“The job will never be finished”: diving into music rights data and royalty systems with Phil Barry from Blokur

Phil Barry interview Julie Knibbe

I recently published a piece about music rights data and the challenges of delivering timely royalty payments to artists on Cherie Hu’s Water & Music publication. I wanted to share a bit of the background research I conducted to write this piece. Here’s an exclusive interview I did with Phil Barry, Founder at Blokur. We discussed how his company addresses one of the toughest issues of the publishing industry regarding royalty payments: data management. If you’re not familiar with these music copyright data issues, I advise that you read the Water & Music piece first for an introduction to these wonders 🙂

Before founding Blokur, Phil produced and co-wrote music for artists signed to BMG, Universal, Warner and EMI; performed in front of millions; founded an indie label and led the development of several innovative music business models and experiences for Radiohead singer Thom Yorke; as well as pioneered the implementation of blockchain and smart contracts for creative rights and royalties with the grammy-winning artist Imogen Heap.

Julie Knibbe from Music Tomorrow: Can you tell us what Blokur is about? 

Phil Barry from Blokur: In a nutshell, we work on improving music rights data. From the publishing perspective, we work on the data that goes into royalty systems and make it as accurate as possible, so that people who are making decisions about who to pay can make sure that they’re paying the right person. We make it as complete as possible and reduce gaps or errors as much as we can. Then, on the way out, we make sure that the correct money has been paid to the right holders so that there’s no usage that has failed to be detected by other parts of the system. 

If you are a music user, like a TV company or a film company or something like that, you can use Blokur to identify who owns the song, so that you can go and get your license and send a license request for them. We also help bigger music users like digital platforms to perform their responsibilities efficiently and cheaply to get people paid when the music is used on their platform. 

JK: Feeding accurate metadata about works and recordings to royalty systems is critical to get paid. Unique identifiers like ISWCs (International Standard Musical Work Code) are supposed to help reconcile what gets in. On your blog, you mention that “only about 30% of the songs in publisher databases have an ISWC.” How do you explain this?

PB: What that means is that even though these identifiers are meant to be unique, they’re not. You might have lots of ISWCs that are by mistake assigned to more than one work. It should theoretically not be possible, but it does happen. 

At Blokur, we don’t use the [ISWC] identifier as the definitive answer. It’s just one piece of metadata that might help you to identify the song, along with other pieces of information like the title, alternative titles, songwriters and their alternative names, publishers’ internal IDs, etc. We build a web of relationships surrounding the song, and we use all of that context to identify what is a unique song, or what is a match. In the end, I’m not sure that the idea of a single true definitive identifier practically could exist.

JK: How do you define data authorities? For example, if you receive conflicting information about the same work, how do you decide who has the final say? 

PB: We use a hierarchy of data authority. It basically means that the closer you are to the information you describe, the more weight you will get. So if you are talking about yourself, you would have the highest score. If you were talking about somebody else, you would have a lower score. 

Most problems are not deliberate. They are due to the difficulty of record-keeping, keeping things up to date. If you can automatically resolve data management issues, you solve most of the problems. Real genuine copyright disputes – in a legal sense – don’t happen so often. 

JK: Do you have an idea of how often real disputes happen?

PB: I don’t have actual statistics, but let’s say I’ve never seen one. It’s always a data management problem. 

JK: How do you work with publishers to resolve these data management issues? 

PB: Before Blokur, lots of companies didn’t have a conflict resolution mechanism at all. Some do, but they use email or the phone to reach out to CMOS. It’s very slow. The idea is that Blokur is more efficient even when publishers have to get involved and do the conflict resolution work. Our system updates many places in one go, so you don’t have to go repeatedly, check your data in this or that country, and update everything. 

JK: I bet that before using such conflict resolution tools, most publishers were not even aware of most conflicts. 

PB: Exactly. 

JK: Given your relationship with publishers, what insights are the most critical for them that you can provide? 

PB: On the copyright side, we combine usage with conflict information to say: here is a really valuable song with a problem. This piece of music has a billion views, and you didn’t get paid for it, because somebody failed to match the usage to your composition. So, there’s money missing for you to claim. Once you have such data, there are all kinds of interesting things you can learn. Maybe the titles are not right, or the writer is not linked properly. We are able to do it because we have the data from so many different sources. If you register with one name and someone else with another, then you both know both names. Everyone gets the benefit of this application. 

JK: You’re working on resolving conflicts about copyrights. We’ve seen that most problems stem from data management issues, so much so that you can automate resolution. So what’s a good level of accuracy? What do you think is the best you could achieve? 

PB: Good question. If everything was perfect and we perfectly did our job, there would be no conflicts left… but this will never happen because the data is not static. Even if it were true today, it would change in the future. The job will never be finished. We measure things like, for all of the songs in digital charts, for example, for how many do we have complete information? How many of them are conflicting? We want those things to be as high as possible. We start and focus on those because they are the songs that are earning the most money overall. 

JK: You’re already tracking digital charts to estimate consumption and value to focus your efforts. Do you plan to take it a step further? 

PB: Yes, for example, we work on TikTok. We look at the music that’s used on TikTok, how many videos are created for each song, and report that back. So it’s not just based on charts, but on what is actually the usage of this song? We calculate the market share based on the number of videos created for each track (or total streams if you would like to go one step deeper) and the publisher’s share in each of the underlying songs.

We also work on other use cases like YouTube. We can help where there weren’t successful matches by the standard process with content ID. We were able to identify usage of music on YouTube that wasn’t identified before. In the end, we want to do more of that because the more details we have, the more valuable it is to publishers.

JK: Can you share more about your roadmap? What are your next steps? 

PB: Blokur has until now been focused on a key foundational building block, which is the right database. The more complete the database is for our publishers, the more coverage we have of all of the errors and problems, the more valuable it is to them. The core has been about scaling all of that up. Music copyright data is complicated in unexpected ways in terms of maintaining the publishing chain along with lists of contracts.

We’re now more focused on issues relating to usage, like what I mentioned about TikTok and Youtube. We are building that up in terms of scalability and user experience to be more efficient. 

JK: The industry overall has been fantasizing about getting a centralized source of truth about rights data. I think people now have accepted that such data will never be perfect. However, which changes do you wish to see in terms of royalties and data? 

PB: In reality, I think it’s better if we aim towards an ecosystem where data can be shared efficiently, so that it is possible to take the best bits from the best places and combine it together. The value is not really in the raw data itself. It’s in the way that it’s matched and the insights you gain from it. If we open the borders between the different organizations, tell them what the data is and allow us to compare… It will be a big step

One other point is, I don’t think immediate payments is necessarily the goal to aim for. If you could get paid the same month, that would be already fantastic. That’s what most people in the world manage with their jobs. From the musician’s point of view, they don’t want to be spending their time thinking about money. What they want is to have the predictability of the money coming every month or every two weeks. That solves the problem for them, instead of getting paid one year a lot, then nothing the next year.

That’s the difficulty in my own experience as a musician. Sometimes I would open a royalty statement, and I would be like, “wow, I never knew I was going to get paid this much for this”. And then the next time it would say zero, and I’d be like, “what does it really mean?”. It’s this kind of unpredictability. That’s partly because you’re getting paid in these long time periods. Recently I’ve been paid money from something from 2010! Music publishers might even pay you once a year now, so once every month will be a lot better. 

There is competition for music publishers to offer better service, but I don’t think they have to pay you the same day for it to make an impact. You know, you’re a product person. Overall, it’s about the value for the customer, not the feature. The value is being able to predict when I’m going to pay the rent, whether I’m going to be able to get a mortgage, whether I’m going to be able to do those things, not the feature of being paid every day. 

JK: Before wrapping up, I wanted to talk about recording data. Do you think that recording and publishing data should be coming to one place?

The digital world and streaming in particular made it essential for publishers to know about the recordings of their songs. It’s such a lot of volume, and it’s all about tracking all these different recordings. A big part of the work is about matching between the composition and the recording. However, it doesn’t mean that if you’re doing lots of matching, that you’ll end up solving all the problems. 

Blokus is a publishing data platform. There are millions and millions of recordings in the database that are linked to the works. It’s linked to the work, rather than separately as a recording. So the data actually is coming to be in one place. I think that the data has to be in one place for it to be efficient. I don’t necessarily think that means that there will be one database for both parts of the industry, but at least publishing needs to have recording data alongside it. No doubt about that. 

We have had recently more inquiries from companies to have both sides, because they want to have a clear idea of what they could control independently. That gives more freedom in terms of licensing for novel applications of music. If you could say, I’ve got a million pieces of music in my database, but there’s a hundred thousand I control myself entirely (recordings and composition), and that’s enough for me to get started with some initiative. So, yeah, let see what happens! 

Music Rights and NFTs: What should we (realistically) expect?

For the purposes of this article, we will assume that you already have a basic understanding of what NFTs are. If not, we recommend you check out Verge’s NFTs, explained first, and come back to this article once you’re familiar with the basics. 

Since artists like 3LAU, Grimes, and Deadmau5 auctioned off digital music, merchandise, tickets, and experiences worth millions of dollars, NFTs — the digital tokens authenticated using blockchain technology — have become the single hottest topic in the music business. 

Deadmau5/Mad Dog Jones' NFT
Check out Deadmau5 and Mad Dog Jones’ NFT collectible on Niftygateway

Right now, most buyers are crypto-savvy investors, and most NFT offerings can be described as simple digital collectibles. However, there’s an undeniable potential for NFTs in music to become so, so much more. It’s easy to imagine that as the market matures, more music-first audiences will enter the space — and if the NFT offers turn from digital memorabilia into real financial assets supported by music copyrights, we might be looking at a radically new way for artists to fund their careers and establish the value of their art. This NFT-powered future seems like a breath of fresh air for a lot of people in the post-streaming, post-COVID industry — but is it at all realistic? Let’s find out. 

So, what is the actual promise of NFTs (and blockchain in general) when it comes to the music business? Outside of making stacks on stacks on stacks (just kidding, don’t expect that), NFT technology enables artists to easily and quickly transfer ownership of an asset — whether it’s a piece of digital art or your entire publishing catalogue. In theory, NFT can make every single music copyright instantly tradable and transferable.

The potential benefits of the wide adoption of NFTs in the music business are numerous — to name just a few:

  • Increasing licensing efficiency: making licensing easier, facilitating the exchange of music rights and creating a public record of ownership that can be used to resolve overlapping royalty claims.
  • New forms of investment: opening the music rights market to the general public. With the help of NFTs, artists can allow their fans to invest in their copyrights directly. There’s a good reason labels and publishers are a part of the artist’s careers — and the point is not to bypass them completely, but to enable other sources of investments.
  • New ways to monetize music: Most NFTs marketplaces automatically pay out royalties to the creators whenever the NFTs are bought and sold. Hence, artists can earn a bit of royalty every time their digital art piece is flipped.

However, in the real world the complexities of music licensing and royalty processing mean that this dream of an “open market for music rights” can’t come true — at least not just yet.

In most cases, music rights are not readily transferable

Imagine you want to put your copyrights on this open, NFT-powered market. Well, first you’ll need to make sure you actually own them. In most cases, artists transfer parts of their music rights to their partners across the industry — to labels, publishers, producers, songwriters, and so on. To establish another, NFT-powered contract transferring those rights, artists would have to acquire permission from all of the parties who already own a piece of the pie. They will need permission from their label or publisher, with an agreement in place to determine how those royalties are collected and paid. 

Right now, most distributors and labels are simply not equipped to deal with that — nor are the publishers or collecting societies. That is why thus far NFT sales have only involved newly produced music, owned solely by the artists. An NFT auction for the previous catalog, where rights are already divvied up between several parties, is simply not possible, at least yet. 

The NFT marketplaces are still underdeveloped 

Besides, it’s not only the music industry. The NFT platforms are not ready either. Right now, there is no authentication to verify that the creator of a token actually is the owner of the underlying copyright — technically speaking, nothing prevents me from trying to sell a token for the entire Drake’s catalogue, even though I don’t own any of it. 

Then, to make things even more problematic, while the blockchain database under the hood of NFTs is permanent, any content attached to the NFT has to be hosted on an ordinary website — which means that if anything were to happen to it, the NFT would become completely worthless. I mean, blockchain would still confirm that you own the NFT, but what’s the point if the NFT itself is attached to a 404 page? And that is not such an unlikely scenario: according to the CheckMyNFT project, some of the most valuable music NFTs were failing to load consistently just a few days after they were auctioned off.

NFTs owners have to collect royalties by themselves

Here’s how the royalty dividends for the NFT-mediated investor would work today. The day after an NFT purchase, the newly-born copyright holder will have to contact a relevant collection society or a distributor. To recognize them as the rightful owner, the middlemen will require proof of ownership, i.e. an IP agreement with the autor(s) of the composition re-assigning appropriate copyrights.

Here’s how Canadian electronic music producer Jacques Greene who has auctioned the publishing rights to a new single via an NFT, describes the process of transferring the rights: LuckyMe holds the master, I still hold the artist/performer side, and now, Trevor McFedries owns the publishing. In the document that was transferred to him at the end of the auction, I retained permission rights, so the song can’t be used in a Raytheon or US military commercial tomorrow. It is up to the token holder to register as a publisher, and it’s not my job to chase down whoever owns this token. Once they’re registered, then they can get residuals on streams, and if it gets synced or used on a TV show or something like that, they will get the publishing cut.”

Okay, so I was emailed this PDF stating that I own some of the publishing copyright — but what can I do with it? How do I find the right collection society? Would I need to register my own publishing company to get paid? Be sure that those thoughts would be racing through the head of any music NFT investor.

The point is, NFT buyers have to understand how music licensing works and what they need to do to get set up and start collecting royalties. This creates a massive entry barrier for any potential music fan turned micro-investor. First, they will need to figure out the ins and outs of crypto-trading with its gas fees, minting, cold/warm/hot storage, and all that. Then, they’ll need to figure out how the music copyrights actually work.

The structure of the music rights, especially on the publishing side, can be confusing even for the seasoned music pros, let alone an average music fan. To make the system work, someone will have to educate the potential buyers on the intricacies of music licensing, or set up a separate process to validate NFT-mediated copyrights. So, for the foreseeable future collecting the actual royalties following an NFT purchase won’t be easily accessible to fans — as this Twitter thread clearly shows, the process of buying music copyright NFTs is anything but solid and tractionless.

A possible way forward can already be found in companies like Bluebox, aiming to make music rights accessible to fans by building a complete royalty chain from licensing to royalty allocation on top of an NFT marketplace. However, such an approach might also limit the NFT’s liquidity by restricting the market to a single platform, which can undermine the final value of the tokens themselves. 

At the end of the day, NFTs are just a tool — a tool that helps people transfer ownership of an asset and determine ownership agreements between different parties. The barriers that a potential token buyer will face when it comes to purchasing master or publishing rights are the same as any industry player would’ve faced. The challenges of NFT-powered copyright exchange are not about the underlying technology — instead, they are about how the systems of music rights management and royalty collection/distribution are set up across the board. 

Want to learn more? Check out Vanessa Magos’ live audio interview later today on NFTs, artist management and new tech for indie artists on Water & Music.

Written by Julie Knibbe, edited by Dmitry Pastukhov