Dubset Thinks It Has Solved the Big Licensing Problem Behind DJ Mixes

Chelsea Lauren/WireImage
DJ Tiesto performs at 102.7 KIIS FM's Wango Tango at StubHub Center on May 10, 2014 in Los Angeles, California.  

With new support from EDM’s A-listers, Dubset’s MixSCAN system can distribute royalties to artists whose songs are used in DJ mixes.

In the ongoing battle between record labels and streaming services, nothing has proven quite as befuddling as DJ mixes, which are largely seen as a licensing nightmare. But Dubset, a New York City startup partly funded by Rhapsody, has found a way to monetize them. 

For the past two years, the company has been testing its MixSCAN technology on its host site, TheFuture.fm, with about 100,000 users. MixSCAN can identify individual tracks within mixes and distribute royalties to underlying rights holders in a matter of seconds. It can also measure how much of the track was consumed, which helps solve the problem of determining the value of fragments of songs. 

The system could be a game-changer: Dubset estimates that 120 billion tracks are sampled each year in mix and re-mix content, which, if monetized, could earn the recording industry an additional $1 billion annually. 

Currently, the company is in late-stage licensing discussions with all three major labels, which will likely take a few more months to sew up. But today, Dubset CEO Bob Barbiere announced that they have the endorsement of some of EDM's biggest players, including Tiesto, Afrojack and David Guetta, who have begun uploading their entire libraries to the company's registry.

"This program begins and ends with DJs," he said. "Rather than trying to ban their medium, we have a way to make it legal." 

The 'ban' is a reference to platforms like Soundcloud that have been forced -- mostly over the past year, and mostly by labels -- to target illegally uploaded content by issuing millions of takedown notices. "It's like the industry suddenly said, 'wait a second, maybe we need to look at what we're giving away here,'" Barbiere said. Because MixSCAN's royalty structure would ensure labels, artists and even DJs were paid for each stream, there'd be added incentive for the mixes to be distributed on streaming platforms. 

Dubset isn't the first company to try to squeeze revenue out of EDM mash-ups. In October, Pioneer debuted its KUVO Box, which plugs into a mixer and tracks song snippets that are played in live DJ sets so that royalties can be distributed accordingly. And Creative Commons, a flexible copyright-management system, offers licenses with guidelines for use that are set by the artist. But Dubset is the only company that can clear multi-owned digital assets in real-time. They recently completed a two-year trial in which 250,000 mixes were uploaded to the company's registry, and of which 50,000 were fingerprinted and streamed on TheFuture.fm. Based on the trial, Dubset was able to analyze everything from the producer's software to methods of user consumption. 

The company says it doesn't play favorites when it comes to streaming platforms, but it does plan to assist the industry in processing takedowns of illegally uploaded music. "We're not trying to be the police, but the folks who do police the industry will use our technology to continue their mission," he said. It's unclear what that means for free platforms like Soundcloud, aside from serving as a forewarning to get on board. For subscription-based services, Dubset hopes to offer mixes in the form of an added package for an extra dollar or two per month. 

A 2012 industry report from EMI Music pegs the audience for EDM consumers at about 650 million people, with 25 percent actively streaming. If that group streams five hours of music each month -- the average Rhapsody user streams closer to 20 hours -- that adds up to about 10 billion hours of streamed dance music each year. 

Therein lies the opportunity, said Ethan Rudin, Rhapsody's chief financial officer, who touted the mix as a powerful and untapped tool for music discovery. He wasn't able to expand on the company's larger plans with Dubset, but said Rhapsody is "particularly intereted" in any program that monetizes electronic music. 

"Dubset is of a similar mindset and ilk to Rhapsody in that they want to help create a legitimate home where DJs can participate in the streaming music landscape without the fear of getting in trouble," he said. "To have these prominent EDM artists getting behind the platform is a big deal, they're setting an example. I'd say we're just getting going."