How can the music industry’s global royalties ecosystem realise a full-scale revolution in payments? This was among the central questions to be addressed by a panel of experts at our Data, Rights & Royalties Summit.
Earlier this year, Synchtank released Drowning in Data, an expansive report addressing the “uphill battle” currently facing the royalties ecosystems in global music. In itself, the existence of this document, taken in tandem with the unequivocal title, speaks loudly of a live issue that must be confronted in the coming months and years by publishers and the multitude of related individuals using the existing and emerging financial tools and models.
Transparency is cited as “a buzzword” in the commentary, which states:
“There is now an expectation among artists, songwriters and their managers for full transparency, particularly in the world of digital with its multiple income sources, trillions of lines of transactions and myriad royalty rates.” Technology has made this evolution – from the tired, archaic systems of the pre-internet era to the interconnected web superstructures that now govern many facets of daily life – possible.
But what is the industry doing to step into the 21st century and how can these people, teams and businesses realise the full-scale revolution that is becoming increasingly necessary? This was among the central questions to be addressed at our recent Royalties and Fin-tech panel, part of the Data, Rights & Royalties Summit, which featured the following speakers:
- Jim Warner – COO, Centtrip
- Milana Lewis – CEO, Stem
- Marcus Cobb – CEO, Jammber
- Rory Bernard – CEO, Synchtank
- Moderator: Will Griggs – Chief Experience Officer, HIFI
Watch the panel in full now or check out our key takeaways below:
Creative community is demanding “an era of transparency”
The specific topic of data has been widely covered here in recent months. During the panel, Marcus Cobb was vocal in reiterating just how significant a role it has to play. Calling for “an era of transparency”, he spoke on behalf of the creatives who work with Jammber’s payment platform: “I want to know what’s going on with my song, I want to know who we’re collaborating with, I want to know what the splits are and then let’s go onto the next thing. We’re finding that the artists and labels that are the most transparent about deal structure are getting the most street cred across the board,” he explained.
“The artists and labels that are the most transparent about deal structure are getting the most street cred across the board.”
– Marcus Cobb, Jammber
His point was reiterated by Centtrip COO Jim Warner. “Ultimately, if you’re transparent then problem solved. You put garbage in, you get garbage out,” he commented, continuing: “It’s a huge, huge challenge and people are taking steps to fix it for new works that are coming out but you have to fix the old legacy stuff and that’s the really hard part.” In fact, Cobb was equally keen to underline how issues of complexity in music rights and the “absurd” payment delays that are often experienced in publishing are generally down to enduring issues that continue to impinge this field of entertainment.
“Historically, the industry at large has been pretty fragmented, partly as a matter of function. Publishers were here and they had a specialty with songwriters. Labels were here and they had a specialty with artists and in a corporate environment those pieces fitted together relatively well and you would offset timing with things like advances. In the streaming era, it’s just changed so rapidly and it’s very difficult for those silos that are still by and large communicating with paper across territory lines to move that bureaucracy as quickly as the money would like to move,” he explained.
“Ultimately, if you’re transparent then problem solved. You put garbage in, you get garbage out.”
– Jim Warner, Centtrip
But, as detailed in our report, innovation is coming and increasingly sophisticated financial technology is starting to play a more impactful role, allowing publishers to upgrade their systems and compensate clients with greater reliability and improved frequency. For example, there are an array of new and improved options when it comes to royalty portals. Kobalt are considered the pioneers in this field, launching an app in March, 2016 that “revolutionizes the way creators can access their earnings” and providing “true transparency and insight into their data” for the first time.
Which companies are seeking to disrupt the existing industry powerbase?
There have also been a number of updates to Sony Music Publishing’s “state-of-the-art” royalty portal SCORE, which provides highly accurate and transparent data from more than 70,000 income sources and real-time processing. Last year, Universal unvelied their own offering with “instant access to clear, complete and real-time earnings and data” and the opportunity for clients to request a no-fee advance on their current period and international pipeline earnings. Elsewhere, BMG recently announced plans to speed up payments to more than 20,000 songwriters on old contracts.
Equally, a host of companies are seeking to disrupt the existing powerbase in innovative ways by providing original services to artists and writers that allow them to retain more control over their career and finances. In February, Create Music Group launched a beta version of Create Carbon, a credit card it claims will allow performers to access royalties as soon as they’re earned. “Traditionally in the music industry an artist is lucky if they receive streaming royalties within 60 days, and it’s not uncommon for artists to wait six or even 12 months to get paid,” commented founder and CEO Jonathan Strauss.
Everywhere you look, these longstanding, accepted music business practices, for example the bi-annual royalty statement, are being upended and fast becoming a relic of the old industry. Distributors such as Stem, Amuse, Tunecore and Ditto Music are offering advances based on past streaming performance, while organisations like Empowerment IP, Sound Royalties, Royalty Exchange, and the newly launched Music Credit Fund provide various financing and loan services to clients who might previously have been saddled with unfavourable economic agreements secured via their record labels.
As we noted in our Drowning in Data report, the level of granularity and financial engineering required to forecast future earnings using historic information is significant. Swedish-based digital music distribution service Amuse, for example, analyses more than 65 billion data points to determine future royalties via its Fast Forward service.
“During the time of COVID, artists were able to slow things down and really evaluate where the revenue was coming from and start to analyse where there were missing gaps.”
– Milana Lewis, Stem
At the Data, Rights & Royalties Summit, Stem’s Milana Lewis was keen to point out how the pandemic has accelerated awareness around the profound limitations of existing systems. “During the time of COVID, artists were able to slow things down and really evaluate where the revenue was coming from and start to analyse where there were missing gaps or where things weren’t clean. It used to be that recorded music was the predominant revenue stream in the physical world and then touring overtook that post-Napster. COVID reset that because touring became less of a dependable revenue stream and so most artists started looking into where the revenue was coming from.
Education key to unlocking the complexities of global rights ecosystem
“On the music side, they were not seeing the revenue they expected and started asking questions and putting a lot of pressure on the business managers,” explained Lewis, whose platform seeks to assist the “population of creators” inhabiting the music industry. She continued: “We just had a lot more clients being more thoughtful about where their money is coming from and where is it not coming from where it should be and analysing it.”
Meanwhile, Rory Bernard clarified how important education is in unlocking the complexities of both the rapidly changing global rights ecosystem and the role that Synchtank has to play in making that happen. “It’s about making sure people are aware what’s out there and how it works. It’s a long-term commitment to make that work properly. We constantly see people who should know better not knowing the basics of how publishing works or how labels work. One of the reasons we have our blog is because we found we had to start educating people about how the industry works,” he told the panelists.
“We constantly see people who should know better not knowing the basics of how publishing works or how labels work.”
– Rory Bernard, Synchtank
Via royalty accounting platform IRIS, Synchtank allows music publishers to provide a competitive and transparent service to their clients. The platform delivers personalised web portals for songwriters, who are able to access a full breakdown of all their Intellectual Property (IP) and how and where it generates revenue. As discussed during the debate, the international proximity of these earnings introduces a further layer of complexity to this process.
“Two incredibly archaic institutions” at intersection of music and fin-tech
Bernard commented: “Banking in the US is very different to banking in Europe and it’s being aware of these areas and the challenges and opportunities that each one of them brings and how you make that available to the client base and through to the writers with minimum effort from publishers having to do the work.” The panelists took a sceptical view on whether the long-term answer would be provided by blockchain, recently touted in a Rolling Stone article as the answer to “help artists finally understand where and how their money comes in”.
However, there was agreement from the speakers that the issue of global finance was universal, directly impacting every person, territory and sector. Lewis elaborated: “At the intersection of music and fin-tech, you’re dealing with two incredibly archaic institutions at either end and this is what I find most exciting about the industry ecosystem. Both institutions, outside of music, are being challenged. I think if record labels are honest with themselves on the role that they play, they’re just big banks and I think they have really outdated infrastructure.
“Right now revenue and payments don’t [travel seamlessly across borders] and that’s the crux of what’s holding back the industry.”
– Milana Lewis, Stem
“The big banks are dealing with very similar challenges in that they’re not set up for a global economy and a world in which commerce can travel seamlessly across borders because right now revenue and payments don’t and that’s the crux of what’s holding back the industry on both sides and the global economy,” she said, calling for “more community and information sharing” across the music business.
This is something that she and Stem have tangible experience of from the startup ecosystem. “What I find incredibly helpful is how open and honest people are about their successes and failures. If I have a question, I have a community of other entrepreneurs I can go to,” she commented, continuing: “In the entertainment industry, people aren’t open so how can you evolve if there isn’t as much open-source information or power knowledge so people can have that collective bargaining?”
Industry must be committed to long-term goal of real-time payments and reporting
This joined-up approach leans into the work and focus of HIFI, which is founded upon “a community of creators and their allies collectively striving to achieve financial transparency and independence through education, advocacy and technological innovation”. But, to his fellow panelist’s previous point, their Chief Experience Officer and moderator Will Griggs was keen to stress the key differentiators between individuals working implicitly within business to those more intently focused on the creative industries.
“As we think of artists as entrepreneurs, I think that’s a loaded statement … you shouldn’t expect them to have all the tools necessary to maximise the financial side.”
– Will Griggs, HIFI
“As we think of artists as entrepreneurs, I think that’s a loaded statement. In a lot of ways there is that same sort of beauty in it but on the flipside, you shouldn’t expect them to have all the tools necessary to maximise the financial side, those registrations and how to make the most of every single layer of rights that you create when you write a song or record and release a song,” he noted.
While the long-term goal of real-time payments may still be elusively out of reach, in these committed discussions around payments in the digital age, alongside the fin-tech innovations seemingly emerging every week, there is genuine promise. It is the passion displayed by our panelists to move things forward that will change the landscape.
Enjoyed this article? Check out more Synchtank Summit takeaways:
- Merck Mercuriadis on Rewriting the Rules of the Songs Business
- Data Sharing, Standardization & Supporting the Creative Process
- Exploding Data Volumes, Tech Solutions & the Importance of Collaboration