February, 2017

More Money for Rights-tech: Dubset Mixes Up a $4M Funding Round

Music remix-rights clearance startup Dubset Media on Monday announced a $4 million Series A fundraising round as it prepares to scale up its platform to address the growing number of licensed streaming and download services looking to include DJ mixes and remixes in their catalogs.

Last year Dubset struck deals with Apple Music and Spotify to add fully cleared DJ sets to those services and plans to announce deals with additional outlets at next month’s SXSW festival, according to the company.

Dubset Media CEO Stephen White

“We’ve delivered thousands of mixes so far and we plan to ramp that up to millions and tens of millions,” Dubset CEO Stephen White told the RightsTech blog.

Dubset’s proprietary MixBANK technology identifies individual tracks within DJ mixes and then links that information with a clearance and payment platform that allows the original rights owners to get paid when those mixes are sold or streamed.

The round was led by venture firm Cue Ball Capital but also included strategic investments from MediaNet and its parent company SOCAN, which currently provide Dubset with rights data and payment infrastructure.

“We’re is excited to be a part of Dubset’s Series A funding,” MediaNet CEO Frank Johnson said in an emailed statement. “We believe MIXBank technology and the services it enables will revolutionize the way electronic music royalties are paid, and will ensure that everyone in the copyright ownership stack is paid for use in emergent listening formats like DJ mixes.”

The raise comes on the heels of private-equity firm Blackstone Group’s acquisition of performing-rights organization SESAC in January for a reported $1 billion, and adds to a growing list of recent VC and private equity investment in rights-tech startups.

The key to opening that spigot, according to White, was to broaden the conversation with potential investors to focus on rights management and clearances generally rather than keeping the focus on the music industry.

“When we started out we were very focused on music and on being a music play. That turned out to be very challenging from a fund-raising perspective,” White said. “VC’s hear ‘music’ and doors just close. They don’t want to hear about it. It was very important for us to shift our story to talk about rights management and rights clearances and not focus on music.”

Investor skepticism toward the music business stems from the industry’s well-documented difficulties in transitioning to digital platforms and the relatively poor track record that venture-backed music-tech startups have racked up over the years — a perception that persists, according to White, despite signs of renewed growth in the recorded music business in the past year.

“There’s still a big overhang in the investment community,” regarding music White said. “Most of the investment you see is in the rights management space and in acquiring catalogs” of rights. “It’s easier to understand, and the revenue is more predictable.”

Johnson added, “We believe that the future of music licensing and royalty administration will be found in strategic partnerships like the one between MediaNet and Dubset, where a combination of investment in exciting new technology combined with long-standing relationships with labels, publishers, rights societies, and artists unlocks new revenue channels for large and small rights holders around the world.”

 

The UK music industry failed to agree a ‘transparency code’ for streaming royalties

After almost eighteen months and an awful lot of calls, coffee meets, confidential chats and boardroom debates the project finally came to an end when it became clear that it would be impossible to reach a consensus at this time.

Source: The UK music industry tried to agree a ‘transparency code’ for streaming royalties. It collapsed – here’s why – Music Business Worldwide

Rights-tech Startups Driving Blockchain Investment

The data-visualization folks at Quid have been crunching some numbers on investment in  blockchain applications and they’ve come up with some interesting charts.

The researchers identified 450 venture-backed companies using some form of blockchain technology. And as you would expect, the biggest recipients of VC money to date have been Bitcoin miners, cryptocurrency exchanges, and companies involved in financial services of one sort or another.

But when Quid stripped out the fin-tech firms a very different picture emerged. Four of the top 10 recipients are rights-tech companies, including ascribe, artCOA, Monegraph, and Revelator.

The scale of the investments in non-finance related startups is far smaller than in fin-tech firms, of course. The top rights-tech company on the list, ascribe, has raised about $6 million to date, compared to more than $130 million for 21 Inc., which sells Bitcoin mining computers. But as Quid notes, its analysis “suggests that blockchain has big potential to transform a variety of industries, particularly those that rely heavily on data authentication and verification, including healthcare and digital media.”

 

A Chunk of History: The Medieval Roots of Digital Publishing

This blog post originally appeared in Concurrent Media.

One of the wonderful paradoxes of the digital era of media is its retrograde quality. We tend to think of inventions like the internet and peer-to-peer digital networks as apotheoses of modern communication, but their economic impact on many media industries has been to unravel their modern industrial structures and to resurrect many of their pre-industrial, folk foundations.

Nowhere has that been more true than in the case of music. MP3 files, P2P networks, and now streaming have blown up the multi-song bundle we called the album — and the profit margins that came with it — and restored the single to prominence, as it was in the days before the invention of the long-playing record (LP).

The much-derided phenomenon of unlicensed “sharing” of music over P2P networks also carries echoes of music’s past. Until the Gramophone and the Phonograph made private performances of music practical, music was almost always shared, in the sense that it was usually experienced as part of a public performance. While the industrial technologies of recording and playback made private performances lucrative the instinct to share music never really went away.

Even modern notions of musical authorship are in part a function of industrial technology and are now being challenged by digital technology. Prior to recording, many forms of folk music (think traditional American blues) held standard lyrical tropes and even entire verses as part of a commons that were recycled and rearranged by performers as needed. It wasn’t until recording technology enabled the fixation of a canonical version of a performance that many folk artists began to think seriously about authorship.

Today, EDM DJs treat recordings as part of a commons, recycling and reassembling their elements into unique performances.

The film and television industries haven’t experienced the same retrograde dislocation as the music industry has, in part because the media themselves are products of industrial technology. Film and TV have no pre-industrial past to resurrect. But even then, they have felt the tug of digital technology against the industrial economics of bundling, as programs are disaggregated from channels and channels are disaggregated from pay-TV tiers.

As a sometime-student of media history, I came across a fascinating recent example of digital technology’s pre-industrial DNA in an interview with David Hetherington, North American COO of Klopotek, ahead of the upcoming London Book Fair.

Klopotek AG, is a German software company that provides CMS and rights management technology to the book publishing industry around the world. Here is Hetherington’s description of one way Klopotek helps academic publishers monetize their works, taken from Publishing Perspectives:

“Typically, thinking in the book business,” Hetherington says, “has started with the book. And I think our view of it is that it really has to start with the grain of content…

“So the idea of taking content from various products and pulling it together means that the initial block of content is no longer sold as it is. It means that the content is able to be parsed and re-assembled.

“The users—whoever wants to re-assemble that content—can identify the pieces they want, can specify the part numbers. This, in effect, means that the owner of the content must give it a unique part number and pass that part number to the potential market.

“At times, in some markets, this has been called the “chunking” of a book, breaking it into salable sections that fit users’ needs. Nowhere is this more easily understood than on campuses, where professors can effectively build their own textbooks for courses by piecing together parts of existing works, a “chunk” at a time, to match the needs of a given set of students.

Klopotek’s sophisticated software helps publishers “chunk” their books and license the chunks separately into customized bundles. It creates a licensed alternative to the “course pack,” in which professors would assemble their custom bundles at Kinkos and then distribute them to students. It also provides a defense against book rentals and used-book sales by providing students an affordable option.

Any 14th Century university scholar, however, would immediately recognize Hetherington’s description as an example of the pecia system.

With the rise of Medieval universities in Europe, the demand for books for use by students increased dramatically. But in the years before Gutenberg made it possible to produce identical copies of texts at scale, reproducing books was a laborious, manual process, carried out mostly by monks or itinerant scribes, and incapable of meeting the demand.

A solution emerged in Italy in the 13th Century and spread quickly to other countries. Books were chunked into pieces (pecia) for copying by individual students, and the pieces were then passed around in what amounted to a peer-to-peer network until each student was able to assemble all parts of the text required for his course work (women were not permitted to attend university).

The system became formalized and regulated in the early 14th Century, beginning at the University of Paris. Certain book mongers were licensed to provide students with pecia rentals for copying taken from master texts certified by members of the university faculty. The rates that could be charged for each work were set by the university, and as demand grew and more master copies were needed to supply pecia, the texts were regularly inspected by scholars to make sure they did not become corrupted through the accumulation of copying errors.

The scholars who oversaw the pecia system were not concerned with authorship per se, of course, let alone droit d’auteur. The concept barely existed at the time, and in any case the texts in question were mostly classical or the works of the early Church fathers. The scholars’ interests were pedagogy and preserving the integrity of the texts, not rights management. But it shows that the use of chunking to affect the economics of academic publishing has a long history.

The printing press, many early examples of which were established in university towns, eventually did away with the need for the pecia system by introducing industrial economies of scale to the reproduction of books, although the system survived well into the 16th Century in some areas.

The mechanical press made the complete text the anatomical unit of the commercial publishing industry — “starting with the book,” in Hetherington’s formulation. But it wasn’t always that way, and with digital technology it need not be that way now.

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