The difficulties both new and established music startups have licensing music was a dominant theme at Billboard FutureSound last week in both panels and keynotes. The only people not obsessed with problems licensing music were those that had established services that don't require such licensing including four of the five music startups featured in FutureSound's Visionary Showcase.
Billboard FutureSound took place November 17 and 18 in San Francisco and involved a wide range of digital music companies and music startups. Coverage at Billboard.biz reveals that music licensing was discussed even on many panels that were ostensibly on other topics.
As featured in the panel "Lowering the Barriers to Music Licensing", a large part of the difficulty of licensing music has been the complicated array of participants whose practices have not yet adjusted to a world beyond physical products. Panelists suggested a number of solutions or workarounds:
Music Reports Vice President Les Watkins pointed to the trend towards direct licensing to bypass rights societies.
Wolfgang's Vault CEO Bill Sagan said their solution has been content ownership yet they still spend hundreds of thousands monthly for licensing.
Though music licensing remains an obstacle worth overcoming for many digital music companies, four of the five participants in FutureSound's Visionary Showcase avoid it entirely. Oddly enough, the panel was moderated by Karen Allen of TAG Strategic, a "digital music consultant group for startups on licensing":
- BKCSTGR is developing a high-powered loyalty program uniting "big brands and big bands" for better fan rewards.
- TrackTrack.it "bundles track-sending features like watermarking and streaming and makes them available via smartphone app."
- Rexly is a music service that focuses music discovery by limiting users to six recommendees though listening habits can be shared more widely.
- ThingLink, which was previously covered at Hypebot, "turns images into a platform for media."
- Music Mastermind's Zya, a "cloud-based music creation and sharing platform", does license "famous hooks" and other bits of music but it's unclear how big an obstacle such licensing might be.
Though many music startups may be avoiding business models that include licensing due to the difficulties involved, a question from the audience at the music licensing panel revealed that there was only one venture capitalist in attendance. He made the point that "many VCs are hesitant to enter the music tech space because many do not, and cannot, understand how royalty payouts work." And, if VCs are avoiding startups that require music licensing, many startups will avoid such business models.
Related News: Billboard Names Top 10 Music Startups For 2011
Hypebot contributor Clyde Smith maintains his freelance writing hub at Flux Research and blogs at All World Dance and This Business of Blogging. To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.