Cloud-based music services are big news at the moment. Whilst there seems to be industry wide agreement that it will take a big name such as Google or Apple to really take this model into the mainstream, momentum is certainly gathering. Locker services such as MP3tunes and cloud-based streaming services such as Omnifone are growing in popularity.As next generation digital music platforms, they create a music experience that is personalised and delivered to the device of your choice – be that in your front room or your car. It’s a music experience that breaks down location barriers and is in tune with how people now want music services to provide a seamless experience.This isn’t conceptual thinking. With car radios internet-enabled from 2011, it’s a reality. Throw into the mix the emergence of music distributors, who many are likening to specialist record shops, and it’s clear that creativity is rife in music.The internet revolution caught the record labels and others by surprise, but the pace with which artists and entrepreneurial companies are leveraging the online world to provide music to the masses isn’t slowing down. iTunes remains the go-to destination for consumers who want to download music to a device, but cloud services are breaking down device and location barriers.In this continual cycle of innovation, real-time royalty calculation and clearing becomes ever more important. In my last article for MusicAlly, I touched on the importance of revenue management across the digital supply chain and how I believed this was an even bigger threat to the industry than piracy. By taking music consumption out of an environment where there is a level of control through downloads, distributor and cloud-based services take the industry into unchartered waters.At present there are a number of legal cases regarding what business models are going to be allowed. MP3tunes’ drawn out legal battle is being watched with eagle eyes and much will hinge on the verdict, but it’s not stopping companies who are confident in their licensing deals from launching new services. At the beginning of AugustCarphone Warehouse revealed its Music Anywhere service and mid-month Time Warner also indicated that it is considering giving consumers more dynamic access to the music it owns.Others will undoubtedly follow suit. To avoid stifling new business models the industry needs to take a long term view of how sales and usage information is provided and acted upon. Rather than having to untangle a spaghetti of interlinking relationships, having one payment interface would streamline the whole process because the royalty ins and outs will have been established up front. This ‘clearing house’ would store common and agreed track identifiers, understanding the associated rights and royalties across territories. Acting as a central hub, once sales and usage information had been submitted, payment could be automatically executed.In many ways steps are already being taken in this direction. There is widespread agreement that the creation of a database that would provide a common framework for all those in the digital supply chain would be a good thing, but the question remains – who would manage and maintain this clearing house? It would make sense for this to be run by a coalition of interested parties. Perhaps we will see collection societies evolve their services to manage and distribute payments across the digital supply chain or maybe a separate body will be formed.One thing is for sure – to be triumphant, a global view point has to be taken. Much of the information needed to make a clearing house a success is protected by the parties whose involvement would be key. Moving to a clearing house model will necessitate greater collaboration, no small challenge in a global market, but the end goal of creating more agile revenue management that secures the industry not just now, but also in the future, is of benefit to all.Martin Redington is director of product management at Microgen Plc and a DDEX board member.
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Tools: Kaiber
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