Last week, Canadian performance rights body SOCAN announced that it was acquiring digital distributor Audiam, two months after it bought B2B firm MediaNet.
It’s unusual to see a PRO acquiring a music/tech company, let alone two in quick succession. Music Ally spoke to SOCAN chief executive Eric Baptiste and Audiam boss Jeff Price to explore its strategy.
Baptiste said that while SOCAN has been working hard in recent years to modernise its technology and recruit talented staff, in 2016 it decided to complement this investment with acquisitions.
“We decided to look outside to see what other companies could quickly and nicely complement our needs in order to deliver the goods on this vision that we have: 21st-century services for 21st-century creators and publishers,” he said.
SOCAN and Audiam aren’t strangers: in fact, Price has been a consultant to SOCAN for some time now. Baptiste suggested that music/tech acquisitions are not such a big leap for a PRO, even if few others have gone down this path.
“It’s only a degree between going outside to buy some of your underlying technology, like your email system – you wouldn’t think of building that internally – and these acquisitions,” said Baptiste.
“Okay, it’s not exactly the same, but when you’re faced with such a transformation in the industry, old habits have to be questioned, even if you don’t necessarily have to throw it all away. You have to be fresh.”
Some critics of PROs in 2016 – Kobalt, most obviously – have delighted in portraying collecting societies as the dinosaurs of the digital music world, unable and/or unwilling to respond quickly to new trends and demands.
Baptiste responded diplomatically to a question about Kobalt – “We have much respect for what Kobalt’s doing, they are a SOCAN member, and they really like what we’re doing” – but was clear about his desire for SOCAN not to be stereotyped.
“In politics, you try to define your enemies, and it is the same in business. A lot of people who have been painting PROs in this way [old-fashioned] have a vested interest to try to diminish their ability to be solutions for the 21st century,” said Baptiste.
“That’s about defining your opponents, but at SOCAN we want to define ourselves. If you look at what we’ve been making available to our members for years, we really believe we can prove the sceptics wrong.”
So, what does being bought by SOCAN mean for Audiam? “We’re able to do more of what we already do, but more quickly with more resources,” said Price, who praised the organisation’s existing technical infrastructure.
“The music industry is about creating art and culture, and technology companies are about databases. The two do not speak the same languages. Many of the collecting agencies don’t have the [necessary] technology infrastructure, and frankly it’s not really their fault. That wasn’t what they were meant to be,” he said.
“In volume terms, a million [lines of data] used to be a lot, now it’s nothing. Now it’s a billion, and the ability to process all that information. We’re thrilled that SOCAN see us as a solution to that.”
There’s a very interesting dynamic at work as different industry entities grapple with these challenges. Kobalt, which sees itself as a technology company, bought a collecting society: AMRA. SOCAN, which is a collecting society, bought two technology companies: MediaNet and Audiam.
Meanwhile in Europe, collecting societies are collaborating to build two new platforms for music licensing and processing in the streaming age: ICE and Armonia. And everyone involved in all of this wants to be seen as an innovator, not a dinosaur.
You can see what SOCAN is doing through another lens, though: the ongoing difficulties on both sides of the Atlantic around publishing data: knowing which entities own shares in which works (and how big those shares are), not to mention matching those works to recordings.
This is the backdrop to the recent songwriter class-action lawsuits against Spotify; its subsequent settlement with the National Music Publishers Association (NMPA); and its intent to create its own database of publishing rights.
That’s something that SOCAN + MediaNet + Audiam will be hoping to do for other digital services. “We can really look at all the data, identify information that is wrong or missing, and fix it,” said Baptiste. “That’s the key strategy: to bring more order to this information.”
Price, who was a prominent figure in the Spotify licensing and royalties disputes, agreed. “The information is out there. If you stick with the United States, Bob Dylan knows what Bob Dylan wrote, and what percentage of the songs he controls,” he said.
“The problem is that the entities in many cases do not have the infrastructure necessary to connect the dots. It’s music industry 101 that if you’re going to use other people’s music, you need that infrastructure, but they [Spotify and other streaming services] didn’t build it.”
“Well, Audiam and MediaNet provides it, so if you want to outsource it, there you go. We can provide this entire infrastructure for you, because if you’re going to use the music, you do need the infrastructure.”
“There’s no excuse any more,” added Baptiste. “We have a very business-friendly suite of services and companies here. SOCAN is open for business. We are eager to help new businesses using music, to see more music used legally and monetised around the world. And at the end of the day, any uses of music around the world which is commercial has to be licensed properly. Period.”
Price gave a bit more detail on what SOCAN and Audiam will be offering to digital services, citing a client that delivered 10,000 hours of audio to the pair with missing publishing data.
“We identified all the sound recordings, then went and mapped them back to compositions, then we mapped that back to the songwriters, and went out and physically located those songwriters,” he said.
“Now this third-party entity that hired us is able to make the payments to those songwriters globally – and that’s something we can offer anybody. We’re going to do this in a new way.”
Baptiste completed the pitch. “We have a shot at providing a solution to many in the digital music ecosystem, and if we have a shot at doing this, I think we have a moral obligation to do it,” he said. “We can’t really waver: we are serving songwriters and publishers.”
Both Price and Baptiste said that SOCAN is also hoping to provide its services to other collecting societies around the world, rather than just to rightsholders or digital services.
“It’s very preliminary, but I’ve been having conversations with quite a few of our colleagues around the world about this new paradigm we’re creating. We believe in co-opetition, which is a buzzword I know, but it defines the rights business very well,” said Baptiste.
“Just as with airlines there are areas of co-operation for competitors to be better together on a global level, so SOCAN is very open, together with our companies MediaNet and Audiam, to provide services to other colleagues around the world.”
Baptiste struck a decidedly positive note about the ultimate impact on songwriters and publishers of the current transition from sales to streams (or, indeed, from ownership to access), despite the worries that many have about their future.
While acknowledging “the collapse of the traditional recorded music market” SOCAN’s CEO pointed to the consistently-growing revenues and distributions of collecting societies as an optimistic sign.
“It has provided relief from an otherwise-worse crisis. We are seeing traditional media sources being very resilient,” he said.
“Traditional TV isn’t going anywhere, radio is not going anywhere, and live shows are very powerful and generate a lot of turnover – and royalties for our songwriters and publishers. And on top of that you see digital services emerging and adding new value.”
Price sounded a warning note, however. “Traditionally when music meets technology it usually creates an explosion of new use and new revenue. We are at a very specific point in the timeline where there’s a transition occurring between purchase and streams,” he said.
“Will the infrastructure be there to allow the money to flow from an interactive stream of a recording of a composition? We have to put the right things into place, and put them in now. It’s really important we get this right.”
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