Brand partnerships and performance royalties come under the microscope in part two of Angus Finlayson's exploration of artists' income streams.
This is a full transcript of this month's edition of The Hour, edited slightly for clarity.
In this two-part episode of The Hour, we've been looking at how the financial situation for underground producers is changing. Traditional income streams seem to be drying up by the year, and many producers claim it's getting more difficult for them to earn a decent income from the music they make. In last month's instalment, we looked at the ways artists can sell their music to fans. We heard how technology has changed the game in the past decade, explored the risks and frustrations of working with major streaming services, and looked at some alternatives to Spotify and co.
If you haven't already, I'd encourage you to check out that episode before listening to part two. This time around we'll be looking at other possible income streams for producers with the help of musicians including Patrice Bäumel, Gunnar Haslam and Telefon Tel Aviv, as well as journalists and experts with a deep knowledge of the topic.
Later in the episode, we'll explore a growing and somewhat controversial income source: brand sponsorship. But first, we'll examine the ways that producers can earn money in the live sphere. First up, we're back with the artist and thinker Mat Dryhurst to discuss the often misunderstood realm of performance royalties.
If you find it hard to keep up with the words and acronyms in this piece, check out our handy glossary.
Let's talk about another potential income stream for a musician, which is performance royalties. In theory, if my track gets played in a club by a DJ, the collection agency in that country will notice that that's happened. If I'm a member of this agency, they will pay me a proportion of their income for the year that reflects that. In what ways is this system imperfect or unfair?
Mat Dryhurst: It's really tricky. The main challenge is you have collection societies who have this ambitious goal or mandate to regulate all music and make sure that everyone gets paid well. Which I think just doesn't work. I'm sure if you go speak to someone at GEMA or ASCAP, there are bright people who are trying their very best to make it work, but there's just too much information there.
Hypothetically, you or I go DJ in a club and we play this record and then that person's registered, then they get fairly compensated. It doesn't work like that. What ends up happening is Paul McCartney or someone ends up getting that money. There's an organisation called BMAT in Barcelona who I think are doing a great job in the sense that they want to register more works, and kind of be another intermediary to help at least identify the works.
They offer a technology, right? A box of some kind?
Mat Dryhurst: Exactly, it's a hardware box that you can place in clubs. Similarly, YouTube is trying this with fingerprinting technology. I noticed that Richie Hawtin and Pioneer started an initiative many years ago called Get Played, Get Paid. I don't know what the status of that is, it's a very noble initiative, particularly coming from someone who presumably makes a very healthy living from playing other people's music. The fact that he would come forward and try and be the figurehead of that, I think is very noble on his part.
What concerns me is that the project doesn't appear to have gained very much traction. Now, I might be wrong about that. But what that tells me is less that their intentions were compromised and more that, like with streaming, retrofitting a bad infrastructure to try and become a good infrastructure is a whole bunch harder than creating a good infrastructure from scratch. I'm more concentrated on thinking about building an entirely parallel different system, that can somehow legally not be crushed by the fact that a lot of the collection agencies are state-protected. I think we might agree that our inability as a community to compensate people for their honest labour needs to be resolved. It's an embarrassment.
Mat's cynicism about the royalty collection system is something that I and many musicians share. There are some ways to earn OK money through the performing rights organisation—that is, for example, PRS in the UK or GEMA in Germany. Peak-time plays on a national radio station, for instance, can lead to decent payouts, but plays of your track in clubs and at festivals rarely translate into much income.
Many electronic musicians are so disillusioned about the system that they don't even bother to sign up to their local PRO, but maybe change is on the horizon. The Get Played, Get Paid campaign was launched in 2014 by the Association For Electronic Music with Richie Hawtin as its figurehead.
After an initial burst of publicity, the campaign hasn't exactly been high profile, but in a sense it's had and continues to have success. Its primary goal is to change the way that performance data about electronic music is collected from an old imperfect model, which puts most of the money in Paul McCartney's pocket, to a more precise method using new music recognition technology.
To find out more, I spoke to Liz Muirhead from BMAT, one of several companies promoting this new technology. Liz is also involved with the Association For Electronic Music, the organisation behind Get Paid, Get Played.
In theory, if say my track is played by a DJ at a club, I get paid for it. Could you talk a little bit about how that mechanism has traditionally worked?
Liz Muirhead: You're exactly right—if your track is played in a club, then you should get paid for it. Because what should happen is that the club is paying a licence fee to play the music to the performing rights organisations in that territory because you have the author's rights and also the Phonogram rights. Now that you have those organisations with those licence fees, exactly what you've said, they should be paying them out to the musicians whose music has actually been played in the club.
We're trying to get to that place. The systems in place right now are in a process of evolution. What traditionally has happened to monitor the music in those venues, it could be one of a number of different things. They could be using data that's on the radio, they could be sending agents that will visit a certain number of clubs in a territory to monitor the music that's played within say an hour, two hours, three hours. But essentially what's not happening is that they don't know all the music that is played in a club, all the time. That's the current status right now for the majority.
These agents you're referring to, these are essentially people with clipboards who go to clubs, who might ask the DJ what they played in the last hour and then kind of write down the tracklists?
Liz Muirhead: Yeah.
I gather it's also possible—or it certainly seems to be in the UK—for the DJ to voluntarily declare their setlist as well, is that right?
Liz Muirhead: Exactly, and it could also be having the DJs themselves deliver those setlists. That could be giving them to the promoter or the people managing the venue itself. Or in some cases you'll have PROs that you can do digitally. That's quite common in a lot of territories where you can actually upload your setlist direct. But again, it's not across the board, it's the ones that are more innovative. They're representing large catalogues of music, so they have the budget to work on their digital services. There's very different ways they can get the data but it's still not complete.
This incompleteness to the data they can collect, this incomplete picture that they have of what tracks are being played in clubs—how does that affect the payout that electronic musicians might get from a performing rights organisation?
Liz Muirhead: Well, this is it—if your track hasn't been picked up in whatever processes are being carried out and conducted by a PRO in that territory, there's no way for that identification of a track to then match with their internal database, and then for that to be passed through the system to receive a payment. For all of the tracks that go unidentified, no money can go in that direction. Then you have the data that is available and the money will either go to them or, depending on the territories, there are these "black boxes" where the money is stored until people claim for it. But essentially the important part here is that where music is not identified, it's missing out on royalties that are legally due to those musicians.
As Liz mentioned, in some territories, and the UK is one of them, DJs can do their bit to rectify the problem by voluntarily reporting their setlists. As we were finalising this podcast, the British duo Posthuman took to Twitter to explain the potential benefits of this. It's very easy to report through the PRS site, and you can report a setlist up to a year after the gig took place. For festival gigs in particular, this could make a difference.
UK festivals pay around 2.5% of their box office takings to PRS, and this money is supposed to go directly to musicians whose tracks were played at that festival. Meaning a play of your track on the main stage could lead to a substantial payout. But there are limitations to self-reporting setlists. The big money is only there for festivals and large events like The Warehouse Project. The potential revenue from clubs is negligible, though declaring a club set does help PRS in guessing what was played at festivals.
More problematically, to submit a setlist, you need to be a PRS member. And to be a member, you need to have a catalogue of works registered with PRS. In other words, only DJs who make their own music can submit playlists, which rules out a fair few of the top festival DJs. Back to Liz with an explanation of how music recognition technologies might improve the situation.
Could you explain in more detail exactly what the technology is that BMAT offers?
Liz Muirhead: There are various different ways we can monitor venues, because for us it's not just about electronic music. We also are doing live music and all different types of genres. We have a small box, it's a quarter of the size of your laptop and almost as thin, that'll be plugged into the mixer and also be plugged into electricity, and that's it.
We provide our own internet to monitor music. We're basically recording all that music, which is then sent to our servers in Barcelona, and all that audio is then matched against a database of music. In total, we have 72 million tracks, so all that music has already been integrated, and that's increasing every day. In fact, we are receiving updates, we're connected to over 120,000 labels, including the majors, including indies. Sometimes it's being connected to digital distributors.
For every track that we identify, it then appears in a platform. Every platform will be different for each PRO, because they'll want to know a specific number of venues, or from our perspective, it could be a specific number of radios and TVs and venues. It'll be a combination of whatever they've actually contracted us for and they'll see every track lined up in their platform.
That will be the name of the artist, the name of the track, their label, ISRC, ISWC. All these music industry identifiers, all the data that is possible to give to the PROs, so they can match it with their internal databases and then pay it out. There's various different ways you can use the dashboard and the platform itself. You can analyse the data in many different ways, we can deliver the data via an Excel file as well if they prefer, or through an API.
We're very agile, we're an innovative company. Although we have the platform, we really tailor our services to what each PRO desires, which can vary from one to the other.
When the Association For Electronic Music started campaigning for this technology a few years ago, it estimated that $160 million was due to the electronic music industry. But it was going elsewhere because of this incomplete data collection by the PROs. That seems like a massive sum of money.
Liz Muirhead: Yup, and it's spot on. All the money that continues to be paid out to the wrong artists is exactly why we need to do this. The voice of the Association For Electronic Music is the type of pressure that needs to take place. Because it's pressure that will change things, it's getting the PROs to consider what they're doing internally and start to review it so they can improve.
What do you think is the level of uptake among clubs and electronic music festivals? Could you estimate about what proportion of that industry has adopted this technology in one form or another?
Liz Muirhead: I would say a fraction. There is movement, which is great, there's press attention, great. PROs are talking to each other, and they're noticing what others are doing, but I would still say it's a fraction. For all the electronic music that is played around the world, there's still a long way to go.
What causes the uptake to be slow? Are there disincentives to adopt this technology? Is it simply that clubs or performing rights organisations haven't heard of it?
Liz Muirhead: When AFEM formed five years ago and was starting to lobby all the PROs and talk to venues, there was this initial fear from the venues, and also the idea of protecting the DJs, asking questions like, "Where does my audio end up? You're going to come into my club, you're going to record the audio, I don't know who you are, I've never heard of your company before." BMAT is well-known among the PROs around the world but unless you're in that world, you're not supposed to know who we are, so it was completely understandable. With the sound recordings, all of them are deleted after a certain period of time depending on how long the PROs need them.
Then we got past that and we started to build up networks of venues. [Lluís Torrents], the general director of Razzmatazz, he did an interview that appears on our blog. His point of view is, "If I'm paying a licence, I want to know who that's paid out to." If you're speaking to someone who's innovative, gets technology and enjoys it, and also has that musical connection, which they should if they play music in their venue, then you can start to bond with them in a new way. What I would love is for everyone to share the same point of view with the Razzmatazz general director, which I think is happening more and more.
In the last four months we've had venue associations, we've had chart companies, we've had producers contacting us direct and asking for installations. We've actually set up a venues referral scheme, so if people actually want to refer to us a venue, we'll actually pay them €100. If they actually want to install the device, we will actually pay them another €100 as well.
You feel like perhaps there's kind of a sea change happening? Where people are hearing about this thing before it's actually pitched to them and then maybe more aware of why it might be a good idea and then kind of seeking it out.
Liz Muirhead: Yeah, rather than being in the dark about it and rather than having the normal complaints about the PROs, which still exists and I completely understand, I think that people now get it more. They are aware of the solutions that are out there and so now they're taking control and taking responsibility, and trying to push things, which I think is brilliant.