This tech startup boss’s attitude to music licensing says it all


FlipagramFlipagram is a social video and photo editing platform that boasts in excess of 30m unique users.

The services allows its audience to create ‘short stories’ using photos or videos set to music.

Flipagram’s pitch versus other social platforms is that its videos ‘offer more narrative space than Vine or Instagram looping videos, but are shorter and less cumbersome to create and share than longer length YouTube or Facebook videos’.

Last summer,  Flipagram announced that it had obtained set of music licences in its home market of the US, which permitted it to use song previews of 40 million tracks.

It secured agreements with the three major labels plus top publishers, as well as indie label body Merlin and independent artist distribution platform The Orchard.

As such, Flipagram is now seen a friend of the music business. It even runs its own music chart.

On the surface, it’s exactly the sort of tech startup that brings optimism to music rights-holders about the future, especially now one of the biggest copyright infringers out there – SoundCloud – has begun its entrance into the world of legal, licensed services.

Yet a new interview with Flipagram’s CEO, Farhad Mohit, reminds the music industry how far it has to go before music-using startups habitually play ball from day one.

“We did it like entrepreneurs do sometimes – We did it and decided we’d ask for permission after.”

Farhad Mohit, Flipagram

After Mohit indicates that music “plays such an important role in the tonality and emotional leverage” of the sort of mini-movies Flipagram users create, Re/Code asks him whether he ‘went out and struck deals’ with record labels in the platform’s early days.

He replies: “We did it kind of like entrepreneurs do sometimes, we kind of just did it and [decided] we’d ask for permission after.”

That’s just how entrepreneurs do it sometimes.

One assumes Flipagram paid its electric bills in those early days. And its server costs. And its programmers.

You see the point.

So how much longer did artists and songwriters have to wait until Mohit’s team went legit and started paying them for use of their music?

“It took a good year and a quarter or so from the first outreach and the first set of deals coming in,” admits the exec.

“It’s a very complicated rights environment that’s been created in music copyright. Suffice to say I had a pretty good education in music rights management by the end of it.”

‘Tech startup blames music rights complication for not bothering to get an initial licence’ is no great surprise headline.

But in this case, it’s a useful reminder for the music industry not to kid itself into thinking that this type of corporate runaround is becoming a thing of the past.

“We’ve secured the rights to these previews with separate agreements with each of the labels that compensate them for their rights and their artist’s rights,” adds Mohit, who reveals that approximately five million Flipagrams have now been created using One Direction’s ‘Story Of My Life’.

In addition, Flipagram gets paid affiliate fees when its users head directly to iTunes to buy a track they hear on its service – a strategy it hopes to extend to other e-commerce platforms like Airbnb.Music Business Worldwide

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  • Much sympathy for your perspective, Tim, but…

    The thing is, what is he supposed to do? Wait 1.5 years before launching? That gives problems elsewhere, particularly in terms of getting investment. Licensing should be more standardised and faster if the industry wants to start making money in new ways. It’s not even that startups don’t have money to pay artists from day 1, many do, but they can’t afford to go through negotiation processes where labels always have the upperhand, because they know if they stretch it out, the only thing the startup can do is take the deal or die.

    Your fantasy headline is a good suggestion though. Perhaps industry bodies could come up with a type of “initial license” that makes it easier to test your assumptions fast and if it works and you manage to stay alive, _then_ you go negotiate licenses for longer terms.

    • + 1 here. An “initial commercial blanket license” to test assumptions would spur more innovation and lets the market dictate what sticks and what doesn’t. It behooves Artists and labels to support such a license because it leads to more consumer choice, which leads to better product experiences, which leads to happier music consumers, which leads to greater revenues.

      As Bas said, once a tipping point has been reached, the startup must negotiate a deal in order to continue operating. This process needs to be faster and with less friction though so the startup doesn’t die between the time they achieve initial traction and the time deals get done.

      Without having product-market fit, it doesn’t make sense for startups, labels, or publishers to negotiate direct deals up-front. Most don’t have the money, and the 1.5 year cost in waiting is a non-starter in today’s climate.

      • Nick Barnes

        Both very succinct arguments. In agreement with you both. Innovation requires action. Rights Holders would be smart to wise up to potential new revenue streams and meet those new partners with silicon valley speed.

      • Anthony Manning-Franklin

        I think this is the kind of role that blockchain based licensing systems will fall into. Enabling all sorts of companies to license music with 0 friction – API call -> look up license/rights-holders -> pay.

  • Anthony Manning-Franklin

    “Presumably he paid programmers too” mate do you have any experience of tech startups? It’s a lot of 90 hour weeks for $0 and a hope that your equity will actually be worth something in the future.