Magda Knyszynski
COMS 4800C
Cathy Allison
Carleton University
April 4th 2018
Introduction
The evolution of the music industry is inevitable as time continues to go by. From the 1950s to the present day, the various aspects of the music industries have undergone significant changes to adapt to new social and cultural changes. With the rise of technology, many aspects of the industry have been forced to adapt in order to appease artists and creative persons. The means of distribution have greatly changed; from in-person purchasing methods to streaming, opening opportunities for both the industry and its creative professionals. As distribution becomes easier with the use of the Internet, proper recognition and credit has declined due to the difficult nature of finding and moderating copyrighted music. Furthermore, marketing to audiences has been greatly impacted with the ability to reach unprecedented amounts of music consumers. With the involvement of the Internet, reaching out to potential audiences and creating trends has become a norm, where music licensing has become a complex landscape due to the lack of Internet mediation software. Through the evolution in technology, rights holders for audio files are able to collect their revenue and police their content in a simpler way. Technological advancements have evolved the relationship between the creators and the industry. The evolution has altered the way that artists receive proper recognition and royalties from a variety of music platforms that include YouTube, Spotify, and Apple Music. Major figures within the music industry have rallied towards a better outcome for the creators by implementing technology that will ultimately focus towards digital rights management (DRM) and royalties. National music industry boards such as The Society of Composers, Authors and Music Publishers of Canada (SOCAN) and The American Society of Composers, Authors, and Publishers (ASCAP) in the U.S.A have implemented new software for both live and recorded performances, where algorithms are able to distinguish licensed music and properly pay the original artists. Innovations such as blockchain, KUVO, Content ID, amongst other digital audio recognition softwares are beneficial in the campaign for the identification of licensed music. The rise of music recognition software is of great importance as analyzing the impact of technology on the industry may give insight for the future of the music business; whether the evolution of technology is truly beneficial to the artists and their relationship with the music industry.
What is Licensing?
In order to understand the current environment of music licensing and the effects that the Internet has on digital music rights, one must acknowledge the history and the inner workings of licensing. The goal of music copyright is to compensate the author, composer, performer, and owner of the recorded form of the music by maximizing the revenues generated by the musical composition, which involves appraising the value of the song and recognizing the factors that dynamically affect the value of the song over a period of time. When referring to the economic success of a specific work, the compensation payable for music licenses is seen in the form of a royalty. This payment is calculated on the number of copies that have been distributed or the revenues received from the sales or performances of the song. In the past, these royalties were claimed from physical sales, where the copyright holder was able to get a distinct amount of money from the record label or national music associations. However, with the evolution from physical copies to online music hosting, the ability to receive proper royalties and recognition for music has become difficult due to the lack of moderation on the Internet. Rolling Stone magazine highlights that “Today, music fans play free music videos on YouTube, stream songs for free on Spotify, MOG or Rdio, customize Internet radio stations on Pandora or Slacker and consume music a zillion different ways. The fractions of pennies artists make for each of these services are nearly impossible to track – at least for now.”[1] In order to calculate the royalties for an artist, subscription services must use a variety of formulas to determine the true value from a variety of different licensing styles. Jeff Price, the co-founder of TuneCore (which acts as a middleman between artists and distribution platforms) states, “songwriters make about 10.5 percent of Spotify or MOG revenue. However, each service has to run literally five formulas each month -- on calculation number one, they have Subsection Number One and Subsection Number Two, they throw out the higher of those and then compare that one against the other three. After that, they have to run this formula five different times."[2] In 2011, the music-streaming platform Spotify, has paid approximately 10.5%[3]of the company’s revenue in royalty payments to the rights owners; this percentage coming from their overall revenue. There has been a significant difference between 2011 and the present day, where licensing rights are negotiated with labels and distributors behind the scenes; where definitive payment amounts are not publically available. However, this percentage was miniscule compared to their total revenue being $3.064 billion at the time. Due to the lack of audio recognition in the past, it was impossible to calculate accurate sums for royalty dispensing. With the recent technology that is being implemented, the company plans to pay rights owners approximately $2.09billion in royalty payments over the span of the next two years.[4] While payment of royalties from the platform directly to the music label can be viewed through a multitude of revenue models and financial statements, the internal distribution within the music label is much more secretive and hidden concept.
Digital Rights Management
Prior to the shift to music streaming, the usage of CD’s as a primary source of music distribution was prevalent. Digital Rights Management (DRM) was implemented in order to mediate piracy and ultimately make sure the copyright owners received their royalties. The purpose of DRM was to prevent people form accessing, duplicating, and sharing copyrighted digital files in ways that the owners did not want them to. DRM was a way to protect the right of license holders, where sharing was restricted and an individual was only able to listen to the audio off of the CD that had been purchased. When applied, “DRM scrambles the data in a file rendering it unreadable to anyone without the appropriate unlocking key. Authentication systems stand between users and the decryption keys, ensuring that only people with the proper permission can obtain a decryption key. Without a username and password or if a file has been decrypted too many times, the system will not provide the key. This means that music files with DRM, can be swapped over the Internet and remain unusable to those who have not paid for them. It also means that only authorized programs and portable players can use the tracks.” [5] DRM utilizes a digital watermark that can be inserted into digital content for a variety of purposes, such as copyright control. The importance was found within the resistance to tampering that was found within the coding of the content. These watermarks bound information to the digital content; such as content owners, the buyer of the content, and payment information.[6] Watermark-reading software was used to check content copyright and determine royalty payments. While DRM acted as a predecessor to blockchain technology, it also was able to track copyright violations. In commercial DRM systems, such as the music distribution industry, there are two license management models. The models differ in where DRM technology is housed and how digital rights are distributed; offering tethered and untethered models. The tethered model dictates that consumers must be online to purchase music. However, in the present day, the untethered model is prevalent, as consumers store licenses on their own computers and are able to make purchases offline, where payment is made at a later date. This model specifically targets super-distribution models where consumers can share files through peer-to-peer (P2P) websites and make micro-payments on a subscription basis. Through the use of DRM, the new wave of technology has been influenced through the untethered model, which allows a variety of services such as streaming to function on a greater scale.
On-Demand Streaming
On-demand streaming have grown in popularity, signifying its importance to artists, composers, labels and publishers, as they generate a source of revenue. Streaming made up over 20 percent of all label revenues in the USA in 2013, however the streaming business model has been challenging for the industry to develop a plan to distribute revenues from streams. As companies, such as Spotify, have contracts directly with the label itself, the major labels do not have to pay royalties from the income that they receive from licenses through streaming. Furthermore, subscriptions to streaming services are seen as grey areas in regards to licensing, as the individual who streams the particular music is technically not purchasing the specific song, rather they are subscribing to the access of a catalogue of millions of songs. Prior to emerging technology, streams from platforms were hard to track; however new services all for easier tracking through blockchain.
Technological Advancements
Major actors within the music industry have begun implementing new forms of technology in order to properly identify and distribute earned royalties. These technological advancements often focus on extracting music from live performances to pay licensing fees to the copyright holders. For instance, the Canadian music society, SOCAN, has begun implementing new software called KUVO. Pioneer created this metadata extraction technology as a way to “identify electronic dance music performances automatically and seamlessly in nightclubs and other electronic music venues”[7] SOCAN has started to provide this technology to nightclubs, in order to fulfill their music license agreement. Once installed, KUVO easily plugs into the DJ’s mixing board to capture metadata from the music, which is then collected and relayed to SOCAN to tabulate and distribute royalties more accurately to copyright holders of the music. The technology helps to ensure that the correct owners are properly compensated through the moderation of song recognition. Like many song identification softwares, KUVO uses an algorithmic system and focuses on the collection of song history from the performances; where once a song is selected for live play, the metadata is recorded within the system. While the device is a physical plug-in to the music console, its tracking is based within the cloud, where data can be accessed and stored on the Internet. In an interview after the original launch of KUVO, Rik Parkinson, the head of the developmental team addresses that the system is based on ID3 tags and the information that is directly visible on the CDJ[8] (a digital music player for DJing). ID3 tags are an important evolution within the distribution industry as it allows for the audio to be sorted on a variety of categories. The “MP3 encoded audio data files, the data file is prepended or appended with a special set of frames called an ID3 tag. The ID3 tag contains descriptive text and other data relevant to the audio data file.”[9] This imbedded system allows for song recognition software to ‘read’ the tags and relay the information to the royalty distributor, whether it is ASCAP, SOCAN, or another non-profit music society. The ID3 algorithm “relies on a technique called fingerprinting, where small segments of a song to be identified are extracted (usually via an app), its time, amplitude, and frequency are used to generate a 3D-spectrogram, and peaks of high intensity then identified. This fingerprint is sent to a server to be compared at super-speed to a hashtag database containing millions of song fingerprints, and when there is a fingerprint match, voila, the artist name and song title are then transmitted almost magically to the querying user.[10] While audio from streaming platforms is ultimately easier to track in regards to licensing, recognizing live music has transitioned from a near impossible task to a more attainable practice. The Vice-President of SOCAN’s Distribution department highlights that “DJs spin more music in one show than the vast majority of other live musical performances, but it's nearly impossible for them to submit accurate set lists of music for shows that they perform… Pioneer-KUVO technology addresses this problem and enables SOCAN to capture even more musical performances in real time and more accurately. Our partnership with Pioneer and KUVO is a great step forward in getting our more than 150,000 members fairly paid for their work."[11]
Metadata
The metadata of audio files contains the original title and any other associated information when embedded into a specific part of the file. This ensures that no matter how many times the track is downloaded or copied, the information about the owner’s rights is transmitted within the file. The metadata is useful if the file name is changed of the file itself is corrupt, “Without this embedded information, its much more difficult to identify the audio in the file. And, if you cant identify a song even by listening to it, then the task suddenly becomes a lot more complicated and time consuming too.”[12] The failure to store clear and unambiguous metadata could ultimately render an artist’s album impossible to identify thus making it incapable to bring in royalty returns to the license owners. Audio files utilize two types of metadata; administrative and descriptive. The former information that helps manage a resource, when and how a file was created, file type, who has access and other technical information. While the latter, is used as a resource for identification. Descriptive metadata includes information on the author, genre, title, keywords, etc that help with audio identification when related to licensing. By using metadata such as ID3, license holders are able to tag their creations with important keywords that would be screened by identification programs such as KUVO.
Automatic Content Recognition
Automatic Content Recognition (ACR) has become a crucial component of audio identification. Companies such as Shazam have implemented this technology to allow individual users to search the database for song information in the form of a title or artist. Shazam markets itself as a way to “Identify the media playing around you, explore the music you love.”[13], where they use metadata from audio files in conjunction with an algorithm that reads the songs’ frequency. By reading the fingerprint of an audio file, Shazam is able to find the peak intensities in the song, and “it keeps track of the frequency and the amount of time from the beginning of the track.”[14] By using the frequency and peak intensities, Shazam is able to build a fingerprint catalog that uses the first frequency and cross-references it within all similar songs. For the song to be an exact match, all frequency points will be positioned in the same place, in the same time frame; which allows a very precise selection. Shazam uses a variety of graphs that plot these frequency and peak intensities, where the algorithm cross-references its catalog for the exact match to the users search. With the creation of ACR, users are able to access song information automatically, while the service they use relays the information to other corporations and sectors.
Blockchain
With the music industry expanding in audio recognition software, one of the new players within the rise in technology is blockchain. This new system records new transactions, which could mean the location of cryptocurrency or purchasing receipts for music. Each block is a singular record of a specific transaction, and once it is completed, it is added to the chain – a thread of sorts in order to link to previous or similar transactions. The information that is found within this blockchain is publically available and decentralized, where it does not rely on a single computer or server to function. As the Internet functions as a data distributor online, blockchain does the same for money.[15] Rather than involve middlemen such as banks or corporations, blockchain allows for individuals to transfer money at their own discretion. This same concept of blockchain has provided a new way for non-profit music societies and streaming platforms to filter through meticulously recorded transactions in order to pay copyright holders their shares. Recently, streaming giant Spotify has incorporate blockchain technology to assist with a more precise distribution of royalties. As the identities of the original creator and the rights owner are complicated to track down, blockchain attempts to fix this issue. Spotify’s introduction of blockchain technology would allow for micropayments to be possible, where micro-royalties would be distributed instantaneously. MediaChain, the company that Spotify has partnered with for blockchain, has created a number of new technologies that include a decentralized, open media that is built on top of the InterPlanetary File (IPFS), which allows for content creators to make statements about their creative works that are cryptographically signed, timestamped in the Bitcoin blockchain, and stored in the IPFS.[16] Technologists Don and Alex Tapscott suggest, “the blockchain could also allow for the ‘micrometering’ of streamed content…down to thousandths of a penny in exchange for milliseconds of [audio].”[17] By implementing blockchain, smart contracts can be incorporated. “Smart contracts are where blockchain technology has the potential to solve many of the music industry's biggest issues with digital distribution - mainly, when it comes to how artists and rights holders get paid.”[18] With blockchain technology, every time a song is streamed or downloaded, it would register and transmit a payment transaction that would go directly to the copyright owner. Additionally, the copyright owner could program the song so that it would automatically issue payments to anyone else involved with the creation of the work. These contracts within the services’ software will allow for music royalties to be administered automatically. Rather than passing through intermediaries, the revenue would be automatically distributed between the rights holders as soon as the song is streamed. Blockchain would ultimately dismiss the middlemen, who often take a percentage of the royalties and allow for musicians to receive immediate royalties rather than lump payments. While streaming giants such as Spotify are incorporating blockchain technology within their services, many new start-up companies have begun to gain public interest. UJO Music, an Ethereum based music purchasing site, has identified itself as a direct service between artists and their audiences. The service focuses on compensating artists directly for their music, allowing artists to trace where their work is used and performed, allows full transparency in the distribution of payments/royalties, and heightens ownership/control of the artist.
Content ID
Content ID has been implemented through video sharing site YouTube in order to regulate user-generated content (UGC). When a user uploads content, a system is deployed in order to screen the video for copyrighted materials. This Content ID system allows copyright owners to easily identify and mange their content on the website. Videos are scanned against a database of files that have been submitted by their rights owners, where they contain a digital fingerprint that assists in determining unlicensed content. Through this system, copyright owners are able to decide what happens to the content in a video if it contains their own work. [19] Copyright owners can choose a variety of actions to combat unlicensed materials; blocking, monetizing, and tracking. These actions allow for the rights holder to determine how the website will ultimately deal with the unlicensed content. YouTube has made it possible for rights holders to monetize a video that contains their material and make money from the video views, siphoning money from the account housing the unlicensed content. [20]
YouTube’s Content ID system uses audio fingerprinting to detect copyrighted material, much like the Automatic Content Recognition on KUVO. Content ID has been updated to detect tricks that are used to bypassed the recognition software; such as pitching audio files, or stretching the video’s aspect ratio. [21] By using this type of metadata, the company allows rights holders to decide whether to claim ownership and reap the ad revenue through royalties, strip the video of the offending content, or request to have it taken down all together. Currently, “98% of copyright control on YouTube is handled through Content ID, which has generated $2 billion in revenue for rights holders and creators since 2014.” [22] Moreover, Content ID allows the activation of advertisements for copyright holders to collect shares of revenue from videos that contain their music. Depending on how people are keen on using your songs on their videos (this type of content is referred as UGC = User Generated Content), it can be dozens, hundreds, thousands or hundreds of thousands of videos where your tracks are on. Given the number of YouTube users, the amount of new content uploaded on a daily basis, and the fact that more than 40% of all music listening in the world happens on YouTube, Content ID represents a new way to monetize copyrighted material. [23] While YouTube contains UGC, only content holders can participate in the automated system. License owners send copies of their audio files to YouTube to be stored in their databases for Content ID to use it as a base for identification in their sweeps. The system will automatically scan the database for audio matches, video matches, and ‘partial’ matches (partial matches are references to content that uses small samples for the copyrighted audio file). As content on YouTube continues to be user generated, major labels have begun utilizing VEVO, a music-streaming component of YouTube, for revenue. VEVO is described as a music video and music entertainment platform, created by Sony Music Entertainment, Universal Music Group, and Abu Dhabi Media that seeks joint ventures with other sites to provide them with music content. The goal of the website is to attract more high-end advertisers, something that regularly would be very difficult for average users of YouTube. VEVO allows for labels to showcase their catalog’s copyrighted works to audiences, where the label itself will directly benefit, as there is a lack of transparency of the way that these royalties are divided throughout the various artists.
Conclusion
Throughout the evolution of the music industry, there have been many significant changes that have impacted songwriters, producers, and other copyright holders. With the rise of technology, the industry has been able to open opportunities for distribution and ultimately royalties. Technological advancements have evolved the relationship between distribution and the content creators, offering an easier way of benefiting from licensing revenue. Through streaming platforms such as YouTube, Spotify and Apple Music, new software for live and recorded performances allow proper payment and recognition of licensed music. Algorithms have become an important part of audio identification, leading to innovations such as blockchain, KUVO, and Content ID. The rise in music recognition software places creators at the forefront, with the ability to properly collect their royalties where they otherwise would not have.
Work Cited
[1] Knopper, Steve. "How Technology Has Changed the Economics of Music."
Rolling Stone. October 25, 2011. Accessed March 14, 2018. https://www.rollingstone.com/music/news/the-new-economics-of-the-music-industry-20111025.
[2] Ibid
[3] Ibid
[4] Christman, Ed. "Spotify's Losses More Than Double To $581M, Revenues Rise
to $3B." Billboard. June 15, 2017. Accessed March 14, 2018. https://www.billboard.com/articles/business/7833686/spotify-2016-losses-financial-results-revenue.
[5] "Technology | Q&A: What Is DRM?" BBC News. April 02, 2007. Accessed
March 30, 2018. http://news.bbc.co.uk/2/hi/technology/6337781.stm.
[6] Shaw, Sandy. "Overview of Watermarks, Fingerprints, and Digital Signatures."
Overview of Watermarks, Fingerprints, and Digital Signatures. November 25, 1999. Accessed March 30, 2018. http://www.leeds.ac.uk/educol/documents/00001244.htm.
[7] SOCAN. "SOCAN First to Use Cloud-Based Technology for Real-time
Electronic Music Royalty Tracking. October 19, 2017. Accessed March 14, 2018. https://www.newswire.ca/news-releases/socan-first-to-use-cloud-based-technology-for-real-time-electronic-music-royalty-tracking-651598603.html
[8] Reynaldo, Shawn. "Kuvo: What Is It, How Does It Work, and Is It a Good Idea?
(a.k.a. an XLR8R Interview with Pioneer About Its Newest Product)." XLR8R. December 21, 2017. Accessed March 14, 2018. https://www.xlr8r.com/gear/2014/10/kuvo-what-is-it-how-does-it-work-and-is-it-a-good-idea-a-k-a-an-xlr8r-interview-with-pioneer-about-its-newest-product/.
[9] Csicsatka, Tibor . Method and apparatus for incorporating additional audio
information into audio data file identifying information. US Patent US20030158737A1, filed February 15, 2002, and issued July 21, 2003.
https://patents.google.com/patent/US20030158737A1/en
[10] D, Matthew. "The Global Outpost." The Global Outpost » The Wide World of
Music Recognition. October 13, 2015. Accessed March 14, 2018. http://www.theglobaloutpost.com/archives/64.
[11] SOCAN. "SOCAN First to Use Cloud-Based Technology for Real-time
Electronic Music Royalty Tracking. October 19, 2017. Accessed March 14, 2018. https://www.newswire.ca/news-releases/socan-first-to-use-cloud-based-technology-for-real-time-electronic-music-royalty-tracking-651598603.html
[12] Harris, Mark. "4 Reasons Why Metadata in Songs Is Important." Lifewire.
February 1, 2018. Accessed March 30, 2018. https://www.lifewire.com/importance-of-song-tags-in-music-files-2438758.
[13] Shazam. Accessed March 30, 2018. https://www.shazam.com/.
[14] Jacobs, Bryan. "How Shazam Works To Identify (Nearly) Every Song You
Throw At It." Gizmodo. September 25, 2010. Accessed March 30, 2018. https://gizmodo.com/5647458/how-shazam-works-to-identify-nearly-every-song-you-throw-at-it.
[15] Kleinman, Jacob. "What Is Blockchain? ." Lifehacker. January 16, 2018.
Accessed March 14, 2018. https://lifehacker.com/what-is-blockchain-1822094625.
[16] Bindi, Tas. "Spotify Acquires Blockchain Startup Mediachain to Improve Music
Attribution." ZDNet. April 28, 2017. Accessed March 30, 2018. http://www.zdnet.com/article/spotify-acquires-blockchain-startup-mediachain-to-improve-music-attribution/.
[17] Richmond, Jill. "How Blockchain Technology Can Transform Royalty
Payments."
NASDAQ.com. May 09, 2017. Accessed March 14, 2018. https://www.nasdaq.com/article/how-blockchain-technology-can-transform-royalty-payments-cm786646.
[18] Bevacqua, Joel. "Are Cryptocurrencies Like Bitcoin the Solution to the Music
Industry's Woes?" L.A. Weekly. September 09, 2017. Accessed March 30, 2018. http://www.laweekly.com/music/blockchain-to-the-rescue-how-bitcoin-technology-could-save-streaming-music-revenue-8383424.
[19] "How Content ID Works - YouTube Help." Google. Accessed March 30, 2018.
https://support.google.com/youtube/answer/2797370?hl=en.
[20] Brian, Matt. "YouTube Is Changing Content ID to Be Kinder to Video Creators."
Engadget. July 14, 2016. Accessed March 30, 2018. https://www.engadget.com/2016/04/29/youtube-content-id-fix/.
[21] Titlow, John Paul. "YouTube Is Using AI to Police Copyright-to the Tune of $2
Billion in Payouts." Fast Company. July 13, 2016. Accessed March 30, 2018. https://www.fastcompany.com/4013603/youtube-is-using-ai-to-police-copyright-to-the-tune-of-2-billion-in-payouts.
[22] Ibid
[23] Varengo, Jeremie. "What Is YouTube Content ID and How Artists Can Make
Money out of It." Medium. May 17, 2016. Accessed March 30, 2018. https://medium.com/@jeremievarengo/what-is-youtube-content-id-and-how-artists-can-make-money-out-of-it-42168348f56b.