Tracking Music Revenues: What’s the Next Challenge?

Tracking Music Revenues: What’s the Next Challenge?

Music streaming has turned the music industry on its head. It’s not only challenging the way we consume music, but how artists and business measure sales and market their products. Not only that, but it’s challenging the way music revenues are captures. But what if I told you things are only going to get more challenging? “Napster and iTunes ungrouped albums into individual tracks for sale and exchange [while] streaming platforms like Spotify… regrouped these ‘unbundled’ tracks into the newly-ordered format of a playlist.” She then goes on to explain how “the next natural step… is unbundling an individual song itself into isolated vocal and stem parts. (Hu, 2018).” I think this is a brilliant observation that will most certainly be realized. It has already taken place, as Hu points out, with many popular producers creating drum kits that other producers can purchase in order to make beats (Hu, 2018). In this case of unbundling songs, Digital Rights Management can be a tool that helps track content (music stems) and establish IP ownership. DRM will be necessary to make this next step of music evolution become a reality.

The content holder will want to implement DRM in this case for many reasons. First and foremost, all of the content might be centralized in one platform (Example: millions of songs on Apple Music). A consumer will then visit the platform, and purchase the stems he/she desires.  In order to ensure the proper copyright/IP owner receives credit for the purchase, a system that can identify where the money should go needs to be in place. This is where DRM comes into play. It will allow the customer’s money to go to the rightful seller. Furthermore, the business models for “stem selling” discussed in this article are subscription based This means the customer doesn’t necessarily “own” the sample/stem. Customers are merely buying a copyright. But what if they choose to resale it, as a completely new product with small stem “samples?”

If any revenues are generated from a track that is produced using stems/samples, DRM will be able to track the royalties and send the “appropriate” percentage to the copyright owners. DRM, in this case, allows the content owner to capture money upfront (through the purchase of the content they are distributing) and in the backend (through royalties that are created using the content they still own). But how will the royalty rate be established?

Although the consumer will be allowed to lawfully use the stem/samples, create an entirely new piece of content, and even sell it on the market, the new content will not be 100% theirs. Thanks to DRM, each sample/stem that is used in the new piece will become a “piece of the pie.” For example, let’s say I purchase three stems on Sounds.com (one of the platforms the article discusses). The three stems are: 1 Rick Ross grunt, a 2Pac line from I Ain’t Mad at Cha, and the electric guitar melody from Sade’s Cherish the Day. I then use these three stems/samples to create an entire new song, with another artist rapping on the verses. I put it out online and make over $100,000 in streaming and download revenue. That revenue would not all be mine. Because of DRM, the owner of each sample I purchased will be entitled to a percentage of the earnings. They will receive royalties from the song as well.

DRM will enable artists to make additional money from recorded music, besides streaming revenue. This will more than likely convince them to jump on board with the idea of “stem selling.” In turn, ordinary music fans will have access to new tools that will spark innovation and creativity. But for artists, DJ’s, and producers, DRM will most likely be bittersweet. While it gives them access to millions of sounds, they will come at a cost; a huge one at that. Not only will the original copyright owners earn royalties, but they will more than likely own a percentage of the master, and that’s not good for any artist.

I personally think DRM does attempt to further the goals of copyright, but it just makes things even more complicated. If a person creates something new using something old (in this case, a sample), who does it belong to? Are they joint owners, or does the new content belong to the “original” owner? I would think the new piece would be a derivative of the original work, but what if the new piece is completely unrecognizable? I like the fact that DRM can be used in music to establish a royalty rate for samples, but the whole issue of ownership will hurt this idea. I think establishing who will own the new content needs to be addressed before this unbundling of songs can come to fruition.

Resources

Hu, C. (2018, May 13). Unbundling the song: Inside the next wave of recorded music’s disruption. Retrieved from https://www.forbes.com/sites/cheriehu/2018/05/13/unbundling-the-song-inside-the-next-wave-of-recorded-musics-disruption/#386a38829cae

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