This MBW op/ed comes from Ran Geffen, founder of XR connect development agency OMR and CEO of Amusica Song Management in Israel. Here, he offers a sober look at the future of the music industry…
Recently, the UK Parliament’s Digital, Culture, Media and Sport (DCMS) Committee spoke loud and clear: the distribution of wealth in the music industry must change.
Songwriters and artists should get more. Streaming platforms and major music rights holders would earn less as a result.
On the other side of the Atlantic, the US Copyright Office recommended extending the period of unclaimed royalties at the MLC from three to five years.
Global black box royalties are estimated to amount to a 9-10 figure sum that is distributed pro-rata according to market share.
Good news for songwriters that are not being paid for their music, less so for major music rights holders.
This comes at a time when music catalogs are being bought up and packaged as asset classes for outside investors.
It all raises the question: how future proof is the current evaluation of music copyright holders?
Who holds the keys to the Metaverse?
A short Metaverse recap: Sony inked a deal with Roblox. Warner Music inked a deal with avatar building platform Genesis and the virtual music venue creator Wave. Last but not least, social media stars Charli and Dixie D’Amelio launched ‘Sparky And Roy’, their extended avatar persona. Welcome the world of PRIP.
Persona Rights IP (PRIP), relating to an artist’s likeness, is often not included in music copyright deals (nor in the rights of major music companies). Without these rights, legacy rights holders cannot benefit from new revenue opportunities in the Metaverse, mixed reality (holographic and AR concerts) or around NFT collectables.
Meanwhile, recording artists can license their likeness or create re-recordings of their songs using deepfake technology without breaking the agreement with their record company. Music legends can ‘do a Taylor Swift’ and revive their back catalog without the involvement of legacy recordings owners. Check out the late Anthony Bourdain deepfake voice in the recent Roadrunner documentary. Can you tell the difference?
Artists could create an extended avatar of their persona to perform deepfake recordings in a metaverse venue and sell NFT tickets and collectables. Who needs the record labels? Songwriters can build an avatar and take performing artists out of the equation!
PRIP will change the way royalties are divided in the future because, as things stand, it’s PRIP owners (or creators) that hold the keys to the metaverse.
DTF over DSP
Here is another glimpse of the future: Portishead released their SOS cover exclusively on SoundCloud because of the platform’s direct to fan user-centric payment system. Podcaster Joe Budden moved from an exclusive deal with Spotify to exclusive contact offered via his Patreon account.
Disney created a DTF streaming platform that grabs big fan data, creates up-sales of merch and gathers insights into future productions. Cinema owners are slowly being taken out of the value chain. The same will happen to the DSPs if they don’t adapt.
Artists have embraced DTF in all its forms: whether it’s engaging with fans on Club House, livestreaming performances on Twitch or building a Patreon supporter base. In some cases, artists offer fans the opportunity to own a part of their copyrights for financial support. This is a fan’s world.
Instagram turned everyone into a photographer, TikTok created a new generation of video creators. AI-based music creation tools are next. Welcome to the world of Fan Generated Music. (FGM). This is already happening: I am sure you know at least one artist who broke after an unauthorized remix created by a fan.
Smart artists and songwriters will use smart contracts to allow fans to create new music based on their own IP. Doing this will not only strengthen relationships with fans, it will create a new passive income stream for artists. Legacy music rights owners cannot partake unless they have PRIP approval.
The P2P solution
Napster’s peer-to-peer network was a nightmare for the music industry. A staggering amount of money and time was lost before the industry caught up with technology, embraced digital and created the now main revenue streams for the music business. Less so for the creators of music.
Today, most music consumption is digital. The second music is streamed as audio or on video, or a live ticket is sold, a data line is created. Income from music copyrights can be paid and displayed like an online investment portfolio.
Big data, Blockchain, fingerprinting and AI can be the building blocks of a new P2P: Pay to Play, which would mean immediate income for music craters and rights owners based on user-centric income. No more sampling of TV broadcasts, no more minimum video and music streams eligible for payment – just a smart contract between peers.
The many stakeholders of the music industry, Metaverse owners and fans can be at each other’s throats or use technology to create a win for all. A simple solution for a complicated industry.
So how future proof is the current evaluation of the music copyright holders?
BMG’s statement on the DCMS inquiry stated: “The world has changed and, as in so many areas, exploitative behaviour is no longer acceptable.”
Evaluation of music rights based on past income and future income according to the old income splits needs re-evaluation.
New rights owners have new relationships. They will need them to maximise the potential revenue in the Metaverse and capitalize on what NFTs have to offer.
Merck Mercuriadis has added an NFT idea submission section to the Hipgnosis website, Tidal has announced plans to move to NFT, SIAE has placed its copyrights on the Algorand blockchain, PROs are taking public performance income out of the black box using Audoo Audio Meter, Downtown is focusing on artist services, YouTube are opening a marketplace for artists… The list goes on and on.
Vladimir Lenin said: “There are decades where nothing happens and there are weeks where decades happen.”
Sharing the creative and economic wealth relating to music creation, and opening the options for fans to create FGM are the keys to future proofing the value of music rights. The time is now.Music Business Worldwide