Recently Jeff Price discovered that music-subscription services including Spotify AB, Rdio Inc. and Apple’s Beats Music collectively owed tens of thousands of dollars to his clients, who are mostly songwriters and music publishers.
Mr. Price believes the shortfall resulted from a problem he said plagues the digital music world: bad data.
By using systems he’d built that match recordings of songs with their creators, Mr. Price, founder and chief executive of Audiam, recovered $50,000 about 10 days ago.
The company has banked more than $1 million in missing payments to clients including Jackson Browne and James Taylor since its launch less than two years ago. The Red Hot Chili Peppers and Metallica recently signed on as clients. Audiam keeps a percentage of the royalties it recovers.
Music distribution is now ruled by tech companies—whether giants like Google Inc., Apple and Amazon, or newcomers like Spotify—which pride themselves on offering customers all kinds of digital efficiencies, from accessing virtually limitless amounts of music instantaneously to automated payments.
But there is still inconsistency when it comes to how artists and songwriters get paid when fans stream their music.
That’s partly because tech companies typically outsource the royalty payment process to third-party companies: they provide their music “usage logs,” but leave it to others to sort out who should be paid for each play of a recording, and how much. All three services said they work to provide the most accurate data to their royalty administrators, so they can pay out quickly and accurately on the services’ behalf.
The long-fragmented music industry, meanwhile, has never created a global database that links each sound recording to the many entities that may hold an interest in it: the record company, the performer, the songwriter, the music publisher and the publishing administrator. And now that everyone from amateur DJs to unsigned garage bands can distribute their own recordings online, entering accompanying data as they please, the sheer volume of sound recordings – including covers of older songs – is exploding.
Sometimes, a label, publisher or artist in a hurry might upload song information but leave some data fields blank or enter incorrect placeholders.
Between 15% and 30% of the recordings played on digital music services don’t have the proper ownership tags in these services’ systems, Mr. Price estimates, likely preventing copyright owners from receiving hundreds of millions of dollars. Between 7% and 12% of the money being paid out by digital music providers is mistakenly paid to the wrong people, he added, or to the right people in the wrong proportion.
But third-party royalty administrators say that when it comes to the percentage of revenue they pay out, their success rates are much higher – and are improving. While most digital services now offer consumers access to about 25 million tracks, only a fraction of those account for the bulk of listening activity—and revenue. Those heavily streamed recordings are generally mapped to their proper owners.
The recordings with improper data attached generally aren’t the ones getting significant play, said Michael Simon, chief executive of the Harry Fox Agency, which calculates and pays out royalties on behalf of companies including Spotify. Mr. Simon said that his agency currently matches more than 95% of the revenue yielded by music streaming services to its rightful owners, even though the percentage of recordings matched is slightly lower. The group’s match rate is constantly improving, he added.
Still, correcting the data behind obscure or rarely-streamed recordings is important to ensure that the copyright holders are paid, especially in the event that unlikely songs “go viral” and soar to unexpected popularity, Mr. Simon said.
Ronald Gertz, chairman of Music Reports Inc., another big third-party royalty administrator, said his company also accurately matched about 95% of the revenue generated by big streaming services, but said he welcomed Mr. Price’s efforts to improve the data.
Frank Johnson, chief executive of MediaNet, the royalty administrator for Beats Music and its predecessor, Mog, said his company had invested millions to build a system to match recordings with their copyright owners – a system he believes is more accurate than any other in the industry – and added that he welcomed input to correct inaccuracies.
In an age of shrinking record sales, though, many artists and songwriters are keen on collecting every penny they’re owed – even if the missing pennies don’t always amount to much. Mr. Price said he has seen copious data errors resulting in inaccurate payments. Several years ago, for example, Mr. Price said he discovered that Eric Clapton’s publishing administrator was erroneously getting paid each time fans listened to a particular recording of Bing Crosby singing “White Christmas” on one digital service, even though the song was written by the late Irving Berlin. Mr. Price said he corrected the data and fixed the problem.
Mr. Price co-founded TuneCore, a company that helps artists and labels distribute music to digital music stores, but was pushed out by the board two years ago along with the company’s other co-founders. He launched Audiam last year with a focus on recovering songwriter royalties just from YouTube.
Now, Mr. Price has expanded his focus to recovering missing royalties from interactive, or on-demand, music streaming services, which must pay royalties each time a song is played. Internet radio companies like Pandora Media aren’t a focus because they use different royalty systems.
“I would like to create an efficient pipeline,” said Mr. Price.
Authored by Tom Gara via wsj.com.