The intricate relationship between artist compensation and music copyrights has long been a contentious issue within the music industry. Artists traditionally hold publishing rights to their work, encompassing lyrics and compositions, while record labels control recording rights. However, legal complexities surrounding mechanical licenses, which allow for the reproduction and distribution of existing recordings, have often obstructed fair compensation for artists. Notably, streaming platforms like Spotify faced challenges in identifying rightful owners of these licenses, leading to significant lawsuits. In response, the Music Modernization Act (MMA) established the Mechanical Licensing Collective (MLC), aiming to streamline royalty payments through a centralized database. Despite its intentions, the MLC has been criticized for disproportionately benefiting major labels over independent artists due to operational barriers and lack of awareness. This article explores these issues and proposes blockchain-based smart contracts as a potential solution to enhance transparency and fairness in royalty distribution.

Historically, the music industry's structure has favored large corporations over individual creators. For instance, Spotify neglected to pay out mechanical royalties for over a decade due to difficulties in identifying license holders. This neglect culminated in a $1.6 billion lawsuit by Wixen Music Publishing, representing renowned artists such as Tom Petty and Stevie Nicks. Following this legal battle, the MMA was enacted, introducing measures like the MLC to address these inefficiencies. On paper, the MLC resolves prior complications by setting blanket royalty rates and maintaining an extensive database. Yet, in reality, many independent artists remain unregistered with the MLC, either unaware of its necessity or hindered by bureaucratic hurdles. This knowledge gap exacerbates the problem, leaving substantial revenue unclaimed and subsequently redistributed to dominant record labels.

Beyond administrative challenges, geographical disparities further complicate matters. While the MLC operates solely within the United States, other nations have varying systems—or none at all—for managing mechanical licenses. Such inconsistencies increase the burden on artists who must navigate multiple jurisdictions while holding streaming services accountable. Consequently, independent creators often lose out on rightful earnings derived from their publishing rights. Education and accessibility emerge as critical factors in bridging this divide, ensuring artists understand the full scope of their potential income streams beyond standard streaming payouts.

Looking ahead, technological advancements offer promising solutions to rectify these inequities. Blockchain technology, underpinning smart contracts, presents a decentralized approach to verifying and distributing royalties automatically upon each stream or purchase. Unlike traditional methods reliant on trust among stakeholders, smart contracts eliminate intermediaries, thereby reducing opportunities for error or exploitation. Although transitioning to this system poses challenges, particularly concerning reliance on a single digital framework, it represents a progressive step toward equitable compensation. Adoption will likely begin with smaller, independent labels before gaining traction among larger entities, driven primarily by grassroots initiatives rather than corporate incentives.

In conclusion, the current state of artist compensation reflects systemic flaws rooted in outdated practices and insufficient education. While the MMA introduced commendable reforms, its implementation through mechanisms like the MLC fell short of fully addressing independent artists' needs. By embracing blockchain technology and fostering greater awareness about royalty entitlements, the music industry can pave the way for a more just and transparent future. As technology evolves, so too must the frameworks governing creative compensation, empowering artists to thrive without undue obstacles hindering their success.