Medianet, SOCAN, YouTube And The Kobalt Effect

Since the demise of the long-running-but-never-launched Global Repertoire Database (GRD) there has been a lot of debate over what comes next for digital rights reporting. The songwriter class action suits in the US against Spotify are the natural outcome of more than one and a half decades of failing to deal with the forsaken mess that is compositional rights in the digital era. The music industry needs a solution and now just like busses that never come, two arrive at once: Google’s Open Source Validation Tool for DDEX Standard (doesn’t sound too sexy I know, but bear with me on this one) and Canadian PRO (Performing Rights Organization) SOCAN has acquired Medianet essentially as a digital rights reporting play. So just what is going on in the world of digital rights reporting?

Transparency, Transparency, Transparency

Artist concerns about transparency in streaming services are well founded but it is an eminently fixable problem because virtually all of the necessary data is in place. When a record label or distributor licenses music to a service it literally provides a data file of its music which is then ingested (uploaded) by the service. But when service licenses from a music publisher or PRO there is no such data file, because the recorded works are owned by the labels. Publishers do not even provide a comprehensive list of what works their license covers. So music services instead do a ‘best efforts’ licensing effort, licensing all the key publishers and PROs. This model is though far, far from perfect, because:

  • Songs often have multiple writers, some of whom may be signed to bigger publishers, others not. So a single song could be covered by licenses acquired from three or four publishers and still not be fully licensed
  • Songwriters change publishers and most often publishers do not notify services, so a licensed song can suddenly become an unlicensed song without the service knowing it
  • Many songwriters are only small publishers not licensed to music services

But perhaps the biggest problem of all is the lack of a single database of compositional works against which music services can cross reference their catalogues, even better would be one that matches all compositional works against recorded works. Without them we end up with large swathes of songwriter royalties not being matched against and paid to the songwriter. Depending on who you talk to this can range between 20% and 40% of digital royalty income. Little wonder then that we end up with class action suits from disgruntled songwriters.

The problem is that until there is a market level solution that sort of action won’t go away. This means any music service operating in the US, where there is a statutory damages system, cannot operate with certainty that it will not face another legal suit with potentially vast damages awarded. The nightmare scenario is that streaming services start pulling out of the US, or restricting their catalogue to identified works (which largely means major publishers only) rather than face potentially fatal legal challenges.

SOCAN Wants To Be The Leader In Rights Reporting And Administration

And this is the world into which today’s two announcements are born. Medianet is almost one of the founding fathers of digital music, tracing its origins back to the very early 2000’s when, as MusicNet, it was set up by half of the major labels (the other other half formed press play) as a D2C music service. Both efforts failed miserably but Medianet emerged out the ashes as a white label music services company. It spent the years since quietly building a solid business powering a host of interesting music services including Beats Music and Cur. While powering and licensing services such as these Medianet developed a unique set of technology and rights assets and handled everything from ingestion, through rights reporting and administration and even payments. In short it was an end to end rights tech company. Which is what makes Medianet such an important asset for SOCAN. PROs have become increasingly marginalized in recent years with publishers withdrawing rights and a whole host of disruptive new competitors ranging from Kobalt’s acquisition of AMRA, through Irvin Azoff’s Global Media Rights, to existing alternatives such as Music Reports Inc and Fintage House pivoting into digital rights reporting and administration. These are challenging times as a PRO and the likelihood is that it will result in a fair degree of consolidation with smaller PROs outsourcing more of their work to larger ones. SOCAN has seized the initiative with the Medianet acquisition, setting out its stall as a rights society that puts tech innovation, effective reporting and accountability at the centre of what it does for its members. It has also positioned itself as a contender for global successor the the GRD. Consider this the first major repercussion of the innovation and transparency agenda that Kobalt set in motion.

YouTube Is Building Something Much Bigger

Alongside this, with what one assumes is coincidental timing, comes YouTube’s implementation of Digital Sales Report Flat File Standard (DSRF). Digital supply chain innovation is not always the most dynamic of sectors and this announcement could be mistaken for appearing to be the poor relation of the two today. The opposite is probably true. The digital supply chain is going to become ever more important and companies like Consolidated Independent continue to move the space forward in order to help ensure rights holders get distributed, reported and paid as effectively as possible. YouTube’s DSRF implementation is built upon the DDEX framework of standards and enables reporting of both audio and audio-visual content. DSRF aims to deliver faster, more accurate royalty reporting and distribution. You see now the link with the Medianet acquisition. Both are part of a broader movement across the music industry to bring rights reporting and administration into a state that is fit for streaming’s purpose.

The reason why YouTube’s move could have the bigger long term implications is that this is part of a much bolder and far reaching strategy by Google, one that has the music industry’s analogue inefficiencies firmly in its sights. But more on that next week….

The Kobalt Effect

Walk into any publisher or PRO right now and the odds are Kobalt will feature in the conversation sooner or late, whether in fulsome praise or through gritted teeth. Kobalt has done what all good disruptors do, it has set the agenda and in doing so is having market impact far beyond its actual, and still relatively small, revenue base. Today’s two announcements are part of the wave of digital rights disruption and innovation that Kobalt has helped accelerate. But the story doesn’t stop here, in fact, this is just the start.

18 thoughts on “Medianet, SOCAN, YouTube And The Kobalt Effect

  1. Mark,
    I am afraid your reporting on “YouTube’s Digital Sales Report Flat File Standard” is incorrect. The DSR FF Standard was developed completely within DDEX by its membership of which Google/YouTube is but one. The YouTube press release is about an open-source tool that YouTube has developed at its own expense and gifted to the the industry. What the tool does is to allow implementers of the DSR FF to test their implementation to ensure it is conformant with the Standard. This is important because then, if every implementer uses the tool, all recipients of messages in the DSR FF can be confident they will all be in the same format and process them accordingly. There is no need for recipients to tweak their systems to manage variations in the way senders have implemented the standard. This raises efficiency and reduces cost. The basic objective of any standards organisation. Your blog suggests that YouTube has some ulterior motive in providing this tool to the industry. Given the above I find it difficult to determine why, notwithstanding, I know rights holders usual regard any actions by Google/YouTube with some suspicion.

  2. Mark – I fully understand and I don’t see anything in my post that is factually incorrect. If you can see anything that is factually incorrect please highlight it for me. My observation was that this fits in part of a much broader strategy for Google / YouTube of which DDEX is just one small part. Open source or no, it will form part of the bigger play. Although the analogy is not without problems, think of this in a similar way to how Android is a quasi open system versus Apple’s closed iOS yet it helps Google pursue a global platform strategy. Google’s modus operandi is finding open or semi open standards and using those to build out a ‘federal’ platform to attach closed ‘nation state’ platforms

  3. The statement “YouTube’s Digital Sales Report Flat File Standard (DSRF)” is incorrect. It is DDEX’s DSR FF. Google/YouTube is a member of DDEX and was involved in the specification of the standard along with a dozen or so other DDEX members. Given that error I am not sure that how your conclusion can follow from that.

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  5. Mark M.-
    Mark I. is correct, the DDEX DSR standard is in no way owned by Google/YouTube. In fact, this is the opposite of how you have portrayed it: they joined with many other companies, devoting time and resources to develop an open standard that is governed completely by DDEX and benefits everyone equally. And, beyond that, they contributed greatly to the development of the open source DSRF validation tool, which will ensure that the standard is easier to use and more accurate. The previous proprietary formats that predate the DSR were not developed this way, which is why an open standard was needed.

    I don’t know if I can speak for my company (Pandora), but as a person who works on two of the many DDEX standards, I am personally very glad that companies devote time to developing standards that benefit everyone. This spirit of collaboration is sorely needed in this industry, and was almost nonexistent before the DDEX standards body began ten years ago. DDEX has grown to include representatives from all the major companies from every part of the music industry, working together. Common and open standards (such as DDEX’s transmission standards and ISO identifier standards) are the only way out of this mess.

    To insinuate ulterior motives with regard to DDEX only serves to dissuade participation in common and open solutions. We need the opposite. Perhaps some coverage of the open standards landscape would be an interesting topic to investigate.

    I think that one small factual error sent you down the wrong path this time. It is not “Google’s Open Source Validation Tool for DDEX Standard” nor “YouTube’s Digital Sales Report Flat File Standard (DSRF)” nor “YouTube’s DSRF.” Ask around.

    Otherwise, keep up the good work. Along with all of your readers, I look forward to your future articles. Always glad to read your in-depth coverage.

  6. I mistakenly missed out the words ‘implementation of’ which have now been added in. To be clear this does not affect my analysis at all. I understood it was an implementation as I am conversant with DDEX and its remit. I fully stand by my analysis that this fits into part of a wider strategy for Google and I don’t see how working on an open standard could prevent that being the case?

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  8. What sucks is that none of these systems or companies is going to deal with performance royalties for music in digital advertisements. To you guys it might seem an insignificant segment of the business, but many many composers have lived off of this income from TV and radio performances for many years. Now the PRO’s are saying that these performances on YouTube (whether stand-alone or in pre-roll) will not be paid because the “data” isn’t there, and its not part of their blanket license agreement with YouTube.

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  10. I think the main point here is that the SOCAN announcement (in particular) is the thin end of the wedge. If a society can think and act this broadly there’s a good chance these transparency issues will be solved – by technology, as it should be. Who is buying the Omnifone assets?

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  14. I am *deeply* interested to see what happens when the wider music community gets around to protesting the deliberate skirting of the millions of traditional, folk and world music tunes in existence. Bang goes any fiction of entirely original work..

    Seems idiotic to imagine anyone’s work was created in isolation from lifelong influence.

  15. Moreover, what’s the point of copyright in an algorithmically-generated/automatically copyrighted music era? Creativity will be killed off. If you want music as a human activity to survive in any form, you’re waaaaaay better off fighting to get rid of copyright altogether.

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