Emiliano Gambula - Before the Deal: What Artists Should Know About Music Ownership

coer of spiral right management platform music creators developed with mood global service uh in so talk before the deal what artists should know about music ownership the talk expose how musician often lose control and income due to misunderstanding about rights and meta data this is quite an interesting one this is yourso allow me to share very quickly. Okay, this we can switch off. Thank you for the introduction first of all and thanks for the uh to the Napolet team for putting this event together. It's looking amazing. And uh I'm going to keep it in English because I know I see some familiar faces that I know that they don't speak Italian.

And any how many of you actually speak English and not Italian?

I I'll please you to to continue in English this talk.

Cool. Um, hi everyone. I'm Emiliano and uh I work as a label manager in Amsterdam and I'm also building uh a web free platform. Thank you. Uh to help artist especially independent artists to protect their rights and collect metadata in a way that is uh uh complete basically.

And uh my talk today is called before the deal what artists should know about music ownership. And my intention was uh indeed to be a bit provocative because uh I don't know how many of you actually today are artists. Maybe you're more techunate, tech professionals and work uh uh within the web three space. Um but the intention behind the title is to uh make you change perspective for this upcoming 20 minutes and uh make you think about what is important for artist to for music music artists to uh um to protect themsel and to generate a sustainable and to create a sustainable career in music. And of course uh what I'm going to do I'm going to uh give you an introduction of um I'm going to start before the deal.

So I'm going to have a look at copyright the concept of rock copyright in music and then uh I'm going to explain how today copyright is exploited to generate income in the form in the form of royalties and then after that I'm going to look at the current web three um in music the web three applications in music and the challenges and the opportunities that there are in there. So we can start. Where do I need to point uh to point this? There we go. Okay.

So as I said I want to start from before the deal. So what happens before the deal? Um well uh before the deal an artist create a song and that's the starting point of everything. And uh in the moment I don't know if many of you are familiar with the concept of copyright but uh the moment of creation is exactly the moment when uh you are entitled to your copyright. So you don't need to um register the cop copyright anywhere.

You don't need to prove it to anyone. Um you are entitled automatically to copyright and copyright specifically gives you five main rights which are the rights that to copy to modify to sell to perform and to publicly display uh the song. So this is the start of everything and uh thanks to uh these are the uh rights that you can exploit in the digital space uh to collect royalty. So the the income in the digital space it's called royalty and there are two main form of um royalty when we come to uh the music space. Um we can see we can distinguish mainly the master right and the publishing right which here is indicated as copyright but the master right is strictly connected to the copyright as well and this money uh generate uh it's basically two sides of the same coin but the type of royalty that you generate can be different.

It's master royalties on the master uh rights side and performance and mechanical royalties on the copyright or publishing side. uh but being the same uh the two sides of the same metal of the of the same coin. This is this is the money that you as an artist can collect um with your with your with the exploitation of your work of your copyright. Um so how this work? Uh in the current landscape uh every um on on a global level the the there is a CMO in every uh country.

Every country has a their own CMO which is a collecting societies society which is an entity that is nonprofit and is um determined by law and works uh on um upon mandates. So you as an artist you should uh register with a collecting society to collect uh part of your revenues and this is specifically if if we go back to the previous slide this is specifically referring to the copyright side whereas uh on the master side um you collect the money on the master side way easily what I mean what I mean by that so imagine you're an artist

you can you can very easily today get your music out there on digital service provider service service providers like Spotify like qualify has got BSPs and uh and there are many there are many solutions there and intermedi and the moment and the moment you automatically going to make it money to you to you on the copyright side here in Italy so you need to be familiar with uh first of all first of fact that you need register society ethics society and this brings us to uh which is the collective society that we have in the Netherlands I live in I don't know if I mentioned that um and they what do they do exactly they monitor how your song is uh used and how the copyright and the publishing side is used uh online and they negotiate uh online and also offline because actually they are also the entities is that talk with shops, with uh clubs, with to um to understand that what music is played there because you need to understand that every time the music that you listen to music in a public space, the music is made available to you in a public space. So there is someone that is getting paid in the at the moment. But as you can imagine, it's really difficult to trace back uh and to monitor this. So that's the role uh played by collecting societies. They do this uh they license they give out give out licenses and they collect and distribute royalties.

So basically they place as the official authority here. Um now uh every country has a different collecting societies and most importantly they have a different legislation. So rules of copyright are really different in every European country. And of course there are some treaties that uh try to regulate how copyright is handled uh internationally and eur within Europe. We also have um uh directives and u um that try to harmonize uh the copyright legislation within all the uh EU countries.

Um what's important to know is that in all this process the role of metadata is crucial. When we think of metadata we think of course of the artist title. So the main artist the uh the artist um the main artist that made the song the song title but also the feature artist. And there is um an ongoing process in the music industry to try to bring more transparency on this. And you can already see on Spotify for example, you can consult uh you can open the credits and you can see who wrote the song exactly who are all the people involved and you can and you start seeing more and more even the engineers and the lyricist and who is the publisher.

So all the roles that before were not accessible. So you start understanding okay who's behind the song who contributed to create this song. But when it comes to metadata and uh we go back to talking about music ownership, the identifiers are the main metadata that we that works behind the scenes. Identifiers are codes and specifically uh we are talking about two codes here. The ISRC which is international standard recording code and the ISWC which is the international standard standard work code.

These codes are used in the back end. uh they were they were created to try to standardize the um monitoring of of the of the copyright and the use of of the songs online on the digital digital space and what is the difference between the two. So the first one was introduced and to identify sound recording. When we talk about sound recording, we're talking about the left side here. So the master of the song.

I don't know how many of you are familiar with the with the music terms, but uh in easy in easy words you can think of um the recorded version. So if I compose a song, I am in my room or in the studio and I write a song. In that moment I'm composing a song. So I'm creating um the copyright uh composition which is on the right side and then I go to the mic I record a song and at the moment I capture the performance and that's the master right side. So you can both of them can generate money but the reason why they're differentiated is that um you can you could associate multiple sound recording so ISRC's to the same composition.

What I mean by that um it's very easy think of imagine that any of you makes a cover of a track you make multiple covers and you record it but the the song is the same. So the original composition is the same, but every recording that you guys do is a different track. It's a different sound recording. And why why am I talking about this? Well, these were initially introduced to try to standardize the recognition of of the music and allow collecting societies to um correctly attribute and distribute the money that they that they collect.

So um collecting societies they talk to Spotify they talk to Apple Music uh that's where the money is generated by subscriptions and uh ads uh mainly and they collect the the money but they also need to know who to distribute this money to and that's uh where this inter comes into play and but there is a big problem here to understand which is that these codes are issued by different entities and at different moments ments of the chain. In the example that we did before, if I'm an artist and I'm putting music on Spotify, then that's the moment that my ISC code get assigned. But if I don't uh register with a collecting societies like like CI or Bumra, I never going to get the ISC WCS iswc code. So you see already there is a difficulty in matching those codes and if you don't have that match that they don't know who to give the money to. So this eventually results in a uh a huge problem which is known as the black box.

The black box is a term that um in a music is is um is is used to refer to a pool of money that doesn't get distributed just because nobody knows who needs to get receive the money. And so the remaining claim and this is just because there's insufficient understanding so a lack of knowledge from the artist. they don't know that they need to register with these societies and also an inconsistent uh application of guidelines. So there is difficulties in understanding what is a good practice and what are the implication of a bad practice. So not getting your music registered correctly.

Now uh I want to show quickly how the royalty flow this is what I was just talking about. Uh let's just look at the right side for for easiness. A DSP is Spotify and you can see that Spotify pays the music distributor which is the platform that you as an artist can easily use. There are many out there to get your music on Spotify and if there is a record label involved so if in a second moment you enter a record deal so you negotiate away some of your rights that's also where the record label comes into play and that's how the the artist receive the uh master royalties. But you can see you can clearly see here that if you don't register with a collect collective society then you start missing uh royalties on the other side.

So this uh I hope explains a bit more and makes it easy to understand uh that the uh how the artist can miss out on uh financial uh income. Now we are in a web 3 conference. So of course I wanted to talk about how music ownership relates to web 3. And I want to start from the 2021 boom of NFDs because in music that was the very first application of web 3. Uh and uh I don't know how many of you are aware of this but during 2021 there was a huge boom thanks to NFTs.

Um and that was actually a really good time for that because uh it was just right after COVID. So artists were really struggling and they had to stop touring and that represents a quite a good part of the income of an artist. if you don't look at the digital space and um they needed to come out with different uh alternatives and that's how blockchain first entered the the music space and this led to a prol proliferation I'm not sure that's the term in English actually but the the um many uh companies uh started launching their products and the market was really high but then eventually dropped down. So why is that? Because there was a collect collector mentality.

So NFTs first of all we are not talking about music rights here. Uh part partially actually because it's connected also with my colleague was talking just before the fragmentation of uh of uh um royalties for u digital arts. But um what I want to the reason why I'm mentioning this is that the main takeaway from this phase was that um we need to shift because this this was a collection collectible uh we were talking about collectible uh colle collection items and uh that interest quickly fade away. I I got a sign that I need to move a bit faster. So um what I want to the reason why I'm saying this is that there is definitely an opportunity in music uh with uh web 3 uh which is uh in my opinion to create some independent e ecosystems where artists can detain their rights their data and their and facilitate the collection of earnings.

Uh this thanks to proof of ownership and control of course. uh but the implication and the the big learner that we got from the 20 2021 uh boom is that uh we need to first of all filter because there is a migration process from web two to web 3. So uh we need to really understand that clean metadata is the foundation of everything. So in the in the transitioning from web two to web three we need to uh solve a huge problem that is there right now which is incorrect uh databases um data sets incomplete data sets u and we need to also keep in mind that um there are a multitude of stakeholders that uh are there and that they that they have an interest and that they are maybe not that interested in transparency uh which of course is one of the big uh opport opportunities with the web three uh but might be not in the interest of stakeholders that play with NDAs for example the use non-disclosure agreements uh so the focus should be rather uh than transparency interoper interoper operability uh which means systems that can work together where you leave control to each stakeholder so you let them um take retain control on their data But at the same time you make those data more accessible to every stakeholder in the ind industry. So you create you create more transparent processes and you you facilitate the reconciliation of missing data and the payout to the artists.

So the next steps of course web 3 adoption will be gradual and uh it's going to take time but I think the f the function the focus here is going to be to uh to preserve the and to help artists create a sustainable careers is to build tools that can uh that have specific functionalities and that keep in mind their need when it comes to music ownership. So the final the vision here is to be the future where artists are empowered and their rights are respected and technology helps them to achieve a su sustainable success. Thank you.

Thank you. Thank you. Thank you very mucho.