in the professional world, typically when copyrighted music is used in a TV/radio commercial).