Performing rights organizations (PROs) are entrusted with a difficult task: getting businesses to pay to use music, and distributing royalties fairly to songwriters, composers and music publishers.
27th October 2019
PROs haven’t yet tried to track every song played in the thousands of businesses that hold music licenses — restaurants, stores, gyms and more. Out of economic necessity, they have used various ways of estimating which songs businesses use as background music, and how often.
Audoo, a new startup based in London, hopes to revolutionize music royalty distribution by taking the guesswork out of this process.
“We want to make it completely accurate,” said Ryan Edwards, Audoo’s founder and CEO.
To play live or recorded music in public, most businesses have to purchase licenses from PROs like ASCAP, BMI or PRS for Music; or subscribe to a commercial music provider like Mood Media. PROs sometimes sue businesses who fail to comply with these copyright laws.
So far, it hasn’t been cost-effective for PROs to monitor every song played by their license-holding businesses when calculating royalty payments. Instead, they analyze smaller data sets, like surveys of radio playlists, to determine a songwriter’s share of the total revenue from licensing.
Audoo hopes its “audio meters” will enable PROs to track what businesses are playing, song-by-song, in the same way that they monitor radio stations.
“I would liken our technology to a meter service; like a water or gas meter that can measure your usage on a second-by-second basis,” Edwards said.
Audoo’s audio meters resemble small smart speakers, and are able to identify a recording by “listening” to snippets of music, like the Shazam app. After identifying a track, Audoo searches through a database to match the recording with the writers, rights-holders and owners of the song.
“It’s the database that drives everything, with organized records and metadata in a cloud environment,” Edwards said. “Rights organizations can take that data and make payments to the artists.”
Before founding Audoo, Edwards led digital initiatives at Visa Europe and was commercial director of Bink, a British fintech startup. His new venture was inspired by his original dream job: writing songs and playing drums in a rock band.
In 2008, Edwards’ former band, the Lines, appeared to be on the way to stardom with a debut single that reached No. 10 on the U.K. Indie-label Singles Chart. “Domino Effect” appeared on the chart alongside songs by Radiohead and Adele. Unfortunately, the Lines were dropped by their record label soon afterward.
Today, Edwards is amused to find “Domino Effect” still in rotation at shops and pubs in London. But he also has been frustrated to discover that these performances often go unnoticed and uncompensated by his PRO, even when the song is played in large corporate venues.
“Artists have no chance [of being paid fairly],” Edwards said. “No chance at all.”
Jay Dougherty, Director of the Entertainment & Media Law Institute at LMU Loyola Law School, said Audoo could encounter difficulties when trying to identify the songwriters, composers and publishers who are owed royalties from a public performance.
Musical recordings and compositions are considered two separate works for copyright purposes. This allows songwriters to receive royalties when other performers cover their songs.
“Audoo can pick up and identify the sound recording, but will it have access to who wrote and owns the song? That data is not widely available… and compiling that data is challenging,” Dougherty said. “You might burn through the money you would earn [from music licensing].”
In an email, Edwards said Audoo is using a database with music rights information provided by some of the world’s largest record labels. And he’s confident that Audoo’s technology will be a worthwhile investment for PROs.
“The PROs we have spent time with... are very driven to innovate and capture as much data as possible,” Edwards said. “They have an obsession with fairness, and the ability to pay out at a granular level.”
Edwards said Audoo will begin distributing its audio meters to businesses in 2020, in partnership with major PROs. The company recently completed the first £600,000 of its £1.2 million seed funding round.
Audoo will prepare for its global roll-out as a member of Abbey Road Red, a music technology incubator managed by Abbey Road Studios and Universal Music Group. The six-month program will help Audoo to refine its long term strategy and find its niche within the music industry ecosystem.
Audoo has brought several music industry veterans onto its advisory board, including Nigel Elderton, chairman of PRS for Music; Chris Herbert, the original manager for the Spice Girls; and Rick Riccobono, a music industry consultant and former Vice President of BMI Western Region and Australia.
“We want to streamline administrative process so musicians are getting paid as much as we can pay them,” Riccobono said. “This is a real tool to bring more money to creators.”