Courtesy Nashville Tracks | CC BY-NC 4.0
Where the Money Goes Missing
Each year, hundreds of millions of dollars in music royalties are collected but never reach the creators who earned them. Instead, they accumulate in what the industry calls the “black box”: pools of unmatched or unclaimed funds created when ownership data is missing, disputed, or improperly reported. Unclaimed “black box” music royalties are estimated to total over $2 billion globally. In the U.S. specifically, the Mechanical Licensing Collective (MLC) reported roughly $427 million in historical unmatched digital audio mechanical royalties. While this is often framed as a technical metadata issue, black box royalties increasingly point to deeper questions about governance, market power, and accountability. As streaming expands globally and music IP becomes a financial asset class, the issue is no longer just whether royalties can be matched, but who ultimately benefits when they are not.
What Creates Black Box Royalties?
Most royalty breakdowns start with something simple: incomplete or inconsistent data, and for decades, the black box has been treated as an unavoidable side effect of a complex licensing ecosystem. Songs pass through multiple intermediaries, distributors, digital service providers (DSPs), collection societies, publishers, and sub-publishers, each relying on accurate metadata to route payments correctly. When information is incomplete or inconsistent, royalties cannot be matched and are temporarily withheld. Over time, those unmatched funds can grow into significant pools of capital (Varghese 2024).
The problem is compounded by how modern music is made and consumed. Songs today often involve many writers, producers, and evolving ownership splits, all of which must be reflected consistently across databases that don’t always communicate well with one another (Fair Trade Music International n.d.). Add in cross-border streaming and different reporting standards between territories, and even small errors can prevent payments from reaching the right people.
Why Independent Songwriters Are Hit Hardest
When these systems fail, the impact is not evenly distributed. For major publishers, unmatched royalties are an operational headache, but rarely an existential threat. Large catalogs benefit from automated registration pipelines, international sub-publishing agreements, and dedicated staff who can monitor statements and pursue discrepancies across jurisdictions.
Independent songwriters operate very differently. Many must manually register works with multiple organizations, rely on platform dashboards they cannot independently verify, and navigate unfamiliar administrative systems in foreign territories. When payments fail to arrive, there is often no clear way to determine whether the problem lies with the platform, the distributor, the collection society, or incorrect metadata submitted months or years earlier (Varghese 2024). For large catalogs, delayed or missing payments are absorbed across diversified revenue streams. For independent writers, even modest gaps can represent a meaningful loss of income.
Governance Questions Are Emerging Globally
Legal challenges abroad suggest these pressures are not unique to the United States. In the UK, songwriter and drummer of Blur, Dave Rowntree, is leading a claim against PRS for Music, alleging that black box income has been unfairly distributed to publishers rather than returned to writer-members. “Musicians’ royalties, perhaps to the tune of hundreds of millions of pounds, have been paid to the wrong people,” said Rowntree (Ames, 2024). While legal frameworks differ, the dispute reflects a broader concern: when matching fails, distribution rules may structurally favor large rights holders, while individual writers struggle to make a profit. This broader scrutiny points to a deeper issue, that transparency and accountability mechanisms have not kept pace with the scale and complexity of global digital music consumption.
The U.S. Policy Response: The MLC and the MMA
In the United States, lawmakers attempted to address long-standing mechanical royalty failures through the 2018 Music Modernization Act, which created the Mechanical Licensing Collective (MLC). The goal was to centralize data, collect blanket license fees from digital services, and match royalties to rightful owners using a public works database.
In theory, this model promised greater transparency and efficiency. Instead of royalties remaining scattered across DSP accounting systems, unmatched funds would be held centrally while creators were given time to register and claim works. But several years into implementation, significant sums remain unmatched, and attention has shifted from technical challenges to governance and redistribution rules.
Growing Scrutiny Over MLC Governance
Concerns about how unmatched royalties are handled are now being raised not just by individual songwriters, but by creator organizations that have taken the issue directly to Congress. In a 2023 letter to the House Judiciary Subcommittee on Intellectual Property, Music Creators North America and nine international songwriter groups questioned whether the Mechanical Licensing Collective has enough incentive to track down and pay rightful owners before unclaimed funds are redistributed (Music Creators North America 2023). As the letter put it, if the MLC’s board is largely made up of representatives from companies that would benefit most from market-share payouts, “what incentive exists for the MLC to identify and contact the rightful owners of those royalties?” (Music Creators North America 2023).
The groups also pressed for transparency around how much money remains in the unmatched royalty pool and how aggressively the MLC is pursuing recovery. Based on publicly available filings and reported identification rates, the organizations estimated that more than $700 million could be sitting in unmatched or unclaimed royalties as of mid-2023, much of it earned by independent creators (Music Creators North America 2023). Without higher participation in the claims process, the letter warned, a large portion of that money could eventually be redistributed to major publishers under the law’s fallback rules, shifting income away from the writers who originally generated it.
When Matching Fails, Who Gets the Money?
Under the MMA, royalties that remain unclaimed after a statutory holding period can be redistributed based on market share, meaning large catalogs are positioned to receive the largest fallback allocations. Publishers are required to pass through at least half of those distributions to writers, but critics argue that market-share redistribution still favors large publishers with scale and sophisticated administrative infrastructure.
Questions have also surfaced around how unmatched funds are managed while in escrow, including whether investment gains or losses are reflected in eventual payouts. When both songwriter advocacy groups and the Digital Licensee Coordinator, representing the streaming services that fund the system, raise concerns about oversight, the conversation shifts from implementation details to institutional accountability.
Why 2027 Matters
Under current plans, the Mechanical Licensing Collective is expected to begin redistributing long-unclaimed mechanical royalties starting in 2027, using market-share formulas when individual rightsholders have not claimed their works. While this may appear to be a necessary administrative step, critics warn it could also lock in today’s matching failures. Once unmatched royalties are distributed by formula rather than by ownership, errors are no longer correctable—they become final financial outcomes (Castle 2026).
Concerns have also been raised about what happens to these funds while they remain undistributed. Public filings indicate that the MLC has held hundreds of millions of dollars in investment accounts; however, the redistribution plan does not clearly explain how investment gains or losses will be factored into creator payouts. With both songwriter organizations and the Digital Licensee Coordinator urging stronger oversight, the approaching redistribution timeline has become a flashpoint for broader concerns about transparency, governance, and accountability.
Why Technology Alone Can’t Fix the Black Box
Technology is often positioned as the solution to royalty-matching failures. Rights-tech platforms now promote machine-learning tools designed to detect metadata inconsistencies and speed up reconciliation. While automation can improve accuracy, it cannot resolve the core governance questions that determine what happens when matching fails: who controls databases, how fallback distributions are structured, and whose interests prevail when ownership cannot be confidently assigned. Without incentives aligned toward recovery rather than redistribution, improved tools may simply accelerate flawed outcomes.
In that sense, the black box problem is no longer just a data-management issue. It reflects how modern music markets allocate value when systems break down, and whether institutional design protects creators or reinforces existing power structures. Until transparency and recovery mechanisms meaningfully account for the realities facing independent writers, unmatched royalties will remain not only missing money, but a quiet driver of inequality in the digital music economy.
Bibliography
Ames, Jonathan. “Blur drummer leads legal challenge over ‘missing’ royalties for songwriters.” The Times. Published April 1,2024. https://www.thetimes.com/uk/article/blur-drummer-dave-rowntree-royalties-kfb02qf3b?gaa_at=eafs&gaa_n=AWEtsqfdniU-yO1mXnoM-a9cIvsbO_WA4uCwtSgGm3WPD5CEouBqnxlLIuIojvdLOvc%3D&gaa_ts=697a6b08&gaa_sig=uwmERde2RFTP_Onr2oE2WNobXdHzpr3PBvo35NoPFxBEXm7IUDzX9B_HfO29_E6hNONvjaEQBZezAbFDRNBW7A%3D%3D
Castle, Chris. “The MLC’s 2027 Distribution Plan: Mechanics Announced, Accountability Deferred.” Music Technology Policy Blog. Published January 23, 2026. https://musictechpolicy.com/2026/01/23/the-mlcs-2027-distribution-plan-mechanics-announced-accountability-deferred/.
“Independent music creator groups alert US Congress to “black box” royalty issue.” Music Creators North America (MCNA). Published July 18, 2023, https://www.musiccreatorsna.org/independent-music-creator-groups-alert-us-congress-to-black-box-royalty-issue/.
“Unmatched royalties.” Fair Trade Music International. Accessed January 26, 2026, https://www.fairtrademusicinternational.org/campaigns/unmatched-royalties/.
Varghese, Jacob. “Beyond the Metadata: How Can We Solve the Black Box Royalty Mystery?” The Independent Music Insider. Published August 14,2024. https://independentmusicinsider.com/editorial-articles/4820/.
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