Annual Report 2015

I’m a workin’ man
I’m a workin’ man
Make my livin’
With my hands
Help my friends
Every time I can
I can tote the load
I’m a workin’ man

Workin’ Man
Written by Cliff Davis
Performed by Cliff Davis and Doug Pitts
Published by Southern Swamp Music

This is the Exploration Annual Report for 2015

This report serves to explain last year’s progress. It will show how our business is maturing to create a framework for planning, and to illuminate where we can improve.

Capsule Summary: We are extremely pleased with the progress of our company. We have experienced in excess of 10% growth, month over month, for 24 consecutive months. Efficiencies have continued to reveal themselves via experience and software. As a result, our costs have been reduced. Data cleaning, organization, and reconciliation remains our largest expense.

What we learned

We rounded the corner of 2014 with incredible hope and excitement – 2015 did not disappoint.

We embarked on the year with our eyes and ears wide open! We feel there is so much to learn not only about the industry we serve, but more importantly, from our clients and those that wish to partner with us. This is the position we try to maintain as we are constantly trying to understand not so much what we are so certain about, but areas we should be thinking about that we aren’t.

These are the top questions:

How does YouTube work? What nuances will help us get paid the money we are due?

We spoke on this topic at industry events including AIMP, CCC, NARIP, Director’s Guild of America, and we also hosted a couple webinars.. We wrote 17 blog posts, covering a myriad of issues, which were reviewed by a total of 11,314 website visitors. We sent out 13 email newsletters to 5,921 subscribers. And we began sharing all of this information with a bit more frequency on Facebook and Twitter. We explained how the process works an estimated 1,000 times on the phone or in person.

We have been giving a lot of thought to creating, you guessed it, YouTube videos to explain the process! These videos may explain the topics in more detail, and will easily be consumed at your own pace.

Attending conferences and events is still very much on our radar, however our collective time for such is less now as we’ve become much more involved in the day to day operations of running the company.

How do I deliver my catalog and metadata? Can I have a copy of my metadata?

This has been one of the primary concerns of our clients since day one. It was also one of our own, as storing catalogs in spreadsheets become unwieldy after a few thousand titles.

Initially, and still, the answer is the same: Send us your catalog in whatever format you currently have it stored. We’ll even come to your office and assist if needed! We’ll then do the work involved to make sure it is all cleaned up and ready to roll.

At your request we’ll send you a complete copy of your clean metadata. We can usually turn it around in less than a week.

Because that does not scale so well, and we want to help the masses, is in part why we built Exploration Data.

Exploration Data is catalog management software. While it is still in private beta, the reviews have been terrific. We are looking forward to seeing this software tested to the limit in relative short order.

Head over to GHOST_URL/data to receive an invite.

I don’t have all those codes and information you need in order to collect on my behalf. Where do I find them?

We’ve become really good at this! Experience and a wee bit of interwebz wizardry has allowed us to streamline this process. Once we fully understood the logic to accomplishing this task manually, we built a robot (software) to help. We then folded it into Exploration Data upon its release.

Eep! We were just notified that one of our assets are in conflict with another music partner on YouTube. Can you take a look now…I mean yesterday!

The speed at which we are able to resolve conflicts on the network is often bottlenecked by our own organization and the process in which we handle it. To best streamline this challenge we set up a ticketing system with the help of the good folks at Zendesk. We also set up all of our project management tasks in Basecamp to efficiently handle recurring tasks.

We are also delivering as many conflicts as we can, in bulk, to partners that have more than just a few. This allows both of us to resolve them in a single engagement instead of piecemeal.

The best way to let Exploration know you have an issue within the YouTube system is to zap an email to support@exploration.io.

While data cleaning and organization are not trivial tasks by any stretch, it should never have to be done more than once. We are very keen on working with operators in the space to come up with ways to more efficiently solve this problem. If you are interested in discussing, please do reach out.

Are you transparent in the way you report, account, and pay my royalties?

Yes.

Exploration will always deliver your checks monthly, along with a summary of the revenue you have accrued minus our fee. We deliver ALL of the raw usage and revenue data directly from YouTube in csv format. We include a document that outlines exactly what each column and field contains. Finally, Rene and I make ourselves available to explain this in as much depth as needed on the phone, in email, and in person.

You guys are doing a solid job with YouTube. Can you help me collect on other networks, too?

Yes.

We have just solidified deals to collect on 60+ digital services. Exploration Data will allow us to execute with the same level of proficiency and transparency that you have come to expect on YouTube, on other networks. Expect to hear more on this in subsequent releases.

Of course, these were just the most common requests and questions. There were lots of others.

We are always open for feedback. We welcome and encourage it. Please, do let us know how to serve you best.

Exploration the company

Exploration is a media management and software company primarily representing music publishers, record labels and film/tv companies in order to get the most from YouTube, SoundCloud, and now via blanket deals, over 60 additional networks. Our clients range from musical composers, with only a handful of titles, to multinational conglomerates, that even if you didn’t work in entertainment, you would probably be familiar with.

Rene runs the operations and administration teams while I tackle software and business development. Our staff has nearly doubled from 6 at the end of 2014 to 10 as of this writing, mostly in the copyright administration department. Everyone starts with learning to format and ingest catalog metadata. We experienced a bit of turnover in administration and we attribute this mostly to finding our footing on training, process documentation, and knowing who we are as a company. Alex Alt, an incredible find from Music Institute in Los Angeles, came to us first as an intern and now manages most of the catalog organizing team. He was the top of his class in school and has been an absolute star for us. Rene and Co. now have operations – catalog organization, maintenance, royalties – down to a science.

I architect the logic and design of our software and along with Michal Holub, our development lead, build the applications that support our company. We experimented quite a bit this past year on identifying and solving the problems our clients face and believe to have found a nice groove with Exploration Data. Testing, feedback, and iterating will be the tale of the tape in the coming months.

Our core search software hasn’t changed a lot but we have added new elements to the search suite we employ, the most important being the ability to identify ISRC data at scale for music publishing companies. This data historically has been somewhat of a mystery for music publishers, especially on portions of their catalogs that were not necessarily hits. In that is requisite to be aware of those musical works that contain one’s copyrights, accurately identifying this metadata has significant material value.

A few experimental pieces of software (ie Audio to Video conversion and others that we have not made public) have turned into zombies, which irks me. We spent measurable time and money developing them, and yet they don’t quite live and aren’t quite dead. I still believe they could present value so I’m hesitant to throw them in the fire and curse them into oblivion but I would be remiss to admit that I often fantasize about such. I may dig up their codebases during a hackathon to resuscitate them at a later date.

Scaling growth demands the most of my time, as I personally handle each new client signing and have not delegated this task with any degree of success to date. Our email list, blog, word of mouth, and referrals are our largest drivers of growth. I’m pleased with the effort, in that we have continued to bring on new clients, large and small, but we are interested in helping much more people than we currently are. There is SO much work to be done! Much focus and attention will be devoted to business development in 2016 and I’m absolutely open to suggestions.

We have created many processes, with the help of commercially available software, to organize operations and business development. This has helped tremendously and made us much more thorough, effective, and profitable. The learning curve and expense of trial and error/adoption was quite high as utilization required buy in from all. Thankfully, these expenses will not have to be repeated.

Operations and System Software

Amazon Web Services – Hosting all media databases, proprietary software code, and business critical file backup

Github – Code storage

Google Apps – Email, calendars, documents, telephone

Basecamp – Client project management

Highrise – Business Development CRM

Zendesk – Support tracking and site feedback

Skype – Client/Employee Communication

Backup – Custom integration from Google Apps to AWS

Exploration.io is built on WordPress using an Avada Theme.
Exploration Data is written in Python and React, using Docker containers.

Exploration Onboarding and Operations

Catalog growth comes as a function of signing new clients to our service. This is typically about a 180 day process from initial contact to catalog delivery and it begins with the foundations of how YouTube has established itself as a revenue stream for rights holders. We’ve given this relatively basic talk about 1,000 times at this point.

Once foundational knowledge is reached, we do our best to answer specific use cases that are unique to a particular client. More often than not, we have those answers, but pride ourselves on the willingness to explain that we aren’t sure when we don’t and are quick to research and return the needed information. Next hop, contract drafting. Our boiler plate contract has now survived 350+ of these engagements, with just about as many attorneys trying to ruin the deal (teasing). As of this writing, we have signed 365 music publishers, labels, and media companies.

The material points of our contract are:

20% commission MFN

1 year commitment that automatically renews

Finally, we take delivery of a client’s catalog.

This was a huge hurdle when we first started the business and we have gotten good at streamlining this process. We encourage folks to simply deliver (email/Dropbox/physical drive, courrier, etc.) any metadata they have and our team will do the rest. We’ll even come to your office and help you collect it.

We maximize the earning of a catalog by first organizing the data. We then search our available resources for all instances of the titles and set search parameters with automated software on the task until instructed to stop. Finally, we are extremely vigilant in maintaining the cleanliness and accuracy of the metadata that is being reported to the networks that are accountable. This is a constant process.

To date we’ve had only two clients move away from our service. One was a result of the operator selling their business and the other did a publishing deal that would have them managed by a competitor.

What went right

Keeping an open mind and a humble pie close by. Listening and learning from our mistakes when working with our clients, competitors, and platform partners. We hope to only get better at this.

Streamlining the operations side of the business. We are delivering incredible material value to our clients on the networks we service.

Finding new ways to collect more for our clients. Creativity in identifying those titles a client might own is critical to staying in front of the tidal wave of potential opportunities that exist.

Sharing more with people about how the systems actually work and how to get the most from them. As our knowledge grows, so does that of those paying attention to our ramblings.

Creating a tool that all will benefit from. Exploration Data stands to make an incredible impact.

Remaining private in public, as to whom we represent. Our clients appreciate this policy.

We are in the black and we are saving money. This makes life better.

What went wrong

Communication channels to verify title ownership have so much friction that the point of diminishing financial returns is extremely high. We look to the systems we’ve put in place and Exploration Data to help ease this.

Business development has much room to grow. Much effort is being devoted here.

We didn’t blog, produce videos, and speak nearly as often as we would have liked.

YouTube

YouTube is growing like crazy. They actually just published statistics for 2015. The figures really are mind blowing. Here’s the thing, it’s gonna get a whole lot bigger.

There is a significant portion of the world’s population, namely asia, africa, and latin america, that are coming online for the first time. Mark Zuckerberg often talks about the next 1 billion on FaceBook…who are the next billion people to use the network and how will they be reached. With the advent of the $40 Android smartphone, about 3 billion humans are about to have the full power of the internet on their person. Given that credit card penetration is relatively low in these regions, ad supported media networks will see incredible adoption. For rights holders, this will equal opportunity as these will be markets which have never been able to consume their media before, ultimately, adding to the bottom line.

Billions of new smartphones making their way into the pockets of the world’s population will also present challenges, as the signal to noise ratio will decrease. Expect there to be a lot more videos of folks like me laughing about the fluffiness of William’s tail (noise) compared to premium and quality content (signal). How does one find the good stuff in the midst of that? How does a label or a publisher identify that which they own such that they can be renumerated and attributed? Having software that can help this challenge is critical.

YouTube Red already has a reported 10,000,000+ subscribers and they are spending considerable resources on encouraging adoption. YouTube currently has over 1 billion users and a lot of those people will adopt the new service. It’s currently in Beta, so its power is yet to be seen, but Google has the data it needs to create a service that will compete with the likes of Spotify, Pandora, and the rest of the usual suspects.

SoundCloud

SoundCloud is becoming a serious force.

They have some very smart cats working together and are well healed. Traffic is way up and to the right and the content rights marbles are getting worked out on a daily basis.

The record label side of things is sorted for the most part. They still have a bit of road to travel for publishers but much effort is being devoted to the task.

SoundCloud has partnered with Music Reports for rights management and they have begun to spin up ad sales.

Money is beginning to flow in earnest.

We suggested it to be 12-24 months last year in this report and we believe that to remain true. We believe 2016 will be a banner year for SoundCloud.

Other Networks

We have officially come to agreements with Loudr, Music Reports, and Audible Magic. Collectively, they service over 60+ digital networks. We will be discussing this in a more detailed post in the not-so-distant future.

Consulting

We have been called on by several outfits to consult on a project basis on the challenges of understanding all of the pieces that are now moving. They have been relatively short (3-6 months) and are quite diverse. We’ve enjoyed these engagements immensely.

Goals for 2016

Grow our team of smart and dedicated staff

Continue to build layers of efficiency into our processes, Exploration Data, and our search software

Educate – educate – educate the industry

Continue to save at least 20% of company income

Remain open to suggestions on what we need to be doing to exceed the expectations of our clients.

Summary

2015 was an incredible learning experience and a reminder that we are doing the right things. We believe that we are squarely headed in the right direction.

Our attention is laser focused on organizing the data that will help our clients get the most from the networks we service and building technology to help all. We strive to be a significant contributor to our clients’ and partners’ balance sheet.

If you have anything to share or ask, please do not hesitate to reach out.

Stay close,

Rene and Aaron

PS – Exploration Data is currently in private beta as we work out all of the bugs and make it can support the demands of many users at once. Please be patient with us as we increase onboarding capability. Signup here to get an invite as soon as they become available – GHOST_URL/data

PPS – “Make today awesome! After all, you’re trading a day of your life for it.” ~ Cliff ‘Dad’ Davis