Broken, Leaky Revenue Pipes — the Global Music Industry’s Data Mess
All That Matters was held in Singapore 16–18 September, 2019. Across 3 days #matters19 integrated topshelf conference content that explored the challenges and opportunities of the data-era for the music, marketing, advertising, digital, sport and gaming industries.
I headed over from Brisbane Australia with one question on my mind “how is content being monetised accurately for rights owners?” I attended 11 panels and presentations and listened intently to a raft of global industry leaders and disrupters. I gleaned one vital piece of information — the why.
Why the music industry is on the brink of an unprecedented crisis
Racing toward 2020 a behemoth of a problem is upon the music industry — rapid growth in revenue is coming toward rights owners with no universal solution to the jigsaw puzzle as to who, where or how artists and rights owners get paid accurately! More and more money will be pouring through the ecosystem and it is leaking profusely.
The first step to solving any problem is admitting there IS a problem. The music industry has a BIG problem that is only just being acknowledged and accepted openly. The problem is manifesting a crisis bigger than the upheaval and haemorrhaging from the death of the CD and the advent of digital music consumption. A problem that requires the smartest minds in music and technology to work collaboratively across traditional silos of power to solve.
Dan Rosen, CEO ARIA, declared the music industry is now ‘back in the black’ with the combination of globalisation and technology driving growth. Streaming revenue is up 75% from 0% only 5 years ago. Epic, rapid growth BUT struggling with archaic data revenue infrastructure from a pre-digital era.
Victorian-era clay ‘revenue pipes’ laid by the music copyright institutions since the 19th century are now so broken, dysfunctional and not fit for purpose that in 2019 the majority of artists and creators suffer from not earning a living wage.
What I learned this week is that ignorance is no longer an excuse and technology is not to blame nor are the reporting practices of the digital platforms. A shocking failure of leadership and change management in the publishing and recording industry for decades has resulted in a mess of broken pipes in their own backyards.
Meanwhile, the digital platforms have invested millions and millions of dollars into data and machine learning. The music industry failed to match this investment to future proof rights owners revenue streams.
The shiny new 21st century digital platform ‘revenue pipes’ report billions of micro data transactions EVERY SINGLE DAY. Today in all markets of the world, including China (excluding Vietnam), the ease of access to technology by consumers has increased music’s value in both consumer and commercial spaces. And yet, artists and rights owners are not serviced with accurate play data, nor earning what they are entitled to.
“Data is the new currency” stated Paul Smith, Global Head of International Licencing, Spotify and he reinforced that artists and managers need to extrapolate data to make strategic business decisions with only limited access to cross platform ‘user-centric’ data and revenue.
Colleen Theis, Chief Operating Officer, The Orchard said that the music industry will only continue to evolve if it puts music and technology together and ensure micro-payment revenue is paid through for music.
All artists, managers and industry must start asking why, why, why ?
For years, artists, managers and the broader music industry, have been told by the Performing Rights Organisations (PROs)— ‘it isn’t easy’, it is ‘complicated and difficult’, we are ‘working on it’. PRO members and industry have been given cursory and opaque information regarding the building of magical rights databases to ‘fix the pipes’. That it will ‘all be okay’ whilst the PROs spend hundreds of millions of dollars of their member’s money trying to build something – with no technological infrastructure expertise in their boardrooms.
It was blindingly obvious at All That Matters that no global solution for the adoption of an industry standard for at least another 10 years!
Sami Valkonen, Director of International for PRS for Music stated on the “Neat & Clean — Making Your Data Pay” panel commented that “it should not be hugely complicated as essentially every track has an ISWC (code for the song) and ISRC (code for the recording) and the links should match in the databases — except BOTH ARE A MESS.”
David Loiterton (Gracenote/Nielson), Sami Valkonen (PRS for Music), Caroline Chow (WOW Music Ltd), Jaqui Louez Schoorl (Jaxsta) and Kenny Shiu (BMG Rights Management Hong Kong) all emphatically agreed there is an ENORMOUS PROBLEM and that the mess is created by the artists, creators, labels and publishers themselves.
Why is it all such a mess?
Every platform requires different data sets and there is no universal standard for how data is collected or ingested at the point of content distribution.
There are at least 10 different sets of data standards for content creators to complete for all the different platforms/uses of songs and sound recordings. Mistakes permeate the system globally; duplication is huge and it is not uncommon for up to 17 different versions of label copy to exist. Names are mis-spelt, meta data is commonly missing (with labels releasing tracks before song writer data is entered) ; when music is translated into other languages, or released across global borders the issues are further complicated. A single song can have a dozen different content IDs, for both the song and recording, for the Chinese market alone!
If accurate data is not collected quickly after creation the impact of the errors increases rapidly upon release.
Data has a very long tail. When data is attached to, or missing from, recordings and songs with duplicate codes, multiple codes for different territories and with no universal ‘authority’ to ensure ‘data hygiene’ the impact of human error, fraudulent behaviour, sloppy administration and cutting corners to avoid intense labour costs manifests a problem that is proving immense.
Willard Ahdritz, CEO of Kobalt, believes that the music industry needs to invest URGENTLY into transparency as without doing so, more money is being made at increasing speed and it will continue to be ‘lost’.
During his publishing and technology focused keynote presentation Ahdritz declared that data and money are shuffled around between the DSPs and PROs with an estimated 75% of revenue ‘disappearing’ in to a “spin cycle that simply does not work and is broken.”
In 2019 it is only the beginning of an explosion in micro transactions — the PROs and music industry are simply not ready and not investing in technology. In a #notsohumblebrag Ahdritz said Kobalt have a “global clean database that consistently matches 100% of micro transactions for writers, artists and sub-publishers.” If Kobalt can do it, it proves it can be done. If the PROs and others cannot, then perhaps all the world’s songwriters and publishers will migrate to Kobalt and the problem will be fixed?
Dealing with 1.2 trillion transactions in the past year alone, PRS for Music recognised the need for an authoritative data base and invested in ICE as the place for a complete set of member data. With data increasing 10-fold a year ICE is a processing hub for pan-European rights owners with aspirations to become global, but in reality this is years away.
Cussion Pang, the CEO of Tencent Music Entertainment, pronounced that his company’s wish is that China will “transform the music industry” and challenged the music industry to be more open, dynamic and collaborative. Fast usurping Universal as the richest music company in the world, perhaps TME will have the resources to get an authoritive data base built in China in record time?
Gracenote/Neilsen are well down the path toward a universal rights database that could be accessed by all PROs and stakeholders without the tension of propriety ownership between the PROs. It is still years away though.
Legal counsels and data whiz kids on the ‘Data Danger — Governance Issues with Data’ panel hypothesized that perhaps data is in such a mess worldwide that it would be easier to just delete it all and start again?
In that case, could the estimated 75% of revenue from DSPs tumbling around in the PROs ‘spin cycle’ be invested back in the home country’s music ecosystems ?
Perhaps all the DSPs could harmonise their data standards to give a helping hand to the process?
PWC’s Australian Entertainment & Media Outlook 2018–2022 is Australia’s leading industry forecasting report across 12 segments of the entertainment industries. Their research demonstrated that “The New Trust Economy” is where success lies.
Trust = Advocacy, Consistency, Success and Transparency
A transparent data and revenue chain will drive efficiency and create sustainable livelihoods for artists.
It is VITALLY IMPORTANT that the music industry embrace this thinking.
It is urgently incumbent upon the music industry to do its due diligence and get this right, fix the pipes and clean up the mess.
Leanne de Souza is an owner/director of Nightlife Music. Nightlife are commited to accurate and transparent reporting to content owners for the legitmate, licenced use of their content in public performance environments.
Leanne attended the All That Matters 2019 Conference as a VIP delegate at her own cost.