Matt-HeadshotMusic publishing is changing. It’s the longest established sector of the music industry, but in the last decade it’s also fielded a lot of criticism from within the industry (i.e. labels) concerning publishers’ appetite for supporting new digital innovations.

The thing is, as soon as you group all publishers together – “Publishers are X” or “Publishers do Y” – you’re showing yourself up, not least because there are a growing number of younger, fleeter-of-foot publishers helping to redefine how the sector works, particularly around digital.

One of them is Songs Music Publishing, which at 10 years old still qualifies as a young company in this space. Most recently in the news for nabbing a worldwide co-publishing deal with Ella Yelich-O’Connor (aka Lorde), it’s also made a habit of striking digital deals early and developing its own technology.

Founder and CEO Matt Pincus has also become an increasingly prominent spokesperson for publishers in general in his role as a board member of the National Music Publishers Association, from tackling Vevo over its lack of licensing deals with indie publishers in early 2012, to sparking debate about the emerging YouTube multi-channel networks (MCNs) space a year later.

Music Ally caught up with Pincus for an interview, starting with his company’s focus on contemporary songwriters rather than classic catalogues. “A lot of independent publishers have entered the market over the last 7-8 years by raising money and buying historical catalogues. We did the opposite: signing people who are writing songs now, and building the business writer by writer and employee by employee,” he says.

“While we’ve lately had a bit of a run with Lorde, Diplo and The Weeknd, we’ve been doing this for a long time! A lot of people think you can get in and out of this business like any other private equity-backed business, but I think music publishing takes 15-20 years before it looks like it ought to. It’s not an easy-in easy-out business. We’re 10 years old this year, and it’s really just starting!”

Songs may not have the hundreds of thousands of works that larger rivals have, but Pincus notes that a big percentage of its catalogue is active – 90% of its songs have earned money in the past year – which he says provides “very good bang for your buck” if you’re a digital company signing a licensing deal with his firm.

“We consider it a responsibility to look at the new channels of business that are opening, anticipate what the licensees need, and deliver it to them,” he says. “We’re so small relative to even the smallest major, we have certain structural advantages. We started from scratch, whereas if you’re running something like EMI, where I used to work, they have a tremendous legacy data situation.”

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Pincus talks about YouTube as a good example of the kind of partnership that’s emerging, suggesting that the company faces a bigger challenge in identifying copyrighted content on its service than people think, despite its much-trumpeted investment in ContentID to match master recordings, and pattern-matching technology to identify melodies in (for example) cover versions.

“These two things are not that accurate, still. The technology just does not exist yet, so you’re left doing search on a textual basis for your songs. We have ‘Express Yourself’, which is one of Diplo’s most reactive songs on YouTube. And you can imagine what you get if you type ‘Express Yourself’ into YouTube: you get hundreds of thousands of results!” says Pincus.

“For us to weave through those manually is almost impossible, so we’re trying to work with YouTube, and with our own internal capabilities, to figure out what the current best practice is in identifying and mapping content on YouTube, and trying to improve it.”

Pincus talks about a “generational pivot” that’s going on within publishing, but also about changing attitudes towards rightsholders and creators within digital music services. There are still legal disputes and licensing battles, but there is also more constructive dialogue happening, and earlier in the licensing process.

“The first round of the dialogue between technology businesses and music publishers was all about suing one another, and trying to establish a legal dialogue. Now I see that you’ve got people at a senior level in the digital companies who actually want to make their careers by figuring out how to make a commercial marketplace for entertainment content on the internet,” he says. “Our job is to identify these people and work with them to make that happen.”

Pincus admits that there are problems that still need solving on the publishing side: specifically the complexity of licensing music, and the difficulty for a digital service in knowing that they have 100% of the licences that they need.

“If Facebook wants to do a global music service, and they’re willing to pay if they can get the rights to any music that people are going to swap on their service, they can go to the majors and get rights, then to four or five independents that have professional infrastructure and significant market share, but then you’re left with everyone else who you have to call individually,” he says.

“It’s not practical. Facebook could be willing to spend $100m launching a global music service, then end up with a cease-and-desist order from the widow of a drummer in a band that owns 15% of a song they haven’t licensed. That’s a problem that needs to be solved.”

What about some of those digital services, particularly the ones taking most flak from songwriters and artists: Pandora and Spotify? Pincus is unimpressed (to say the least) with Pandora in recent years, suggesting that the company has “gone dark” to the point where it is “fighting us in every available way, and it’s not going that well for them – they’ve had some litigation victories, but PR-wise it’s been a rough road for them, and I don’t understand why they have gone that route”.

At issue is Pandora’s desire to lower its royalty commitments – a hugely controversial campaign with publishers in particular, who already feel sore at the rates they receive from the personal radio service.

“They only pay music publishers 4% of their revenue, but they’re spending a lot of money and a lot of time to fight that 4%, and lower it to 1.7%, says Pincus. “Those guys need to figure out that they need to sit down with us and hammer out a fair deal. It can’t be a plan for them to be suing us everywhere. I don’t understand why those guys are picking on music companies and trying to scapegoat us.”

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Pincus is warmer on Spotify, in terms of the approach it has taken to working with music publishers. His concerns about the on-demand streaming service are more about its long-term sustainability in the face of competition from rivals like Apple, Google and Amazon who have huge businesses to support their push into streaming music.

“I think Spotify’s problem is just scale, really. If you try to model the revenue picture of Spotify, they need at least 10m paying subscribers in the United States, and probably 50m globally to look like a real business that’s going to pay a return on the capital they’ve raised,” he says.

“I have a real question about whether a standalone digital music company can survive to grow that big. They just have a really hard job: I don’t know whether it’s possible for them to raise enough capital and retain enough ownership of their business to get critical mass. I really question whether a standalone digital music service can go the distance. Maybe via acquisition…”

If music publishers used to be seen as entities used to saying ‘no’ behind closed doors, 2013 saw a different trend emerging: publishers (particularly through the NMPA in the US) calling out companies they saw as bad actors in public. Pincus’ Billboard piece on MCNs was one example, as was the NMPA’s campaign against unlicensed commercial lyrics sites later in the year, when it sent cease-and-desist letters to 50 of the most popular sites.

Pincus says the growing public voice of publishers is partly down to better leadership – he praises NMPA boss David Israelite on that score – while also suggesting that this is a crucial time for publishers to be taking more action of this kind.

“We’re now entering into a different phase in the digital market, where people are building legitimate businesses with real consumer interaction in the digital music space. So publishers are saying ‘look, we gave you guys the runway to build businesses, and now you’ve got businesses, so now’s the time to deal with us in a fair and permanent manner,” he says.

“Part of that is identifying the good actors and bad actors, going after people where they are not pulling their own weight, and working with them where they are. Look at the MCN business, where the biggest MCNs – the Fullscreens and the Maker Studios – have raised lots of venture capital. Those guys are building businesses partially off of music, yet they don’t have a licensing infrastructure.”

Some of them do now, albeit after legal threats. The NMPA filed a copyright infringement lawsuit against Fullscreen in August 2013, but announced this week that it had reached a settlement with the MCN to ensure publishers are paid for use of their songs in videos on Fullscreen’s network.

“We’re making progress. We had to get harder with the MCNs than we would have liked, but we have settled with Fullscreen and we are in the process of settling with Maker, and that will create a model for other MCNs to do the same with less difficulty. It’s no longer acceptable to use the chaos of the early digital market as an excuse to not have your house in order,” says Pincus.

“What I keep saying to people is that you’ve got to pay attention to the operational aspect of this business: the systems do not yet exist to handle YouTube content to the level of precision that will be needed to make this a real commercial business. We’ve got to focus on that, and stop just beating each other up in court. Nobody wants to see a cable television type of business on YouTube more than I do!”

The unlicensed lyrics sites campaign falls into the category of ‘getting rougher than we’d have liked’ for Pincus too. Based on research by musician David Lowery, the NMPA identified 50 of the largest sites without licensing deals, topped by Rap Genius, and called them out.

“Rap Genius is a good example: they responded to it, because those guys are looking to build a legitimate business,” says Pincus, who sees lyrics as a hugely interesting part of the market in 2014, particularly the emerging breed of lyric videos, which started as a way for labels to get something up on YouTube ahead of an official video when a song broke big – Cee-Lo’s ‘Fuck You’ was perhaps the first high-profile example of this.

“Now they’re going to this funny meta level. Google has a platform they’re launching that is lyric videos created by a program, which means kids can create their own lyric videos and put them on YouTube,” he says. “It’s a new category: not an official music video produced by a label. What you’re going to have is these user-generated lyric videos. Instead of one version of Lorde’s ‘Royals’ lyric video, you might have 5,000. That’s going to be really interesting.”

lorde

Pincus is unsurprisingly full of praise for Lorde and the way she has gone about managing her career and recruiting a “top-shelf” team to support her. He files her alongside Abel Tesfaye (aka The Weeknd) as a good example of the kind of young, intelligent and digitally-savvy songwriter that Songs is looking to work with.

“Ella is young, but has a really sophisticated point of view as to how to help her music get through the world. And you see that in young artists that have a real point of view and urgency about them. They’re inventing ways to release their music around the traditional model that are really interesting,” he says, pointing to The Weeknd’s use of mixtapes to build a following before signing with a label.

“It’s all about people, which is something that gets overlooked in the music publishing business. It’s not ‘how many compositions do you have, let’s acquire assets’. This business is about the people who create songs, it’s not an asset management business. When you get involved with people like Ella and Abel, it’s about the people, and how smart, talented and focused they are,” he says.

“That applies to the wider business too. One nice thing is that the people left in the music business are dedicated and intelligent. It’s more difficult than it used to be, but the people in this business need to be very good at what they do. 10 years ago, if you had a top five hit, you’d be good for two years. Now, that’s good for a quarter, and you need to have something ready for the quarter after that. All over the business, people are accepting that responsibility and rising to it.”