Music collective SOCAN's tech acquisitions aim to give all Canadian musicians more robust copyright and royalty mechanisms in an age of streaming that reach around the world
People are buying less music. That's well-known. At the same time, barriers to consuming it have been struck down the world over: It is possible for someone in Kyoto or Cape Town to access Spotify or Tidal and hear a bedroom-pop album made in Halifax before the artist's next-door neighbours do. Do-it-yourself used to mean selling CDs around town. Now it means finding like-minded people anywhere.
There is still money out there for musicians, but it isn't coming from sales. Consumers are increasingly turning to streaming music, which has a number of royalties available for copyright holders – songwriters, performing artists, their labels and publishers. The Internet is rife with these streaming services, some licensed, some not, in markets around the world. It's a fractured universe. And for the collectives in charge of getting that money into rightsholders' hands, it's increasingly necessary – and complicated – to trawl for these dollars.
The Society of Composers, Authors and Music Publishers of Canada, better known as SOCAN, is trying to transform itself for this fractured age. In the old days, the member-owned collective mostly collected "performance royalties" for songwriters and their publishers when their music was played in public, like in concert, on the radio or on TV. But much of digital music is now considered a performance, forcing the collective to retool. In the past few months alone, the company has made a number of acquisitions and adjustments to help its 135,000-plus members make as much money as they can from digital music.
Today, SOCAN has announced it has purchased Audiam, a New York-based company that audits and polices services such as YouTube to properly license content to deliver fairer royalties to rightsholders. In other words, it gets more digital money from more places to more songwriters. This complements SOCAN's May acquisition of MediaNet, a metadata-rich company with a database of more than 51 million songs that will also help the collective collect real-time streaming data more accurately online to make sure every song play worldwide is counted and its royalty paid out.
"It's all part of the plan to provide 21st-century services to 21st-century creators and publishers," Eric Baptiste (below), SOCAN's chief executive officer, said in an interview.
(Fernando Morales/The Globe and Mail)
Performing-rights organizations such as SOCAN and global partners like ASCAP and BMI have long operated in the background of the music industry, but the splintering of traditional revenue streams is forcing them to step up their game. Their royalties are an increasingly important source of income for the music industry. Last year, the company collected $308-million for both international and domestic performances, breaking the $300-million-mark for the first time. The company hopes this will only grow. SOCAN's vision, Mr. Baptiste says, "is to lead the global transformation of music rights."
The company has also announced a new royalty dashboard to let songwriters analyze how their music is heard worldwide, helping them make more educated decisions, such as marketing to a city where they didn't realize they were popular. On top of that, it has introduced new application program interfaces, or APIs, to better connect songs and concerts to SOCAN's databases.
Unlicensed content on streaming services has been in the spotlight lately, with musicians-rights advocate David C. Lowery having launched a $150-million (U.S.) class-action lawsuit against Spotify for improperly licensed songs.
Broadly, Audiam and MediaNet both keep an eye on streaming services for unlicensed content that should be monetized for rightsholders – such as user-uploaded content on YouTube, or songs on more widely licensed services that have incorrect songwriter or publisher information – to send royalties in the right direction. There's a little bit of overlap, but together they help cover licensing for most major digital services.
Artists such as Bob Dylan, Metallica and Red Hot Chili Peppers have used Audiam in the United States to actively seek unpaid royalties. The company says it has recovered millions of dollars for these and other clients. SOCAN will immediately use the technology to enhance its own music-scanning and matching services to collect more royalties. But for more personalized service, members will have to individually pay to join; the company hopes to remove that barrier soon.
As part of SOCAN's portfolio, it will help bring in revenue on behalf of global artists while acting as a global tool for Canada's finest. "We expect Audium to be a good investment to us and to be a profitable company to deliver dividends," Mr. Baptiste said. "Hopefully it'll be extra revenue for every SOCAN member."
Audiam was co-founded by Jeff Price, who had previously co-founded the digital distribution service TuneCore. Mr. Price has had a relationship with SOCAN for years: Shortly after he exited TuneCore in 2012, SOCAN brought him on as a consultant with an open-ended mandate to work on future products. (Audiam and SOCAN, both private organizations, did not disclose the value of the acquisition.)
In diversifying its business lines, SOCAN is also jumping into new copyright territory. The organization has historically represented only performance copyrights for its members – collecting royalties for the "performance" of a song; for instance, when it is played in concert or via broadcast. But digital streaming, Mr. Baptiste said, "has changed everything," altering the very notion of what a broadcast is.
Streaming also involves using a copy of a song from a server, therefore incurring what's called a reproduction, or "mechanical" royalty. In the past, this might have been best associated with the royalty you would have to pay by releasing another songwriter's song on your CD. Expanding the number of copyrights SOCAN works with, Mr. Baptiste says, will only bring more benefits to its members.
Reproduction copyrights have their own Canadian licensing bodies, similar to SOCAN, including the Canadian Musical Reproduction Rights Agency (CMRRA) in Toronto and Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) in Montreal. These organizations usually do the actual licensing for companies such as MediaNet, meaning SOCAN's acquisitions won't necessarily mean it's stepping on their toes. A CMRRA representative declined to comment. "We would like to work with them more closely on this," Mr. Baptiste said.
SOCAN is not the only music-rights organization leveraging data for its members. Connect Music Licensing, which handles licenses for the reproduction of master recordings – for performers and their license-owning labels, as opposed to songwriters and publishers – recently announced that it had $2-million in additional royalties to distribute to members, thanks to better data management.
Connect says it achieved this through better, more consistent metadata, and a shared database with its partner royalty-collection agency, Re:Sound. Making the process more efficient, the company says, led to a 28-per-cent decrease in administration costs.
"The more metadata that can be associated with a given track, the more transparent the entire process is," says Connect's president Graham Henderson, who also runs the record-label trade organization Music Canada. For musicians, he says, "We all know the pie is not getting bigger. … In that environment, you have to be attuned to efficiencies and that's where technology is your friend."
The advance of tech companies such as MediaNet and Audiam has chipped away at traditional performance-rights organizations (PROs) like SOCAN, says digital music analyst Mark Mulligan. Buying them, then, rather than fighting them, may be an advantageous move. SESAC, an American PRO, similarly purchased the licensing company Rumblefish Inc. in 2014.
"There are two ways to approach it," he said. "One is you just constantly fight a rear guard. Or, you go on the offensive and grow your global footprint, and you become a more robust global business rather than having your domestic business continue to be chipped away at."
But beyond a global play, these kinds of acquisitions help the songwriters on the ground in Canada, too, Mr. Mulligan said. "By having the best-in-class technology, which they're working toward, they've got far more chance at making sure their songwriters actually have the music matched and the royalties due to them."
Strengthening both locally and globally, Mr. Baptiste said, is SOCAN's endgame. "Our members are global stars," he said. "Shawn Mendes or Arcade Fire or Coeur de Pirate are global superstars – they need to know that SOCAN will have their back all over the world, not just in Canada. That's the global transformation of music rights that we need to lead, and we're excited to lead."