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Written by Ramsey Brown.
As an up-and-coming musician, you must know all the possible ways of receiving income and collecting all royalties that your music makes. Unfortunately, many musicians and songwriters lose a ton of money each year due to lack of knowledge in this regard.
These unallocated royalties are what we in the music business call ‘Black Box Royalties’. Billboard recently estimated that there is around $250 million+ dollars worth of these unclaimed funds building up as we speak. This has become an increasing problem largely due to increasing use of streaming services.
Many musicians know about the royalties they have yet to receive, but they don't know how to claim them. As a creator, you are rightfully owed money from the public streaming or using your intellectual property. When this money is not accounted for by the rightful recipient, it results in the bigger and wealthier artists becoming even bigger and wealthier.
At Omari MC, we are dedicated to the wellbeing of our fellow independent artists. We want to make sure that emerging musicians coming up in the complex music industry are equipped with the proper knowledge and information in order to succeed. Which is exactly why we are going to dive into the topic of Black Box Royalties — explaining what they are, how to collect them, and how to prevent losing any of your hard earned money moving forward.
Black Box Royalties or Unclaimed Royalties are any music-generated royalties and incomes that are named towards the rights holder, but aren't given to them for one reason or another. This then causes the creator, writer, or artist to lose money and not receive the proper monetary credit that their music has generated.
In order to get royalties in the first place, an artist or musician must be registered with a collection agency, or PRO. These organizations collect money for artists and must know who the artist is and how to get ahold of them in order to allocate the funds accordingly.
When organizations don’t have this information or either have the wrong information, this money goes into a ‘box’ where it sits there as unclaimed income, AKA black box income. To further summarize, black box income is money that’s held either by a collection agency, or more recently a streaming service, because the company doesn’t know who or where to send it to.
Sometimes it’s the fault of the record label or publisher that the royalties can’t be matched to the artist or songwriter. In other cases, it’s because collection organizations haven’t made it particularly easy to claim the money. Either way, there is a ton of dough floating around in this ‘black box’ and some of it may have your name on it.
If you're a songwriter or publisher who hasn't received their fair share of royalties, you're referred to as a lost writer by record labels and involved parties. The moment your song hits the airway and is listened to by the public, the artist and songwriter begin to earn royalties from that usage.
If your song(s) are either unregistered, registered with the incorrect data, have no collection society or publishing behind it — the artist/songwriter payout becomes interrupted. When the payment has no place or artist to go to, it then falls into the black box.
The music royalties then stay in this black box for a period of 2-3 years, or until the rightful owner claims it. After the 2-3 year wait period expires and nobody has claimed the funds, the money then gets redistributed to major publishers and the industry’s top earners such as Drake or Taylor Swift.
This is a problem because it prevents smaller artists from earning the revenue they deserve and earned. Thus, keeping them at the bottom of the totem pole and pushing the already big name, wealthy artists even further up.
If you want to avoid this sort of nightmare in the future, there are a number of ways to do so. With the right preventative measures, you’ll be able to ensure that you are receiving every dollar of royalties you are rightfully owed. It can be easy for artists to fall into this black box due to the complex nature of song registration and publishing administration. However, if you follow these tips below, you can steer clear of losing any money moving forward.
Music distributed on digital platforms will have an ISRC (International Sound Recording Code). Whenever you register your songs, entering this code and in complete accuracy is extremely crucial. If your song registration is incomplete or missing information, your chances of a full payout are much less likely.
To add to the point of entering your metadata in correctly, it is also important to enter in your song titles correctly with the name matching on ever single platform. For example, if your song has a feature in it and it’s called “Song ft. Artist”, make sure to register it everywhere as “Song ft. Artist”. If it is in some places with the title as just ‘Song’ and other places as ‘Song ft. Artist’, it can cause confusion and discrepancy in your royalty distribution.
It is always critical for co-writers and co-creators to be on the same page during the music making process for many different reasons. In terms of royalty collection, if there is any sort of split discrepancy, it can lead to no one receiving any royalty payouts at all.
If a song is registered by different parties with different split percentages, all of the money the song is generating will be inaccessible until the disparity is resolved. It is always a best practice to fill out a split sheet as soon as the recording process is over. Make sure you leave no grey area of ‘who gets what’ before leaving the recording studio.
When you write, register, and release new music, you need to constantly be updating your PRO/CMO and publisher. Unlike PROs who only track and collect performance royalties, a CMO or Collective Management Organization collects both performance and mechanical royalties.
Signing up with a publishing administration can also do all of this heavy on your behalf. Platforms like Songtrust will directly register your songs with pay sources worldwide and retrieve your performance royalties for you.
Performance Rights Organizations or PROs are responsible for making sure nobody utilizes your music and catalogues without your permission and copyright. These organizations will take all the necessary actions and make sure the streaming platforms and record labels are made aware of the rights holder, so that you can get paid for your music.
This is also how you're going to avoid any kind of copyright infringement in the future and a hassle free way to ensure your royalties are accounted for. You also need to sign up and register your song with all of the major PROs, and not just one. ASCAP, BMI, and SESAC are the three organizations you want to be familiar with.
So we told you how to avoid black box royalties, but many of you may be asking, is there any way to recoup my royalties that are already in the black box? Luckily, there is. All thanks to the Music Licensing Modernization Act (MMA).
One effect of this act is the creation of the Mechanical Licensing Collective (MLC) and the establishment of the unclaimed royalties oversight committee. This committee of American songwriters and publishers set out for a more transparent, streamlined royalty payment system.
The MLC now works to obtain historically unmatched money by doing the research to find its owners, and giving copyright owners a transparent process to claim what is theirs. In fact, the MLC recently announced that it received $424,384,787 in unmatched royalties from digital music services to distribute back to the rightful copyright owners.
This number proves that there is big progress being made in the future growth of streaming that will benefit not only artists, but the entire industry as a whole. If you feel that you are not receiving the proper royalty payout that you deserve, check out the Mechanical Licensing Collective and see how they can help get back what you have lost.
Unclaimed Black Box Royalties are a very real and serious problem in today’s music industry. They’ve cost millions of artists millions of dollars — dollars that could’ve been used to help boost their careers. Although the topic of royalties and the complex nature behind it isn’t the most exciting to discuss, it is an important topic to discuss and one that all artists should be knowledgeable about.
We hope this article helped raise your awareness so that you do not fall victim to black box royalties in the future. Share this information with your fellow artist friends, so they can also be aware of how their hard-earned royalties could very easily be slipping through the cracks. Make sure you utilize this information to ensure a successful, lucrative, and thriving music career!
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Great article. I learned about black box from a major record owner when I worked as his executive assistant. Today some of what he taught me has helped me in my C suite capacity.
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