In February 2021, the Mechanical Licensing Collective (MLC) absorbed approximately $424 million in unclaimed streaming royalties from major streaming platforms like Spotify and Apple Music. The MLC was created after Congressional approval, with a mandate to collect and distribute songwriters and musicians' royalty payments. However, by the end of 2021, the MLC had accumulated at least $561 million in unmatched royalties, according to a tax document shared with the media outlet Digital Music News (DMN).

The Growing Black Box of Unpaid Royalties:

According to the DMN, they received word from an anonymous source that the massive portion of owed but unpaid mechanical compensation, which totaled to $561,773,734 at the end of 2021, is just the tip of the iceberg. The source also raised several other concerns about the operations of the MLC, including their ability to direct compensation to the appropriate parties and their role in driving down the per-stream mechanical rate.

Unanswered Questions about the MLC's Operations:

When asked about the current state of the black box of royalties, the MLC's Chief Marketing Officer, Ellen Truley, declined to answer and referred DMN to follow up with her later. However, multiple follow-up messages exchanged between DMN and Truley failed to produce a direct answer to the seemingly straightforward question.

Discrepancies in Streaming Royalty Statements:

Finally, DMN was provided with a breakdown of an artist and songwriter's streaming royalty statements from DistroKid and the MLC. The comparison of streams for each work shows significant discrepancies between the number of recording streams identified by DistroKid and the number of composition streams identified by the MLC. One work, for instance, received over 1.15 million Spotify plays in the DistroKid report but failed to register any MLC streams during the same period, potentially signaling a major underpayment.

Conclusion:

The data presented by DMN raises interesting questions about the efficiency and accuracy of the MLC's operations. With a growing pile of black box royalties, the MLC needs to address the concerns raised by DMN's anonymous source and ensure that compensation is directed to the appropriate parties. The way that artists and producers can protect themselves from not being paid royalties, is to register their songs. We've created a free eBook to help you protect and monetize your music. Get our free eBook - "The Songwriters Guide To Song Registration" https://arkatechbeatz.com/songwritersguide 

The MLC's inability to provide a direct answer to the question about the current state of the black box of royalties only adds to the uncertainty surrounding their operations, so it's very important that artists and producers take the right steps to protect and monetize their music.

Arkatech Beatz (Jugrnaut & Mike “Trauma” D) are a Grammy nominated music production team from New York now based in Atlanta. They were affiliated with Loud Records/Sony Music Entertainment as A&R’s and have produced for artists such as Big Pun, Nas, Raekwon, Jadakiss, Prodigy of Mobb Deep,The Game, Waka Flocka Flame, Freddie Gibbs, Killer Mike, Mýa, Max B and others. They are the host of The Arkatech Beatz Music Business Podcast.  Arkatech Beatz are also authors of The Songwriter's Guide To Song Registration .