[Manic Monday] Licensing Music For Digital Services

Running a business that licenses something for digital services is not easy. First of all, the legal basis of a licensing business depends on the protection of intellectual property rights, which in reality depends on how serious the local government enforces it, especially due to the differences in regulations between countries, despite efforts of bodies like WIPO. Licensing is essentially a permissions-based business, which depends on control and trust, two things that are seemingly difficult on the internet.

Music a very complicated affair in terms of licensing for digital. In one song recording alone, there are two core rights contained within: the rights relating to the sound recording itself (the recording process, producers, artists, sound engineers, musicians, background singers, and so on), and the song composition itself (relating to the composer/songwriter). On the eve of digital music services, many recording companies had to go back and revise all their contracts with their artists, which initially only covered distribution through cassettes, CDs, and vinyls, to incude various digital formats that have or have not been created.

This process is not without its problems - the smart musicians and artists took this opportunity to renegotiate their contracts with the recording companies, making this process even longer. Even though this process had started at the major labels since 2002, one example is AC/DC, which only agreed digital distribution of their songs at the end of 2012.

Of course, these negotiations are easier done with artists and musicians who are still alive. In Indonesia alone, there is a large amount of Indonesian music that has gone missing with the passage of time, after passing their popularity phase, bad maintenance of the recording masters, the artist or the songwriter having passed away without any instructions to the heirs about their work, or even the non-existence of a contract.

Even if the contract papers are complete and clear and the heirs are found and can be contacted, this does not guarantee the transition of the content – represented by the contract – into digital will immediately commence. A business will always compare whether the effort to digitize the content is recoupable through its sales potential. In other words: "I've spent the time clearing up the papers, will the ringbacktone sell or not?" This line of thinking is not wrong, it's purely business: like it or not, a business must prioritise products that can bring the largest potential revenue. Of course, businesses should not stop there and must dare to invest into various future potentials, but the recorded music industry seems to have been in survival mode the past few years.

So if there is a question of "why is song X not available on service Y", there are so many factors! From the songwriter, artists and musicians, the recording companies, the digital services themselves - all have their own interests, not to mention if there is not yet an agreement between those parties. There is a multitude of layers of contracts and permissions that must be cleared before a song can be legally offered to the consumer, in the meantime the consumer can bypass all of this and search for the song they want on sites that host illegal content (I use 'illegal' here as these sites certainly distribute this content without any permission or renumeration to the rights holders). So perhaps, it is time to simplify the structure?

Ario is a co-founder of Ohd.io, an Indonesian music streaming service. He worked in the digital music industry in Indonesia from 2003 to 2010, and recently worked in the movie and TV industry in Vietnam. Keep up with him on Twitter at @barijoe or his blog at http://barijoe.wordpress.com.

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