Music licensing evolves in response to new tech and trends


With Covid-19 continuing to curtail gigs, festivals and awards ceremonies, the sad-but-true fact is that Britain’s showcase music event of the year has probably been the parliamentary inquiry into music streaming economics.

Despite spotlighting several white-hot music issues of the day, the inquiry has to some extent also showed some of the ways the music industry remains tied to its past: for example the debate over whether streaming a track constitutes a sale, a rental, a broadcast etc.

In music licensing, too, there has often been a sense that technology is outpacing regulation.

“When you think back, Sacem was the first licensing organisation to be set up [in 1851]… a long time ago,” says Mike Edwards, VP of music licensing and European operations at Audible Magic. “There’s a lot of legacy in music licensing… People have developed set ways of doing it, and adapting them to new uses is quite a difficult and painful task for everyone.”

Just how difficult has been made clear during the last year. On the legislative side, we have seen the creation of the Mechanical Licensing Collective (MLC) in the US, which launched its operations in January this year.

“It’s fantastic news because now it’s going to be much easier for digital services to launch in the United States,” says Tom Frederikse, partner at Clintons Law, “and it means that there’s going to be a lot more money collected for songwriters in the US.”

More money may also mean more problems though. “The MLC is going to collect a ton of money that they will not know how to distribute, and they’re going to be forced to distribute it on a market share basis,” says Frederikse.

“That means that the three major publishers are going to get a lot of cash that they shouldn’t be getting, and they’re going to distribute it directly to their shareholders, not to songwriters. And that is horrible. But you know, if that only happens for a couple of years, that’s fine. Let’s just get past it and set up a database and get to a position where for the next hundred years, songwriters can be paid properly.”

Admitting that he “hate[s] that there are so many Americans who are bitching about the MLC right now – they should be happy that the money is getting collected at last”, Frederikse is keen to stress the importance of its existence in a market where $424,384,787 of previously unclaimed mechanical royalties will now finally be distributed.

“If you know any independent publishers then your first question at the moment should always be, “Have you registered with the MLC yet?”

The establishment of the MLC has occurred alongside a wider copyright legislation drive stateside, including Senator Thom Tillis’ suggested Protecting Lawful Streaming Act and the proposed Digital Copyright Act Of 2021, which would reform US safe harbour laws.

Unsurprisingly, this has sparked criticism from the technology industry, with familiar battle lines being drawn over any such reform. The tensions are certainly recognisable in Europe from the European Copyright Directive which is currently being implemented by EU member states – including the measures that music rightsholders hope will tackle the ‘value gap’ with user-generated content platforms like YouTube.

“The value gap provision adopted in the EU is obviously something that has caught attention in the US and has had some influence on the US debate,” says Ted Shapiro, head of Wiggin LLP’s Brussels office.

While the country-level implementation is taking time, Shapiro thinks that the legislation is already having an impact “on the willingness of platforms to entertain better licensing deals, or licensing deals in the first place… [as] companies are evaluating the extent [of] what would they have to do to be in compliance.”

However, in such unusual times, it’s hardly surprising that licensing strides have been overtaken by events. For example, the emergence of livestreaming during the Covid-19 pandemic as the only way many musicians can perform for an audience, and some of the headaches around it.

“Both the rights owners and the platforms are still grappling with [that],” says Edwards. “What is the basis for licensing? You [basically have] performers who were performing [at] a venue, and the venue would have a performance license from the local collecting society. And they’re now streaming globally. How do they license that?”

“Livestreaming is a disaster basically, because it is the single most important thing that’s needed to rescue musicians all over the world,” says Frederikse, “I get phone calls from musicians in tears every day saying, ‘why can I not sing my own song on my own guitar, on my own website and earn some money from it?’ And the answer is they can’t, unless they pay lawyers thousands of pounds to do national licensing throughout the world.”

While some collecting societies have developed tariffs for livestreams, Frederikse laments the fact that PRS for Music’s proposal for a globally recognised ‘territory of origin’ licence ran into problems.

“The idea is that each country should create a licence that’s easy to get through their local website and covers livestreaming for the whole world, but only if it originates in your own country,” he says.

“That is a brilliant solution. It means that Nick Cave can play live from Ally Pally and this one licence, easily obtainable from the PRS website, will be licensed around the world. He pays the correct rates through the website and then the PRS distributes that money to whoever songwriter or publishers’ rights he used during his live stream.”

“This licence… literally would have kept musicians in work that otherwise aren’t in work, and yet the whole thing fell over because every other PRO in the world said, ‘PRS, get back in your box and shut up. You cannot license rights in our country.’ And they forced the PRS to admit that the PRS is only allowed to license concerts that happen in the UK to online viewers in the UK, which is about as much good as a chocolate teapot. Because who wants to do a livestream that is only to your own country? Try calling up one of your musician friends that happens to have their own website and ask them if they know how to geo-block the world. No musician knows how to do that.”

Livestreaming platforms – even Twitch, which has come in for the most criticism from rightsholders recently – do have some licensing agreements in place with collecting societies. However, Twitch has come in for particular opprobrium from figures such as NMPA president David Israelite.

He recently used a Billboard op-ed to criticise the platform’s “audacity to imply licensing music for its platform is a novel or difficult exercise”, pointing out that “other sites, including Facebook, Instagram, YouTube, Snapchat and TikTok, to name a few, have figured out how to compensate songwriters for the use of music on their platforms, even though not all of their user-generated content contains music.”

Twitch has struggled to find an appropriate solution to the sudden flurry of takedown requests it was subject to last summer. US industry body the RIAA filed 2,500 copyright takedown notices in June 2020 alone; Twitch says that prior to 2020 it received “fewer than 50 music-related DMCA notifications each year”.

Despite removing some live DJ streams, setting up a pre-cleared music catalogue called Soundtrack, and forcing users to remove archived videos containing music in a “bloodbath” of deletions, Twitch maintains that it doesn’t need sync or mechanical licences for streams that are truly live, even if temporary proxy copies are being made to improve stream quality. As long as it complies with takedown requests, Twitch will claim protection under safe harbour laws.

At least for now. As Twitter has recently found, that defence is wearing thin, although Frederikse suggests the timing of attacks against the microblogging site is likely a negotiating tactic ahead of an upcoming settlement (either that or “the RIAA and the MPAA hadn’t noticed that Twitter existed”).

He thinks Twitter will likely pay a lump-sum payment rather than set up a YouTube-style content ID system, as it is not primarily a music company, although he also claims that “the bulk of the lump sum will go straight to shareholders [rather than artists and songwriters] just as it does with Facebook – it’s a form of black box, but it’s so egregious that I don’t think you can call it black box.”

While Frederikse feels similar measures against stream-ripping and messaging apps are likely just targeting small numbers of older infringers who are “basically stealing the Doobie Brothers because that’s the only music they like”, it’s not surprising to see Telegram’s name crop up repeatedly in such discussions.

The app is the brainchild of Pavel Durov, founder of the ‘Russian Facebook’ vKontakte – a former infringement bugbear for the music industry, until it struck deals with rightsholders and launched a licensed streaming service. Durov was forced out of the company in 2014, and subsequently launched Telegram as a secure messaging app.

Telegram’s private groups and one-to-many channels offer fertile ground for filesharing; it doesn’t take long to find, say, Adele’s Glastonbury performance or Nick Cave’s entire discography. Whether under pressure from app stores, national industry bodies, or perhaps the EU’s proposed Digital Services Act, expect to see more action around the platform over the next year.

While you’d be hard-pushed to find much sympathy for Telegram, Twitter or the Amazon-owned Twitch within the music industry, if multinationals can take years to fully licence their platforms, what chance do smaller companies have? Even just working out who to pay remains complex.

“I’ve seen statistics where the average number of co-writers has moved from about 2.3 to about 15, some of which may be represented by publishers and some of which may never have done a publishing deal. That then becomes a nightmare,” says Mike Edwards.

“The MLC has been set up in the US to deal with that for music streaming services, but there’s nothing available for any of the innovative platforms that are being set up… it’s a scary task for some guy working in his bedroom, setting up what could be the next killer app, having to deal with global rights owners all around the world.”

It’s not just about startups; even reasonably established companies can struggle. “I’m the only person that handles licensing [here], so it’s really just been a bandwidth issue” says Vanessa Wilkins, the Head of Music & Data Partnerships at Audiomack, which started life in 2012 hosting hip-hop mixtapes and now boasts over 25 million registered users, attracted by generous free tiers for both listeners and creators.

While the company is growing rapidly in key African and Latin American markets (and also boasts 500,000 monthly active users in the UK), international expansion brings its own headaches. When asked what the biggest challenge has been, Wilkins doesn’t hesitate.

“Publishing, without a doubt. I think the publishing landscape is pretty convoluted even for people who work at music publishers and PROs. But I think navigating that for a platform like Audiomack, who was predominantly a user-upload service and then has pivoted into doing direct deals with large rights holders, has been challenging on multiple fronts,” she says.

“We don’t have the resources to throw big checks at multiple rights holders at once. So it’s been a process of looking at our past data, trying to make sense of the usage that occurred, that we’d be obligated to pay for under various local laws, and engaging with the right people to do so.”

Whereas once Audiomack had to take down all unauthorised content manually, detecting infringement has at least got easier. “We use ACRCloud to automatically block uploads of infringing content,” says Wilkins. “And we do quarterly rescans of our entire platform to make sure that… everything is being removed that should be removed.”

Indeed, audio fingerprinting is one area where platforms are increasingly able to keep up with technological developments. “When SoundCloud became a customer,” recalls Audible Magic’s Edwards, “we needed to be able to recognise where the recordings [had] been manipulated by changing tone, pitch [and] speed. So we’ve developed a more flexible, broad-spectrum fingerprinting algorithm, which will enable us to recognise the original, even when there’s been quite considerable changes made to the recording.”

As well as trying to balance cost and effectiveness (“so that the actual processing of the recognition service doesn’t become actually more expensive and more costly than the right itself”), Audible Magic is also working on technology that can detect unlicensed cover versions of a composition “even though they are quite drastically different interpretations.”

Like Pex, whose ‘attribution engine’ aims to allow rightsholders to monetise on platforms more easily, Edwards sees Audible Magic’s role as evolving from being primarily a detector of infringement, to a facilitator of licensing.

“We are now just launching our UGC licensing programs, where we aggregate licenses from labels, publishers, copyright management organisations [and] collecting societies, and provide a one-stop shop where a small operator can get all licenses for a UGC video that they need, and then administer the license, identify the content, help track the usage, and then report back to the rights owners,” he says.

“We’ve invested very heavily in building that capability. And the purchase of MediaNet [in January] was a logical step in doing that because they had already developed systems that were tried and trusted.”

Ultimately, says Edwards, “it is not so much technology keeps ahead of licensing, it’s human creativity just keeps leaping ahead, and people invent new ways to have fun with music. And then we’ve got to say, ‘Oh wow, this is happening, we need to… work out the best way of recognising it and licensing it.”

Whether it’s livestreamed cover versions on YouTube or short-form snippets on TikTok, it has never been easier to identify and analyse areas where licensing is needed, and technology is increasingly an asset rather than a threat to regulators.

The tools are there – but as the lethargic response to the livestreaming dilemma has shown, less hesitance and greater international cooperation are both needed if those tools are to be used effectively.

Lead photo by Shoeib Abolhassani on Unsplash

Kier Wiater Carnihan

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