Streaming Platforms – How SoundCloud Monetization Works – SESAC Bought HFA

Left a good job in the city,
Working for The Man every night and day,
And I never lost one minute of sleeping,
Worrying ’bout the way things might have been.

Creedence Clearwater Revival – Proud Mary

What should I consider when my artist wants to live stream?

This question is being delivered straight from the mail bag. Thank you, Rene Merideth, for the insight!

I have an artist looking to stream live performances – I understand no syncs/permissions are required for live stream when performing cover material, whether or not there is a charge for the stream or free, this is correct, yes? And if taped for later stream or sale, there is still no mechanism for efficient licensing other than reaching out to individual publishers and negotiating a quote, is that correct?

And then about streaming–the short answer is that it’s complicated LOL You are accurate in breaking it down as Live and taped. That is the best way to look at it.
In terms of live streaming, YouTube is currently the only platform that has mechanisms in place to find and possibly “claim” live streams on behalf of any of the publishers they represent. Ustream and some others do not have these capabilities yet that I’m aware of. This doesn’t mean that you shouldn’t use a YouTube channel as your streaming platform. It all depends on the song being used. When the claim is made on a live stream at YouTube, it’s treated the same way as a video, if a claim by a composition is made, then the protocol in place for the composition will still be in effect. So if it’s set to monetize, then you will see ads appear on the stream–usually in the form of the overlays at the bottom of the stream that a viewer can close. Yes there is a possibility it could be set to block, but that is actually VERY rare. I cannot even think of a composition that has a block policy. Still at that, there is no charge to the channel owner/live streamer for a license.
When you tape and then upload the video later, the process is basically the same when it comes to YouTube. A composition match to the video will likely be made and ads will appear, but that’s it. There is the same very slight chance of a block policy–but again not very likely. On other video upload platforms you run the risk of DCMA takedowns from publishers. So it then becomes a guessing game of which publisher is very strict and is out there searching and which publishers are pretty lax about it. Your biggest concern should be if the video goes viral on those platforms because the publishers have no way to make a claim, if they are monetized in any way then you could face wrath.
Bottom line, if you are NOT monetizing the stream or video yourself, I’d use YouTube. If you are going to monetize it in any way–get a license from the publisher. A YouTube claim by a composition can be released if you have a license in place already.

SoundCloud Monetization

Monetizing SoundCloud has been on the minds of many (Labels and Publishers) for some time, and while the switch is turned on, there are a few caveats.

Label deals are the priority – Labels, especially those that are realizing higher play counts, are being given priority, for obvious reasons ($$$ – to both the rights holder and SoundCloud. I’d like to think that this is part due to the fact that sound recordings are soooo much easier to identify at scale – think Shazam or ContentID and the rights are typically World Wide. Compositions, on the other hand, must be connected or associated with a sound recording in order for them to be identified with software. Using a top down (big money first) approach, its simply easier to sign a label and then allow software to make matches, instead of signing a publisher and having a human make matches. There is also the technology side of things. SOundCloud is using Audible Magic for audio fingerprinting. They have no system in place to allow a publisher (and its managing human(s)) to make manual claims, a la YouTube.
Publishers are at the mercy of the Labels, wherein their songs are being performed – Publishers are currently only able to monetize titles where:
1. The label that controls the artist that is performing the song has a deal in place
2. The publisher controls 100% of the publishing being performed
Advertising dollars are relatively low – When Google bought YouTube and then began to monetize, they pushed ads to the video portal that had been sold via the world’s most sophisticated ad sales platform and team – Google.com, showed the ROI (return on investment) to advertisers, and then started selling ads specifically for YouTube. SoundCloud does have some very smart people assigned to the task, but they don’t have a sales force of several thousand, yet. For what it is worth, I believe SoundCloud to be a very good buy right now. (Full disclosure – I am an owner in a business that makes money indirectly via ad dollars spent on SoundCloud)
Traffic is relatively low – The number of people visiting and listening to SoundCloud is, by my best guestimate (check out a title on YouTube and then look at the same title on SoundCloud), about 20-30 times less than YouTube. With that in mind, there are fewer ads being served and less dollars flowing, than the ‘Tube.

Capsule Summary: SoundCloud is an extremely fast growing platform that artists/labels and composers/publishers should consider to proliferate their craft. The revenue to be realized on the platform is contingent upon multiple parties achieving their mutual goals.

SESAC Bought Harry Fox Agency

Oh, right. SESAC bought HFA. That’s a big deal…

New York Times – http://www.nytimes.com/2015/07/07/business/media/music-publishing-deal-driven-by-shift-from-sales-to-streaming.html
Billboard – https://www.billboard.com/articles/news/6620210/sesac-buys-the-harry-fox-agency

The implications of this deal are far reaching and extremely complex.

Why shouldn’t publishers just go direct?
Do blanket deals negotiated with HFA to service providers remain intact?
Does the NMPA have the same bargaining power for all publishers, given its ties to SESAC, which may be out of alignment with BMI and ASCAP?
How do ASCAP and BMI (public nonprofits) compete with SESAC (private for profit), that has proven to secure higher rates for its writers, now that they can also provide mechanical licensing?
Will ASCAP and BMI now enter the mechanical licensing game?
Do SESAC or its financiers have the tools in personnel and technology to right the sinking metadata ship?
How much fuel does this give GRM and Kobalt?
Is consolidation of this degree good those that need it most – writers?
How does HFA provide a return on investment at a purchase price of $35 million?

FaceBook Video

The social networking giant seems to firing up the beast. If I were a betting man, I’d put my money on the fact that FaceBook will soon be a viable resource to distribute one’s material.

Recent published articles regarding their revenue split (45/55 … sound familiar?) and copyright management tools seem to say opportunity is nigh.

http://www.theverge.com/2015/7/1/8842025/facebook-music-rumors-video-platform
http://variety.com/2015/digital/news/facebook-video-ad-revenue-partners-1201532366/
http://www.businessinsider.com/facebook-video-challenges-2015-7

Postulating on all of this makes my head spin! Do you have thoughts? Share in the comments or drop us a line.

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