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CMU@TGE: Reality check – who needs to play ball, and why would they?

By Andy Malt | Published on Tuesday 21 June 2016

Look out for insights, advice and viewpoints dished out at this year’s CMU Insights @ The Great Escape conference here in the CMU Daily throughout June. Today we look at the final panel from the data focused strand.

Titled ‘Reality check – who needs to play ball, and why would they?’, our last discussion in the CMU@TGE data and transparency strand considered what barriers stand in the way of the bold new visions we’d heard about during the day for the way music rights data could be collated and digital royalties distributed. Beyond the technical issues of utilising the blockchain, what spanners is the music industry likely to throw into the works, and is it possible to overcome them?

A theme that had come up earlier in the day returned for much of the debate, that however good a blockchain solution to the music rights data problem may be, someone still needs to input good data to start with. And the metadata currently provided to digital services is a big issue that causes numerous problems.

“We clearly need a single view of the truth of metadata around music, that’s without doubt”, said PPL’s Chief Technology Officer Mark Douglas. “Is blockchain the answer? Well, the features that blockchain brings to bear – so 7000 nodes, all with identical copies, that’s publicly available – they’ve never been the problems, or the barriers in the way of achieving a single view of data”.

He continued: “There’s this big cry for transparency and public availability, the harsh truth of today is people have to work damn hard to fill in the gaps, resolve the rights conflicts, and do all that stuff to get that data right. The people calling for that data to be publicly available aren’t suggesting how that work gets paid for. I’d rather see us talking about the actual problems and how we solve them, rather than this ‘let’s solve world famine and world peace with blockchain’ type approach, which too many people are adopting”.

Instead he praised services like Auddly, whose founder Niclas Molinder spoke earlier in the day, which are working to ensure that better data is being attached to new musical works from the point at which they are created.

Commenting from the audience, lawyer Nigel Dewar Gibb, who had spoken earlier in the proceedings, agreed, saying: “When that studio engineer or producer creates that final mix, they should be putting the ISWC code [the unique identifier code for songs] on it. That is the place it belongs. Get that attached at birth. One of the problems is we’ve had some very poor behaviours around core parts of the data. Tracks are issued again and again and again with new ISRCs [the unique identifier code for recordings]. ‘Another One Bites The Dust’ by Queen – 59 versions. Guess what: they were only in the studio once. There is one sound recording that was committed in the studio, but that thing has got 59 ISRCs”.

Believe’s Stephen King added: “If you look at the data that’s provided to Spotify by the distribution companies, by everyone, it’s absolutely appalling. It’s shocking. We deliver twelve million tracks worldwide and we have 37 people whose only job is to clean our data for our clients. We had an Indian client who delivered 130,000 tracks, it took us seven and a half months to get it data correct. There are fundamental issues”.

“I sign up record labels and I do their digital distribution, so publishing isn’t an issue for me inherently, but it’s always an issue because there’s always issues with the publishing”, he continued. “So more and more we would like to be able to deliver all the information across everything across every track. I think it’s easy to do and I don’t think you need blockchain to do it. I think you need a commitment from the labels that they want to do this and they want to do it properly, and in the end someone’s got to pick up the cost, because the money we would save each other would be massive”.

The way in which business is carried out across the recording and publishing industries came in for a kicking too. Lawyer Amanda Harcourt took aim at the slow pace with which the industry often works, saying: “Working to acquire licences from the music publishing industry is Hell on Earth. It took me fourteen months to clear rights in probably the most well known catalogue in this country, and even then one really famous song, which I was told one publisher owned for the world – a week before the deadline I was told, ‘Oh there’s six countries that we don’t own it in’. It was ridiculous and embarrassing and the industry should be ashamed of itself”.

Once deals are done, there are too many points at which money can be held up as it filters thought the system, added Cooking Vinyl boss Martin Goldschmidt. Referencing the dispute over mechanical royalties which led musician David Lowery to sue Spotify, he expressed particular anger at the system for these payments in the US.

“Every other country in the world there’s a collection society and at least there are adequate databases to make sure most of the publishers and songwriters get paid accurately most of the time”, he said. “In the US you’ve got a system of [the] Harry Fox [Agency], which has allegedly 70% of the rights. The other 30% of publishers and songwriters won’t engage with Harry Fox, so Harry Fox doesn’t even have a complete data set, no one does. Harry Fox is, in my humble opinion, run dreadfully – we’ve been trying to pay them money for five years and failed, so that money is not getting through to publishers and songwriters”.

Bringing it back to the quality of data, he added: “Part of the problem is the US publishers want a solution that digs holes in the ground and fills them in again instead of just having a one stop shop. And if people aren’t going to put good data in, it doesn’t matter what database you’ve got, you can use a pencil, you’re going to get the same results”.

Music Managers Forum CEO Annabella Coldrick brought up the issue of transparency, and the NDA culture that leaves artists and managers in the dark about how money flows from digital services down to them. “When we’re talking about transparency in this case, it’s the ability of artists and their managers to be able to understand what is going on, to be able to see what happens between the services and the labels”, she said. “Then being able to understand how the money flows from the labels, what deductions are made, and how it then makes its way through to artists. Being able to reconcile the two is critical”.

“I think if there are deductions being made, and I am auditing on behalf of a client, I don’t think it’s unreasonable for the rightsowner to justify, to demonstrate what it is that’s come off the top”, added Harcourt on this point. “Now, I know in a global industry that sometimes a lump sum arrives in England and it’s been generated in America and the English office doesn’t necessarily know what the original amount was. But I don’t think it’s unreasonable to ask them to demonstrate how they arrived at the number they want to put on the cheque”.

“We’re often told, ‘We can’t share this information with artists and their managers, NDAs are essential, because otherwise we’ll get in trouble with competition law and antitrust’, and actually I think it’s the other way round”, said Coldrick. “I think it’s anti-competitive not to share the information with artist. The major labels do not share this information, and that’s predominantly the largest source of investment, and if you have a hot new artist who hopefully has the interest of several labels and you’re wanting to do a deal, you cannot make a comparison. So you’re actually stopping competition”.

Continuing on the subject of deals and deductions, Harcourt said: “There’s a phrase I discovered this week from the financial sector, which I’m in love with: the dark pool of liquidity. It’s all those transactions that operate outside the regulatory system, and in this industry its known as ‘the black box’. If you cannot allocate your lump sums to each track or each songwriter, then it goes to the bottom line. We can’t ignore the fact that as companies, your obligation is to maximise the return to your shareholders”.

“We ran an exercise on that”, said King. “And while we get incomplete information back from the services, we managed to allocate everything but 0.2% of income back to our clients. So, if you spend the money it’s possible to do it. But some companies choose not to do it, because it goes to the bottom line. The worst bit is that, when you track income across multiple sources, there’s a bit lost at every single stage. So if I track income around the world and look at 30 sources of income on the same recording, I can see a drop off at every point”.

Throughout the discussion, panellists noted that the blockchain cannot itself solve most of these issues. Summing it up, Goldschmidt said: “Looking at the word transparency, I don’t think that data is the problem, it is one facet of the problem. There’s a lot of people who are just happy stealing the money, there’s myriad problems. I don’t think blockchain is the solution”.

Between this discussion and the earlier interview with Robert Kaye of Musicbrainz, there was quite a level of cynicism towards the blockchain. With various organisations and individuals currently working on blockchain-based data and royalty solutions for the music industry, we will find out soon enough if that is justified.