Music

The Music Modernization Act: Making the Case for Open Data

The Music Modernization Act (MMA) has been scheduled for a vote in the House Judiciary Committee on April 9th, where it’s expected to pass with bipartisan support, committee chairman Bob Goodlatte’s (R-Va.) office confirmed Wednesday.

Still to be determined is whether it will go to the House floor as a standalone bill, or gets bundled into a package of music-related measures, including the CLASSICS Act, and the Allocation for Music Producers (AMP) Act. Either way, the MMA stands to be the most significant piece of legislation affecting music licensing in a generation.

“It’s also the only significant piece of legislation affecting music licensing in a generation,” quipped National Music Publishers Association CEO David Israelite during a panel discussion on Capitol Hill this week on music licensing issues.

In addition to being a rare example these days of genuine bipartisanship in congress, the MMA has proved an even more rare example of consensus among nearly all the (frequently warring) institutional voices within the music industry, including organizations representing digital service providers, publishers, songwriters, and record labels.

The bill is aimed at solving an enduring problem within the music industry that has grown more acute with the rise of streaming as the dominate mode of distribution for sound recordings: uncertainty and inefficiency in licensing mechanical reproduction rights for musical compositions.

Under U.S. copyright law, songs are subject to a compulsory mechanical license. Once a song is published, anyone can record it by notifying the songwriter or representative of their intent and paying the statutory royalty set by the Copyright Royalty Board. Unlike the performance right for songs, however, where a venue or service provider can obtain blanket licenses from ASCAP, BMI, SESAC, and GRD for their entire catalogs of works, covering nearly every song published in the U.S., and unlike other major territories, there is currently no blanket licensing facility here for mechanical rights. Instead, a service provider like Spotify or Apple Music, with upwards of 30 million or more sound recordings in their libraries, must locate, notify, and pay the songwriters or administrators for each of those recordings individually, many of which have complex, and often opaque fractional ownership structures.

Alleged failures to correctly locate and pay the appropriate rights owners have led to a raft of litigation against service providers for copyright infringement, including the $1.6 billion lawsuit currently pending against Spotify brought by Wixen Music Publishing.

The MMA would address that problem by creating a blanket license for mechanical rights and creating a new entity, selected by the Copyright Office, to administer it. Instead of having to pay each songwriters individually, service providers could write one check to the new entity, which would assume the burden of locating and paying the appropriate rights owners. The costs of operating the new entity would be paid by service providers, eliminating the need for the new entity to charge a commission to songwriters.

Songwriters and publishers would gain greater certainty of being paid, while service providers would be relieved of an enormous administrative burden and protected against the risk of litigation.

It is that alignment of interests that has led to the broad consensus in support of the MMA within the industry. But the MMA’s most important contribution could be to prove the case for open data and open protocols.

In addition to administering the blanket mechanical license, the new licensing entity envisioned by the MMA would, for the first time, create an open, publicly available database matching sound recordings to musical compositions and their authors and owners.

“We’re really changing the paradigm on data,” said NMPA’s Israelite, one of the MMA’s main architects. “Throughout the history of the music business databases have been regarded as proprietary. ..We want to encourage competition.”

By making critical ownership data public, MMA’s backers hope, entrepreneurs will be able to develop new applications and services beyond the current crop of streaming services, bringing new investment and new revenue into the music business.

“I don’t think streaming is the be-all and end-all in terms of business models,”  Panos Panay, VP for innovation and strategy at Berklee College of Music and a leader of the Open Music Initiative, said during the same panel discussion. OMI is working to develop open protocols for the exchange of music rights data, which could achieve some of the same effects as the proposed MMA database.

“With open protocols you can build an ecosystem, you can have innovation” Panay said. “The MMA, hopefully, will let this industry finally move beyond its past. If we get this right, we won’t have to stop at streaming. All sorts of new applications could be developed to create all sorts of new revenue streams.”

If that pans out, it could provide a valuable proof of concept for other rights based industries. An open and verified database of authenticity and provenance for images and artworks, for instance, could help unlock new licensing and e-commerce opportunities that are today held back by high levels of uncertainty and fraud.

Likewise, the lack of an open, comprehensive database of rights to published works makes it difficult for would-be developers to learn what works are available for license in which territories, holding back the creation of potentially new, digital applications and revenue streams for authors and publishers.

Much will depend on how well the new music rights database is maintained. There are companies in the market today, such as Music Reports and Loudr, that have already compiled comprehensive databases matching sound recordings to compositions and their rights owners, and they invest significant money and effort to verify the data and keep it current. Whether the administrators of the new open, non-proprietary database will have the same incentive to maintain it at a high level of accuracy and currency remains to be seen.

“Everyone will benefit from having this, and everyone is hurt by not having it,” Panay said of envisioned new database. “I think the important thing is that puts a focus on the data, and the importance of good data.”

 

The Purr-fect Blockchain Application? Collectible Digital Assets

Many a fortune has been built on the internet, but we all know the internet’s real purpose is to share funny cat videos. So it’s perhaps no surprise that the latest iteration of a digital network — blockchain — is also being overrun with kitties.

Apart from trading Bitcoin, just about the hottest application running on a blockchain at the moment is CryptoKitties, discrete bits of digital art featuring cartoon felines that can be bought, sold, traded and even interbred with other CryptoKitties to create new, “genetically” unique pussycats. By one estimate, traffic in CryptoKitties is currently taking up 13 percent of the Ethereum networks capacity., making the application the single biggest user of that blockchain.

Apart from the internet’s natural affinity for cats the appeal of CryptoKitties lies in their collectibility. Each CryptoKitty cartoon is generated from a unique digital “genome” and is visually distinct. The application then generates a cryptographic hash of the unique image that is then registered to the Ethereum blockchain. The images therefore cannot be reproduced or forged.

Whether CryptoKitties turn out to be a passing fad, or not, they’re helping popularize the concept of blockchain-based collectible digital assets — a notion pioneered by serious-art blockchain registries like Monegraph and Ascribe. Similar efforts include Rare Pepe cards featuring the alt-right’s adopted mascot, Pepe the Frog, and Cryptopunks.

Now, digital collectibles are moving beyond the world of visual arts into music and other media sectors. Earlier this year, artist-management services provider Boogie Shack Music Group teamed with music blockchain developer Tao Network to create a new type of licensed artist merchandise in the form of blockchain-based digital tokens.

Tokens will be offered in limited editions via “initial artist offerings,” with 50 percent of the proceeds going to the artist. The tokens can be exchanged for fiat currency or Bitcoin, but since each token is cryptographically unique they can also be collected, traded, or used as currency within an artist-centric “engagement” economy, according to Tao Network founder and CEO Bryce Weiner.

“You think about a band like The Grateful Dead and there’s a whole ecosystem of collectibles among their fans,” Weiner said. “That’s an ecosystem that could be monetized with digital tokens. As the tokens increase in value it becomes like a new royalty stream for the artist. It’s an example of another right that could be monetized with blockchain.”

Tao and Boogie Shack plan to launch a token exchange to be called AltMarket in early 2018. Artists initially on board for the launch include the estate of the Wu Tang Clan’s  Ol’ Dirty Bastard, and Digital Underground, with more expected to be announced soon.

Weiner will be speaking a panel in the RightsTech track at the Digital Entertainment World conference in Los Angeles on February 5-6. For information on how to register for the conference click here.

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.”

 

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.

Warner Music Group Partners With Streaming Video Platform Vadio 

Warner Music Group and b2b music video platform Vadio announced a content agreement on Wednesday that will give Vadio’s partners easy access to WMG’s trove of artist videos. This marks the first major label partner for the Portland, Ore.-based company, whose network of partners spans 80-plus streaming video channels, including Radio.com, Vizio and MetroLyrics.

Vadio’s curation platform, ChannelMaker, allows its clients to curate music video channels from a library of videos. Ron Wilcox, WMG’s executive counsel of business affairs, strategic and digital initiatives, said in a statement that “Vadio’s extensive distribution network of video channels expands the potential for Warner Music artists to connect with new fans, while creating new revenue streams on our artists’ behalf.”

Source: Warner Music Group Partners With Streaming Video Platform Vadio | Billboard

Canadian Music Rights Company Acquires Royalty Collection Startup 

Audiam, a company that collects missing streaming royalties for songwriters such as Bob Dylan, James Taylor and Metallica, has been acquired by a Canadian performing rights group.

The Society of Composers, Authors and Music Publishers of Canada, whose clients include star acts from R&B’s the Weeknd to rock band Nickelback, bought Audiam as part of its effort to more efficiently identify its clients’ compositions when they are played on digital services such as Spotify AB, Apple Inc.’s Apple Music, Pandora Media Inc. and Alphabet Inc.’s YouTube—and to pay them for all such instances.

Source: Canadian Music Rights Company Acquires Royalty Collection Startup – WSJ

So… do new artists really need to sign to a record label? 

Kobalt boss Willard Ahdritz has never been shy about proclaiming his company’s model – that of artists and writers holding onto their own copyrights – as the future of the music business.

Now a new film from The Economist delves into the pros and cons of musicians disregarding the traditional label deal – ie. receiving advance money in exchange for a lifelong portion of their royalties.

Source: So… do new artists really need to sign to a record label? – Music Business Worldwide

Apple Dusts Off its Ebooks Playbook for Music

Library_of_Congress_(1)It’s hard to tell whether Apple is simply trolling Spotify with its pitch to the Copyright Royalty Board to adopt a fixed, per-use royalty rate for songwriting rights on streaming services in place or the current revenue-based formula, or whether it’s a serious proposal. But if it’s the latter, the CRB should at least consider the source before adopting it.

Music-Subscription Service Deezer Enters Crowded U.S. Field

French music-streaming service Deezer is launching to the masses in the U.S. this week, stiffening the competition in an already-crowded market.

Deezer, which had about 6 million subscribers world-wide, already has some users in the U.S., where it has been available only to AT&T Inc.’s Cricket Wireless customers or on Sonos and Bose speaker systems. Starting Tuesday, the 9-year-old service will be available for $10 a month to all U.S. consumers after 30-day free trials.

Source: Music-Subscription Service Deezer Enters Crowded U.S. Field – WSJ

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