Nordic Firms Teosto and Session Lead European Push for Faster Royalty Payments

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"Payment and music credits are the two parts of the industry that are suffering with streaming."

UTRECHT, Netherlands — A small performance-rights organization from Finland is at the forefront of a European push to pay rights-holders faster by processing performance royalties in near real-time.

Currently, most collecting societies, including BMI and ASCAP, distribute royalties to members quarterly, often up to six-months from the end of a three-month collection period. This is based on a widely used existing model of music licensing for performance royalties done through deals based on the annual revenue of companies using music. That means that the writer of, say, an unexpected hit in the first three months of 2020 might only receive her performance royalties in October, putting a substantial drag on her income.

But this spring, Helsinki-based Teosto, which represents more than 33,000 Finnish composers and almost 3 million international lyricists, arrangers, composers and music publishers, is planning to launch the second phase of a pilot to speed up payments, with Spanish music monitoring platform BMAT (Barcelona Music and Audio Technologies) and Israeli music tech firm Revelator, which has developed a platform for managing digital assets in music. 

The program has shown that rights-holders can receive payments within 24 hours, the companies say. Run over the summer of 2019, Teosto's pilot tracked the plays of a trio of songs on Finnish radio using Teosto's metadata, splits, and user information for the 19 rights holders in the three songs. It was able to process near real-time monitoring of BMAT radio performance royalties through Revelator's Original Works platform which allows rights holders to register their works, create smart contracts and receive royalty payments into a digital wallet. Payments were simulated in a test blockchain environment with no actual euros distributed.

Phase two of the pilot will focus on how to move from blockchain technology to actual fiat currencies. "It is the trickiest part of taking the pilot into the real world," says Turo Pekari, senior advisor, innovation and discovery at Teosto Futures Lab. "But it is also the most fascinating because no one has done it before." Although Teosto was the first test case for handling radio play royalties, Revelator's platform can potentially be used by collecting organizations in other territories. 

Another European-based move to speed up payments comes from Session in Sweden. The start-up is currently using the second phase of its Creator Credits project to work more closely with CISAC to improve the speed and accuracy of identifying musical works. The program comes at a moment when recording and uploading to a streaming platform has become radically faster than it used to take to distribute physical product. "If we make sure that the data is as correct as it should be, of course publishers, labels and societies will be able to pay out faster," says Niclas Molinder, Session's CEO. "Payment and music credits are the two parts of the industry that are suffering with streaming."

Session has partnered with MXM Music, Avid Technology (the maker of Pro Tools), Universal Music Group and DDEX (Digital Data Exchange) to create an ecosystem for creator credits that includes identifiers for the correct payment of performance and mechanical royalties.

At November's DDEX Creator Credit Summit in Stockholm, Molinder showcased how Session's Creator Credits is embedded in the Pro Tools workflow -- including the key International Standard Recording Code (ISRC) and International Standard Musical Work Code (ISWC) industry identifiers for songwriters and recording artists, as well as the International Standard Name Identifier (ISNI) favored by streaming platforms that identifies all rights holders in a recording. Session plans to bring additional digital audio workstations and CMOs on board in 2020.

Lending heft to Molinder's startup are co-founders Björn Ulvaeus of ABBA and Max Martin, the Swedish hitmaker famous for his work with Britney Spears and the Backstreet Boys. In his keynote at the summit, Ulvaeus observed that "music creators come out of their bubble twice a year to look at their royalty statements." He also stressed how important it is for music creators to be credited, especially in the digital age. "The recognition may not always lead to money, but can lead to your next gig," he said.

Also positioning itself in the changing payments ecosystem is Songtrust, the global royalty collection platform based in New York City, which says it recorded a boost in collections of nearly 250% in 2019. Led by Molly Neuman, a former drummer for riot grrrl band Bratmobile, the company credits its growth in part to its growing global reach. "Songtrust is now able to collect royalties from more than 150 countries and territories and has over 50 direct affiliations with collection societies," it says in a December statement.

"Is there going to be a time when the creators of music played on radio or at a show or streamed will be paid much quicker?" says Mandy Aubry, the Netherlands-based director of business development, EMEA and APAC, for Songtrust. "There has to be a way eventually."

Molinder is confident that the Nordics, as they have in other parts of the music industry, will again make their mark. "On the music creation side, you had ABBA and Max Martin, and on streaming it has been Spotify," he says. "No one is close to what we are doing when it comes to identifiers." Says Pekari, "There is no benchmark available, but we can be the ones who can set up the rules for the new types of transaction models."


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