How Music Reports’ Answers the Royalty ‘Black Box’ Problem

Photo Credit: Music Reports

Royalty accounting isn’t just a numbers game: it’s a minefield for anyone tracking who actually gets paid. The core of the challenge in the digital era is matching sound recordings to the songs embodied in them and the current payment information for the owners of those songs. Now there’s a radically new system leading the market in that challenge— Trakdex.

This article was created in collaboration with DMN partner Music Reports.

According to a recent Digital Music News report, “fraud is rampant, detection is inconsistent, and billions are at stake—with no clear industry estimate of how much is being siphoned away.” For songwriters, composers, recording artists, publishers, labels, producers, and distributors, ‘mind the gap’ is good advice.

Music Reports has been a relatively quiet company for most of its 30 years, but they can’t keep quiet about Trakdex. The company has always been an independent music royalty accounting innovator, with a reputation for exceptionally detailed royalty statements. While some have complained that their statements can be too detailed, they believe it’s essential rights holders always know exactly how much they should be paid for the use of their works in any context.

Music Reports has several tools in its utility belt to achieve that goal, centered on its proprietary Songdex registry, which it claims is “the world’s largest and most comprehensive registry of music rights and related business information.”

Songdex contains metadata on hundreds of millions of sound recordings and compositions, plus an immense store of objective data on the share ownership of those recordings and works, and the payment details and preferences of those owners.

Now they’re bringing a new tool to market—Trakdex. Early last year, with its own worldwide footprint already established, Music Reports made a strategic decision to acquire Blokur, a London-based company known for its novel matching technology, based in graph theory, that is engineered to pinpoint unclaimed publishing royalties and data gaps at scale. As Digital Music News reported in December, 2023, Blokur’s leading matching tech saw them selected as part of the MLC’s Supplemental Matching Network.

Music Reports spent the last fifteen months integrating this approach with its existing sound recording database, which provides track-to-song matching at scale. The resulting integration, branded Trakdex, is turning the search for unmatched works from a needle-in-the-haystack effort into a lights-on, systematic process.

“When we undertook this project, we’d have been excited about two or three percentage points of matching improvement,” said Aaron Partington, CTO. “We were blown away when our results showed a full ten percentage point improvement on our baseline match rate. Even better, when they vetted the results, our Copyright Research team found that we had improved the quality of our matches too, leading to vastly better monetization for copyright owners.”

Fraudulent and duplicate claims have become a frontpage headache for collectives like the MLC, for rights holders, and for licensees alike, as Digital Music News reports: “We now know about millions of dollars in fake works, ghost writers, and diverted payments. The MLC’s own data reveals that ‘duplicate works’ and shell companies are gaming the system, with fraudsters registering the same song multiple times in different guises.”

For rights holders, neutrality and objectivity aren’t just talking points—they’re an absolute necessity. Music Reports isn’t competing with publishing administrators to affiliate catalogs, like some other organizations; instead, it’s dedicated to ensuring that copyright owners are accurately compensated, armed with data that’s as solid in a complex, industry-wide rate negotiation as it is in a single royalty statement.

Rights owners who utilize Music Reports’ catalog auditing tools gain access to a cloud-native tech stack that includes Trakdex, the Songdex Claiming System (six million tracks successfully claimed since 2016), and a new black box discovery service making royalty recovery as easy as drag and drop.

Music Reports does not operate on a membership basis that might bias its operations; instead, it forms simple vendor agreements with its clients, who include digital service providers (DSPs) like Amazon Music, Apple Music, and Peloton, as well as rights administrators like music publishers, PROs, and CMOs.

To facilitate efficient royalty payouts, the company obtains and vets copyright management information directly from rights holders, on the one hand, and license terms, catalog usage, and revenue data from DSPs, on the other hand. The ownership data is collated in Songdex, and referenced by the company’s license administration platform, which processes the DSPs’ license terms.

Trakdex amplifies this system by performing the critical step of matching as many recordings as possible to actionable song ownership information, while keeping track of all unidentified work shares until rights owners can determine their splits and register them with Songdex.

The comprehensive scope of this system enables Music Reports to conduct precise royalty administration, rights management, and verification of ownership—key to ensuring the right parties are paid—no matter how complex a catalog or license structure might be. For rights holders and digital services alike, Songdex’s SOC-audited, SSAE-18 compliant platform ensures crucial details are not only stored but continually updated and accessible for accurate royalty calculation and timely payment distribution.

Unlike other providers, where claims are less strictly verified, Music Reports’ manual review process ensures data stays reliable and minimizes incorrect or duplicate claims. The process enables publishers to keep their catalog current, tie compositions to all relevant recordings, and access new licensing and royalty opportunities as soon as songs are matched.

For publishers, this means humans stay in the loop for better control, more timely payments, and publisher support with royalty distributions—still a critically important element for rights management in the artificial intelligence era.

Having invested nearly $10 million in back-end system developments like Trakdex over the past three years, Music Reports has ensured its platform will remain the leader in music rights administration for the foreseeable future.

“The Music Modernization Act of 2018, with all its regulatory changes, was highly disruptive for our business, there’s no doubt,” said Jason Walker, CEO. “But we took on the challenge with our usual can-do spirit and have managed to grow every year since. And now we’re stronger for it.”