DMN & Tipalti Uncover Solutions for Music Industry's Black Box: Addressing Unclaimed Royalties and Streaming Fraud
The music industry faces a multi-billion dollar challenge with unidentified and undistributed royalties, commonly known as the 'black box', alongside fraudulent streaming activities. Here's a comprehensive look at the problems and solutions.
Hand burning dollar bills
The primary causes of unclaimed royalties include:
- Bad or missing metadata
- Unclaimed works
- Fraudulent activities and incorrect information
- Bot farms creating fake plays
Key Solutions to Address These Issues:
- Strong Participant Verification
- Implement robust Know Your Customer (KYC) processes
- Use validated security protocols
- Verify all platform users thoroughly
- Strict Metadata Requirements
- Collect detailed verified information on splits
- Document recording and publishing IP ownership
- Maintain accurate remittance details
- Gather complete tax information
- Reject incomplete or incorrect data submissions
- Clear Fund Distribution Policies
- Establish holding periods for unclaimed funds
- Create transparent redistribution protocols
- Follow industry best practices (like YouTube's model)
- Robust Dispute Management
- Freeze payouts during disputes
- Maintain dedicated resolution teams
- Ensure fair conflict adjudication
Prevention Strategies:
- Block platform access until complete metadata is provided
- Regular audits of streaming patterns
- Automated fraud detection systems
- Clear verification processes for all participants
US Copyright Office building exterior
These solutions can significantly reduce unclaimed royalties and fraudulent activities while ensuring proper compensation for rights holders and creatives. Implementation of these measures at the upstream level provides the most effective prevention of future issues.
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