DMN & Tipalti Reveal Solutions to Music Industry's Black Box Problem: Tackling 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
Photo Credit: JP Valery
Main Causes of Undistributed Royalties:
- Bad or missing metadata
- Unclaimed works
- Fraudulent activities through incorrect information
- Bot farms creating fake plays
Key Solutions for Prevention:
- Strong Participant Verification
- Implement robust Know Your Customer (KYC) processes
- Use validated security protocols
- Verify all platform users thoroughly
- Strict Metadata Requirements
- Detailed verified information on splits
- Recording and publishing IP ownership documentation
- Complete remittance details
- Accurate tax information
- Clear Holding Policies
- Establish defined timeframes for holding unclaimed funds
- Create fair redistribution protocols for unclaimed money
- Follow industry standards (like YouTube's model)
- Dispute Management System
- Freeze payouts during disputes
- Maintain dedicated resolution teams
- Ensure fair adjudication processes
- Document all conflict resolutions
Best Practices for Platforms:
- Implement thorough verification processes
- Require complete metadata before allowing content
- Regular audits of payment systems
- Monitor for suspicious activity patterns
- Maintain transparent communication with rights holders
By implementing these solutions upstream, platforms can significantly reduce payment issues and protect against fraudulent activities while ensuring proper royalty distribution to legitimate rights holders.
US Copyright Office building exterior
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