The MLC Black Box Problem: Why Thousands of Independent Artists Left Money on the Table in 2022

In 2022, the Mechanical Licensing Collective distributed more than $532.3 million in mechanical royalties to music publishers and songwriters through its blanket licensing system, a meaningful milestone for an organization that began operations only in 2021. The Music Modernization Act that created the MLC was supposed to fix one of the most persistent problems in the music industry: the black box of unclaimed, unmatched mechanical royalties that had been accumulating in DSP holding accounts for years.

The fix was real. It was also incomplete in ways that specifically disadvantaged independent songwriters who didn't know how the system worked.

This article is for those artists, the ones who released music in 2020, 2021, and 2022 without fully understanding what mechanical royalties are, how the MLC tracks them, and what happens when they go unclaimed.

What Mechanical Royalties Are and Why They're Different

When a fan listens to your song on Spotify, Apple Music, or any streaming service, two separate royalty streams are generated. The first is the master recording royalty, paid to whoever owns the recording (often the artist or their label). The second is the mechanical royalty, paid to whoever owns the composition, which means the songwriter and their publisher.

Before the Music Modernization Act of 2018, DSPs were legally required to obtain separate mechanical licenses for every song they streamed, a nearly impossible logistical task given the millions of songs on major platforms. In practice, many DSPs simply failed to do so, accumulating unpaid mechanical royalties in holding accounts. The black box referred to this pool of money that existed but had no verified owner attached.

The MLC was established to solve this problem through a blanket licensing system: DSPs pay a single license fee to the MLC, and the MLC is responsible for matching payments to the correct songwriters and distributing them. For songwriters who register their work properly, this is a significant improvement. For those who don't register, or who register incorrectly, the improvement hasn't reached them.

The $426.9 Million Problem

The MLC's 2022 Annual Royalty Recap documented $426.9 million in total historical black box unpaid royalties accumulated from 2007 through 2020, held across 21 DSPs. This money existed and had been generated by streams, but it had not been matched to the songwriters who created those songs.

The historical royalties break into two periods. For the Pre-Phono I, Phono I, and Phono II periods (2007 to 2017), approximately $53.4 million remained unmatched. For the more recent Phono 3 period (2018 to 2022), roughly $373.6 million remained unmatched, pending a final Copyright Royalty Board rate determination that would allow the MLC to process and distribute those funds.

The MLC's initial match rate for 2022 usage was nearly 85%. That sounds high until you consider what the remaining 15% represents: approximately $79.5 million of the year's distributed royalties that, at the time of initial processing, could not be matched to a verified songwriter. Many of those royalties were subsequently matched as the MLC reprocessed data against new registrations; the match rate for 2022 usage improved to over 89% by February 2023. But the gap between generation and distribution is real, and closing it requires songwriters to be registered in the system.

The Three-Year Clock and Why It Matters

The Music Modernization Act requires the MLC to attempt to match and distribute unpaid blanket royalties for at least three years before considering an alternative distribution. After that three-year window, unmatched royalties can be distributed on a market share (pro-rata) basis, meaning they flow to the songwriters and publishers with the largest overall market share, not to the specific creators who generated those streams.

In practice, this means that if you released a song in 2021 and didn't register it with the MLC, by 2024 your unclaimed mechanical royalties from that song could be redistributed to major publishers based on their overall market share in the streaming economy. The money you generated doesn't disappear; it flows to someone else.

For independent songwriters without major publisher representation, market share distribution is a mechanism that routes their unclaimed income to the entities least in need of it: the publishers with the largest catalog footprints on the major streaming platforms.

This is not a system malfunction. It is the MMA's designed outcome when songwriters fail to register. The three-year rule was intended to create urgency around registration. For independent artists who didn't know the deadline existed, it functioned instead as a silent transfer of their royalties to better-capitalized publishers.

What Registration Actually Requires

The MLC's registration process is accessible and free for individual songwriters. The MLC provides several tools through its portal:

The Public Search Tool allows anyone to search for songs by writer or publisher and see how many shares have been claimed. If you search for your own songs and see 0% shares claimed, your royalties are sitting in the unmatched pool.

The Matching Tool allows registered MLC members to search for unmatched uses of their compositions and propose matches between usage data and registered works. This is particularly important for independent artists whose songs may be in the DSP catalog but not properly linked to their MLC registration.

The Claiming Tool allows members to find registered works with missing ownership shares and claim their percentage. This addresses the scenario where a song is registered, perhaps by a co-writer or publisher, but the artist's specific share remains unclaimed.

The ISRC-to-ISWC Link is the critical technical step that many independent artists miss: connecting the ISRC code (International Standard Recording Code, which identifies the specific recording) to the ISWC code (International Standard Works Code, which identifies the underlying composition). Without this link, a DSP's reporting of streams by ISRC cannot be matched to the composition in the MLC's database, leaving the mechanical royalties in an unmatched state.

What This Means for Artists Producing Music Since 2020

Any songwriter who has released music since 2020, the year the MLC began operations, has potentially generated mechanical royalties through streaming that may or may not be matched and distributed.

The steps to check and correct this situation are straightforward: register with the MLC if you haven't already; search for your song titles in the public tool; verify ISRC-to-ISWC links across your DSP and PRO registrations; use the matching and claiming tools if you find unmatched usage or unclaimed shares.

For artists developing music through Mollohan Production Inc., this is a conversation that comes up in the context of building a complete release strategy, not just getting music onto platforms, but ensuring the royalty infrastructure catches everything that music generates. The MLC's systems work for songwriters who engage with them. The black box, in 2022 as in every year, held money for songwriters who hadn't yet learned to open it.

The deadline is real. Register your songs. Don't leave your royalties in a black box.