New Database Takes Aim at Black Box Royalties

Dec 14, 2017

Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.

Searching for Unclaimed Royalties Is About to Get Easier for Music Publishers With New SXWorks Database (Billboard)

Benom’s Take:

Have you ever lost loose change between the couch cushions? Maybe some pennies, a few nickels and dimes, a couple of quarters? How would you feel if you lost $20,000 worth of loose change between the couch cushions?

Sounds crazy, doesn’t it? But people in the music industry do it all the time, especially songwriters and music publishers. That’s what makes this week’s news of a searchable unclaimed publishing royalties database so interesting.

First, a little background. The new database and company (dubbed “SXWorks”) is owned and designed by SoundExchange--the U.S. federally mandated non-interactive streaming royalty collection society for sound recordings and recording artists. (Non-interactive streaming is when you can’t pick the song or skip, like on SiriusXM and Pandora.)

But notice what I said there--SoundExchange was created to work on behalf of the sound recording side, not the music publishing side.

So why is SoundExchange creating a searchable database for the music publishing sector to find their unclaimed royalties?

Over the past year or so, SoundExchange has begun to weave its way into the music publishing sector. This move toward “collective licensing” is the company’s strategy for future growth.

“Collective licensing” essentially means creating a one-stop shop for multiple music rights and their corresponding royalty payments. Instead of going multiple places to get licenses and pay royalties, a user can kill multiple birds with one stone, by licensing and paying one entity for many.

For example, SoundExchange recently purchased Canadian publishing mechanical royalty society, CMRRA. A few years ago, in a similar move, SESAC acquired the U.S. equivalent of CMRRA, the Harry Fox Agency. This means that both SESAC and SoundExchange can offer licensing and royalty payments for multiple rights under one roof.

So how then does one even begin to lose $20,000 in loose royalty change?

This is primarily due to songwriters and copyright claimants not providing correct payment information to music users and/or not registering their shares of songs with the appropriate royalty collection institutions. To properly register songs, so all that loose change doesn’t fall through the bottomless couch cushions, the following must be accomplished:

  • Register the song copyright with the U.S. Copyright Office (Form PA)

  • Register the song (both songwriter and music publisher shares) with the songwriter’s affiliated performing rights organization (ASCAP, BMI, SESAC, GMR).

  • Register the song internationally via a network of foreign sub-publishers or through one publisher that can cover most major royalty producing countries.

  • All songs should have an ISWC code.

  • All recordings attached to those songs should have an ISRC code.

  • All songwriter, publisher, performer and record label data, as well as ISWC and ISRC codes, should be embedded in the sound recording file “metadata”.   

If one or more songwriters or music publishers are missing from these registrations and metadata, the royalties earned from those missing shares are put in escrow. This unclaimed royalty income is often referred to by those in the music industry as “black box money.” Though the songs have earned money, the users don’t know who to pay so they stick that percentage of money into an escrow account - the “black box” - until someone pipes up and claims it.

When I worked for a music publisher in Nashville, we would often notice that these shares weren’t registered or being claimed. Tracking down the proper claimants and making them aware of this missing money is how we regularly picked up new business.

For example, a client’s co-writer hadn’t registered their share of a song. Through our client, we were able to make the connection, tell the co-writer the amount of royalties we believed were unclaimed on their share, and ask whether they would they like us to take it care of it for them. We could also find this information through certain international databases that would even provide approximate amounts of unclaimed royalties.

The article states there are over 57 million songs filed for “Notice of Intention” (compulsory licenses) with the U.S. Copyright Office. These are primarily interactive streaming licenses for which Spotify, Google, Amazon, et al receive and pay royalties. Many of those 57 million songs have missing songwriter and publisher data. A searchable database that is accurate, not technically “buggy,”  and incorporates an efficient, fool-proof system to claim the missing income is a much-needed solution.

And now for this week’s other headlines: