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 have more. Streaming platforms and major music rights holders would earn less as a result.
Across the Atlantic, the US Copyright Office has recommended extending the duration of unclaimed MLC royalties from three to five years.
Worldwide black box royalties are estimated at a 9-10 figure sum which is pro-rated based on market share.
Good news for songwriters who don’t get paid for their music, let alone big music rights holders.
This comes at a time when music catalogs are being bought up and touted as asset classes for outside investors.
All of this begs the question: how sustainable is the current valuation of music copyright owners?
Who holds the keys to the metaverse?
A short Metaverse recap: Sony has signed a deal with Roblox. Warner Music has signed a deal with avatar creation platform Genesis and virtual music room creator Wave. Finally, social media stars Charli and Dixie D’Amelio debuted “Sparky And Roy,” their extended avatar persona. Welcome to the world of PRIP.
Personal Rights Intellectual Property (PRIP), relating to an artist’s likeness, is often not included in music copyright agreements (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 collectibles.
Meanwhile, recording artists can license their likenesses 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 catalog without the involvement of legacy recording owners. Check out the late Anthony Bourdain’s deepfake voice in the recent Roadrunner documentary. Can you tell the difference?
Artists could create an extended avatar of their character to perform deepfake recordings in a metaverse location and sell tickets and NFT collectibles. Who needs record labels? Songwriters can create an avatar and take performers out of the equation!
PRIP will change the way royalties are divided in the future because, as it stands, it is the owners (or creators) of PRIP who hold the keys to the metaverse.
DTF on DSP
Here’s another glimpse into the future: Portishead released their SOS coverage exclusively on SoundCloud due to the platform’s user-centric direct-to-fan payment system. Podcaster Joe Budden has gone from an exclusive deal with Spotify to an exclusive contact offered through his Patreon account.
Disney has created a DTF streaming platform that fetches big fan data, creates merchandise sales, and gathers information about future productions. Theater owners are slowly being removed from the value chain. The same will happen to DSPs if they don’t adapt.
Artists have embraced DTF in all its forms: whether it’s engaging with fans on Club House, streaming live performances on Twitch, or building a Patreon fanbase. In some cases, artists offer fans the opportunity to own a portion of their copyright for financial support. It’s a world of fans.
Instagram has turned everyone into a photographer, TikTok has created a new generation of video creators. AI-based music creation tools come next. Welcome to the world of fan-generated music. (FGM). It already is: I’m sure you know at least one artist who broke after an unauthorized fan-made remix.
Smart artists and songwriters will use smart contracts to allow fans to create new music based on their own IP address. This will not only strengthen fan relationships, but create a new source of passive income for artists. Legacy music rights holders can only participate if they have PRIP approval.
The P2P solution
Napster’s peer-to-peer network was a nightmare for the music industry. A huge amount of money and time was wasted before the industry caught up to technology, embraced digital and created the main revenue streams for the music industry. Less for music creators.
Today, most music consumption is digital. The second music is broadcast in audio or video, or a live ticket is sold, a data line is created. Music copyright income can be paid out and viewed as 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 holders based on a user-centric revenue. No more TV show sampling, no more minimum video and music streams eligible for payment – just a peer-to-peer smart contract.
The many music industry stakeholders, owners, and fans of Metaverse 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 sustainable is the current valuation of music copyright holders?
BMG’s statement on the DCMS investigation read: “The world has changed and, as in so many areas, exploitative behaviors are no longer acceptable.”
The valuation of music rights based on past revenues and future revenues according to old revenue distributions needs to be reassessed.
New rights holders have new relationships. They will need it to maximize potential revenue in the metaverse and capitalize on what NFTs have to offer.
Merck Mercuriadis added an NFT idea submission section to the Hipgnosis website, Tidal announced plans to move to NFT, SIAE placed its copyright on the Algorand blockchain, PROs withdraw public performance revenue from the black box using Audoo Audio Meter, Downtown focuses on artist services, YouTube opens a marketplace for artists… The list goes on.
Vladimir Lenin said: “There are decades when nothing happens and there are weeks when decades happen”.
Sharing the creative and economic wealth linked to musical creation and offering fans the possibility of creating FGM are the keys to the sustainability of the value of musical rights. It is now.The music industry around the world