By: Erin M. Jacobson, Esq.
This article was originally published on Forbes.com.
Today’s hot topics in the music industry are more about data and payments than sex, drugs, and rock ‘n’ roll. As previously discussed, payments to musicians, songwriters, and the companies that represent them are unfairly low. Aside from the rates, the other problem with getting paid fairly relies on the accuracy of the data relating to music.
Digital uses of music require various types of data embedded in and tied to digital music files – called metadata. Metadata includes data like the copyright owners of the compositions and master recordings, ISRC codes (unique identifying codes for master recordings), ISWC codes (unique identifying codes for compositions), performance rights organization affiliations, and other information. One large problem with current metadata within the industry is a problem of matching. Music publishers and record labels often need to match data so certain sound recordings are matched to the composition embodied within them, or that certain uses can be matched to the exact sound recording and composition used. However, there is not yet a good system in place for totally accurate matching, which means a lot of extra work for rights’ holders to identify uses of their works in order to collect the payments associated with those uses.
The other problem is the lack of correct metadata. Oftentimes, identifying correct metadata is like identifying the correct message in a game of telephone. Between the publishers, labels, distributors, and other involved entities, metadata that may have been correct at the beginning of the chain is often incorrect by the time it reaches a stage of usage, resulting in incorrectly identified (or unidentified) owners who don’t receive payments because it is unclear who to pay.
Metadata is often incorrect for several reasons: (1) human error of employees incorrectly inputting data, and (2) lack of communication stemming from either rights’ owners not being clear on their shares of ownership or co-owners not sharing ownership information, (3) companies that have been sold or gone out of business with no clear successor, and (4) people who claim ownership of shares to which they do not actually have rights. In addition, many rights owners (often songwriters) do not want their ownership shares made public because they feel the ease of third parties figuring out what they earn will decrease their bargaining power.
There has been a longstanding argument within the music industry for the need for a centralized database containing all relevant ownership information for all songs. There was an initiative to create the Global Repertoire Database (GRD) to solve this problem, however, the initiative failed reportedly due to companies not providing their data, side initiatives focused on mini-GRD projects, and lack of funding. Although the GRD failed, there are other possible alternatives. CISAC, which is a worldwide collective society of author organizations, supports CIS-NET, a global network of ownership information powered by Fastrack. CIS-NET will be available to CISAC member societies, but not the general public or digital service providers.
Significant attention has been focused on using Blockchain technology to create an open database that is not governed by any one body and can be contributed to by multiple sources. This is a similar principle to the Wikipedia model. The advantages of using Blockchain technology for a centralized music rights database include: the data on the platform is encrypted and run across multiple computers making it difficult to hack; its Bitcoin protocol supports micropayment amounts, making it easier for rights owners to receive that $0.0007 payment and receive it directly; and its decentralized nature allow for rights’ owners to correct information on the rights they own.
However, in my opinion, there needs to be a centralized body to oversee the database to protect against bogus claims and try to discern correct data when inconsistencies are present. Further, while it is great that Blockchain technology can pay artists and writers directly, the technology needs to be implemented in such a way that representatives of rights’ owners like performance rights organizations, music publishers, record labels, attorneys, etc. are not circumvented, as those representatives are essential to handling important business functions for artists and rights’ owners who need to spend their time creating instead of drowning in the minutiae of administration.
The music industry needs a central database with correct information, splits, metadata, etc., both for cohesiveness within the industry and for information transparency to increase the efficiency and reliability of receiving payments. While Blockchain puts forth some real advantages, there is one element that Blockchain or any other database will never have – the human element. The music business is a business of relationships, a business run by people who manage and guard the rights of the music. Therefore, we can only achieve a winning proposition if the business can implement the technology in a way that supports the structure of and the people within the music business.
Performance rights organizations (“PRO’s”) are organizations that track and collect performance royalties on behalf of songwriters and music publishers. In the United States, there are four PRO’s: ASCAP, BMI, SESAC, and Global Music Rights (“GMR”). ASCAP and BMI are the two largest U.S. PRO’s and are also non-profit organizations. Since 1941, ASCAP and BMI have been subject to consent decrees issued by the Department of Justice (“DOJ”). These consent decrees are agreements that allow the government to regulate ASCAP and BMI’s license fees and how they operate in order to prevent monopolization and encourage competition. SESAC and GMR are both independent, privately owned companies that operate on a for-profit basis and are not subject to consent decrees.