I’m not saying anything new when citing that music regulation has not kept up with technology or consumer usage patterns. Despite the fact that music has proven to be incredibly effective content for creating long-term customer connections, many product managers and marketers have stayed as far away as they can.
There are three main reasons:
1) The legal landscape for music usage is complex
2) Music can be cost prohibitive
3) The ability to select the right music for one’s brand is not a typical corporate skill set
I'll leave 2 and 3 for another day, so let's just focus on the legal landscape for now.
The Legal Landscape
The music industry is highly complex and copyright holders have been known to zealously go after infringing parties. While the music landscape has undergone major changes over the past two decades, and continues to evolve quickly, music streaming is currently the easiest and best option for most companies. There are two types of streaming services to consider: On Demand and Internet Radio.
Companies who wish to obtain licenses for On-Demand Services need to approach two primary groups:
- Labels – both Major and Independent – for the sound recordings
2. Publishers – for the compositions
Sound recordings simply mean the end product after an artist records his or her music in the studio. For artists that have signed a deal with a label, the label owns (or at least partially owns) the sound recording. The 3 major labels (Universal Music Group, Warner Music Group, and Sony Music Entertainment) all require direct deals in order to license music for an On-Demand Service.
The other major streaming category is Internet Radio which is governed by a compulsory statutory license under the DMCA.
Similar to On-Demand Services, Internet Radio services also need to pay copyright holders for the sound recordings and the publishing. However, the agencies that collect these payments are government approved organizations that in turn pay the rights holders.
Music licenses are generally identical and there is not much room for negotiation. The rates are set by the Copyright Royalty Board (CRB), which is a group of 3 royalty judges who arbitrate between various stakeholders.
So, knowing all of this, it's obvious why busy executives have traditionally run for the hills when considering music as part of a product or a campaign. But (you knew this was coming), we've figured all of that out!
At Feed.fm, we've built a platform to automate all this legwork and fully indemnify our customers from any liability. Before providing an overview of the music platform we’ve developed, let’s move on to #2: the ginormous price tag.
To Be Continued…