By George Howard
(follow George on Twitter)

Imagine a scenario in which the moment you create a piece of music it is: digitally fingerprinted and registered (with the Library of Congress, and your PRO). Imagine then that when that music is used in a TV show, this usage is immediately detected, and the public performance fee you are owed is immediately transferred to your bank account.

Sound too good to be true? Well, the reality is that the technology for just such a scenario described above exists.  Additionally, we clearly have motivated buyers and sellers to make this happen.

However, instead of moving toward a system like the one described above — a system of transparency and accuracy — we continue to bumble through a system that really hasn’t changed in the last 100 years or so.

If we’re to have any optimism towards the business of music continuing to grow — in an era when music creators have seen their revenue from sales go from roughly $7 per sale for a full album, to fractions of pennies for a stream of the same album — we MUST push for innovation in the measuring, collecting, and paying of music usage.

I recently met, Scott Schreer, the founder of a company called TuneSat.  In talking with him, my optimism that we may indeed be tilting toward not only a healthy music business, but one where songwriters can flourish, has been greatly enhanced.

This is not an ad for TuneSat. I’ve not used the service, and while, based on my limited exposure to him, Mr. Schreer certainly is a very smart and passionate individual, I simply don’t know enough about him or his company to recommend or not recommend it.  I do, however, feel strongly that it’s worth your time to check out and make your decision.

Rather, TuneSat represents a tangible example of how technology might alter the economic fortunes for composers, artists, and publishers alike (anyone that has an interest in a royalty stream).

Music used in TV, at last count, accounts for $800 million of the $2 billion distributed to composers annually by the PROs in the US.  Additionally, music used in TV represents something akin to what radio used to represent for artists: exposure that can lead to sales/streams of their work, ticket/merch sales, etc…

No one can deny that the goal of many musicians is to have their music used on TV.  However, the vast majority of musicians are woefully under-informed about how the process works.

It’s not their fault.  As stated above, it’s an old and outmoded system; one that pretty much defines byzantine.

For instance, question one: how much do you get paid when your song is played on TV? Impossible to answer.  The variables are many: is it a theme song, what time of day was it aired, are there vocals on the track, is there anything else surrounding it (people talking, etc…), is it background instrumental music.  Beyond these, one massive distinction is whether or not the song is what’s called a “featured registration” or a “non-featured registration.”  A featured registration is essentially a song that has a band or artist associated with the track (i.e. a song that was released on a CD, available from iTunes).  A non-featured registration is a work that was written specifically for the TV show or ad.  This distinction becomes very important when you realize that a featured registration earns the writer six to ten times what a non-featured registration earns when it’s broadcast.

These and other weighing factors make a huge difference to the bottom line of the rights’ holders whose music is used on TV.

However, there’s yet another problem. Mr. Schreer informs me that as much as 80% of all music that’s on TV is misreported.  This means that music is being broadcast on TV, and the author (or copyright holder) is not getting paid the correct amount (if anything).  Typically, this misreporting occurs as a result of human error in conjunction with the byzantine classifications used by the PROs in order to calculate weightings (and thus payments).

TuneSat’s goal is to use fingerprinting in order to reduce this number.  Even a fractional reduction when you’re dealing with $800 million represents tremendous value for artists.

I hope that they pull it off.

As we can see all around us (from the financial world to the Arab Spring) institutions that eschew transparency are crumbling.  Technology is making it increasingly difficult to obfuscate the flow of information.  As we increase transparency, we reduce transaction costs, and thus increase profitability for artists.

This is truly our best hope. As the barriers of entry for broadcasters come down, and an increasing amount of music is streamed, rights holders have an opportunity to make up in volume what they are losing in margin, but only if we increase accuracy in collection, reporting, and payment.

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George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is an Associate Professor of Music Business/Management at Berklee.  He is most easily found on Twitter at: twitter.com/gah650

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