The following MBW blog comes from Alan Graham (pictured), who is co-founder and Chief Technology Officer of UK-based OCL which specializes in making copyright compatible with technology. OCL’s Totem Framework allows rights owners from creative industries (music, images, text, video, etc.) to be able to instantly communicate the allowed intent of their assets with each other.
If you have been to any media conference or read any trade magazine over the past several years, you would know that ‘big data’ was going to be the answer to all of the woes of the music industry.
The idea was simple: utilizing the collection of large amounts of data and profiling those generating that data (citizens) could inform you how to extract more value from your customers.
Essentially, big data was a solution pitched and sold to the music industry as a panacea to fan engagement problems. Case in point, from an interview with the Chairman of Alibaba Music, Gao Xiaosong, in 2016:
The company knows where fans are, what their education and income is, what kind of cars they drive and so on..
“We have everything. So we are more like a big agency, and we share big data to our clients. They open their own flagship stores on Alibaba Planet and we serve them to find their fans… We promote stars and the stars show their lifestyle, and the lifestyle will sell everything,” said Xiaosong.
If you work in marketing or biz dev, anecdotes like this have very likely informed your thinking when it comes to music licensing.
Whether a fan is streaming a track or using a clip of music for user-generated content, data collection and profiling have become a de facto requirement for any company looking to secure a music license.
After all, data, according to some, is more valuable than gold:
“Data is the new gold. It’s the new oil. It’s the new plastics.” – Marc Cuban, 2017.
While big data seems very attractive, using personal data and profiling fans may in fact turn out to be, like oil and plastics, already outdated and toxic. The risks taken over the years may in fact threaten a very precarious music industry whose recovery, while driven by streaming, is held together by data.
In 2015 I gave a talk at Midem, touching upon data and potential risks involved. One talking point was that past partnerships between media companies and technology companies were based on a misalignment of goals which created gatekeeper models with dangerous side effects. Any disruption of a major gatekeeper could send music revenues into a death spiral.
Imagine if suddenly, all the ad-revenue generated by music use suddenly came under intense scrutiny. Or perhaps all the tactics used for retargeting users or to generate leads became unusable. What if, almost overnight, you had to rethink how your entire business worked. I mean, that could never happen, right?
For many media-based technology companies, it isn’t about the artist or the music, it is about the observer, the listener, the citizen-creator.
Everything is based on using media to collect as much information from these fans, and utilizing that data to not simply create a better user experience, but to extract revenue.
In a 2014 New Yorker article, Spotify was keenly aware of the power of such data:
All this, Ek explained, will help Spotify to better program the “moments” of a user’s day. “We’re not in the music space—we’re in the moment space,” he told me. The idea is to use song analytics and user data to help both human and A.I. curators select the right songs for certain activities or moods, and build playlists for those moments. Playlists can be customized according to an individual user’s “taste profile.” You just broke up with your boyfriend, you’re in a bad mood, and Justin Timberlake’s “Cry Me a River,” from the “Better Off Without You” playlist, starts. Are you playing the music, or is the music playing you?
Further clarity of Spotify’s position occurs later in the same article:
Spotify knows what time of day users listen to certain songs, and in many cases their location, so programmers can infer what they are probably doing—studying, exercising, driving to work. Brian Whitman, an Echo Nest co-founder, told me that programmers also hope to learn more about listeners by factoring in data such as “what the weather is like, what your relationship status is now on Facebook.”
“We’ve cracked the nut as far as knowing as much about the music as we possibly can automatically, and we see the next frontier as knowing as much as we possibly can about the listener.”
If we flash forward to today, we can see exactly how something as innocuous as what you listen to can in fact say a lot about who you are, including your political leanings.
All of this is tied to a personal profile which can include your friends, which devices you use, social media accounts, cookies, sharing your data for advertising purposes, email, date of birth, gender, address, postal code, and country. From third-party services, Spotify may additionally collect your friends’ names and profile pictures, likes, and posts.
In fact, when you agree to use Spotify, third-parties who install the Spotify widgets on their sites may also send data as to which page on what site you are visiting.
With this knowledge, just how comfortable are you knowing that Facebook is now contextualizing your private chat messages to suggest music on Spotify?
My point is not to simply singling out Spotify here, but to point out this is how nearly all digital services work today. The pursuit of big data and online profiling has a very dangerous darker side that citizens are just now waking up to. What you watch and what you listen to could in fact expose private details about you, that beyond embarrassment, could even put you at risk.
- “How Facebook got into a mess – and why it can’t get out of it”
- “This Is So Much Bigger Than Facebook”
- “Zuckerberg can’t fix Facebook’s quagmire”
- “To be safer, treat unknown tech brands like poison”
Just a sample of headlines from the fallout these past few weeks regarding the revelations of how third-party services may have used Facebook data to psychologically manipulate users of social media.
Facebook is literally fighting for its very life, no exaggeration, because of course its business is advertising and advertising is built around big data. In a recent blog post, John Battelle postulated: “You cannot fix Facebook without completely gutting its advertising-driven business model.”
There is no way this is going to happen, as it is not only part of the DNA of Facebook, it is the very core of nearly everything that comes out of Silicon Valley. The current revelations regarding Facebook will have wide-reaching ramifications all over the world.
This isn’t just about collecting and storing personal data. Every single company that handles data and utilizes it to create a customized personal outcome is about to come under intense scrutiny.
Whether that’s advertising, some sort of personalized recommendation, or maybe Amazon’s Alexa playing sad songs to get you to purchase more tissue paper. I fully expect every company is going to be required by law to reveal how they profile their customers, who they supply that data to, and that will include every music licensing deal going forward. Big data is about to become a very big problem for the music industry.
Additionally, ad-based revenue models, of which the music industry has tied a great deal of its future revenues to, will be affected. Ad-rates had already been dropping year after year.
With new scrutiny and limits on tracking and profiling, it is likely ad revenue will drop. I’m not the only one who thinks so:
“Morgan Stanley cut its price target on Facebook shares to $200 from $230 on Wednesday, citing concerns about the social media company’s ad sales because of its data scandal.”
According to GBH Insights analyst Dan Ives, roughly $4 billion to $5 billion of Facebook’s annual advertising revenue is at risk in this crisis:“The concern from the Street’s perspective is this latest fiasco could reignite the debate within the Beltway and EU around a tighter regulatory environment Facebook and its social platform brethren (Twitter, Alphabet) could face, leading to major changes/ impact to the company’s advertising model and key monetization engines for 2018 and beyond.”
The music industry has deep ties to companies who earn their revenues from advertising, and in many cases has ad-share deals in place. Their bottom lines are now inadvertently tied to this same scandal.
If you look at the massive growth of online services and apps, “paid” was pushed out of the way by “ad-supported” years ago.
Nearly every popular application or social media service is ad-driven by design, and you can’t simply switch that model, because they were designed to function this way. It is their core. And while it’s easy to kick Facebook when it is down, it isn’t entirely fair to simply blame Facebook, because we as citizens bear some of that responsibility.
Since the advent of modern web and the explosion of apps, as a society we’ve preferred that everything intangible was available immediately at our whim, and if it were free, even better.
In order to pay for all of this, we willingly helped create a massive advertising-based surveillance network that rivals top governmental spy agencies. It would be disingenuous to only blame social media giants when, as citizens, we freely gave them our data that allowed them to profile us, just so we could lip sync to a 30 second Beyonce clip.
Now that we’ve suddenly found religion, it is counter productive to simply start movements like #deletefacebook, unless we also open ourselves to new ways of doing things. And that’s not just citizens. The music industry has to stop being afraid of the unknown and open itself to new models.
The primary change we need in the music industry is getting away from the gatekeeper-only licensing models and trying new relationships between rights-owners, developers, and rights-users. We need to look at past adversarial models and convert them to partnership models.
Five years ago, my co-founder Rupert Hine and I began making the rounds of musician unions, indie labels, publishers, artists, and so on, preaching this very idea of changing business as usual in a way that could offer a parallel set of business models.
These alternatives would not disrupt the older models, but provide an additional structure that could work alongside existing licensing agreements. By working in this manner we could be sure not to disrupt current lucrative deals, but create an additional path for newer developers who could build new types of applications and services that had never existed before.
This message grew into a company called OCL (what.ocl.is), and what began as a new philosophical approach, became the core of a technology that would be designed around three key principles:
- We need to find a new model of business that isn’t reliant on ad revenue to support itself, where every party in a transaction gets something.
- If we free ourselves from the ad revenue model, we free ourselves from profiling and tracking people and their personal information.
- Everything we build must be informed by 1 and 2.
We designed a model around these ideals and later the technology that could bring accountability, while anonymizing the experience for the fan. If you do not collect personal data, you can’t expose personal data.
From this came the Totem Framework, a technology, that instead of viewing developers as just some licensee, creates a universal model that can actually licence the party using the media directly, the fan. This is done via the developer as a facilitator of the relationship between the rights- owner and rights-user.
What that means is the previously impossible task of licensing every citizen on the planet for using the media of a rights- owner, becomes not only possible, but trivial. That’s right, instead of licensing thousands of developers, you can actually connect directly with the party using the media, billions of fans.
The Totem framework gives rights-owners the ability, through developers, to provide a universally sanctioned method to acquire, clear, track, utilize, and monetize media, plus report usage in seconds, without the need to fingerprint files.
Accountability without the collection of any personal data means you can understand the “why” without connecting it to the “who”. Developers can also use additional OCL technologies, like Portes, to create applications that do not have usernames or passwords, and can easily be compliant with privacy laws, because they store no personal or payment data.
Developers can simply focus on building great applications without having to spend years figuring out how to acquire rights or build reporting tools. For rights-owners, no need to chase your usage data or your money, as it will always find its way back to you, whether your media is in one application or millions.
The Totem Framework allows both rights-owners and developers the ability to speak a similar language and build new applications with new models for streaming, ticketing, marketing, user-generated content, age verification, and more, all of this done with user anonymity.
At OCL we believe that profiling people in order to create more effective advertising is the wrong model for the future. For us, we’ve replaced the idea of big data with one of accountable data, while making possible new models of monetization.
As an industry, those working in music cannot simply continue down a path driven by fear of the future, but instead need to trail-blaze new opportunities. That may involve a leap of faith or some risk, but compared to the risks we are going to face with big data, I think it is worth trying.Music Business Worldwide