How to create transparency in the music industry

How to create transparency in the music industry

Bruno Guez
Bruno Guez
4 minutes

While the digital music industry has made leaps and bounds over the past number of years, it still fails to provide artists with easy access to real-time data regarding their music. Revelator is working to change this.

In the 15 or so years of the Internet economy, the digital music industry has come a long way, but there are still major hurdles to cross. Platforms like iTunes, Spotify, and Google Play are major improvements over the early illegal file sharing days, but the multitude of service offerings and revenue models make it difficult to understand the true value of each and what they can deliver for musicians and music companies. These difficulties are further compounded by the fact that, according to a new study from the Berklee College of Music and its Rethink Music initiative, there are major transparency problems throughout the music industry caused by outdated technology.

In other areas of the Internet economy, online tools are data-driven and real-time, allowing professionals to make informed decisions based on accurate and up-to-date information. Unfortunately, these kinds of tools have not been widely adopted by the indie music industry thus far. This makes it difficult for labels and publishers to provide artists with timely and easily understandable data on track listens, revenue, accounting, and payments. In addition, labels and publishers are often unable to find the proper royalty recipient for music uses due to complicated and unclear songwriting credits and the lack of a standardized database that would make it easy for rights-holders to be identified. In short, the systems that exist today are not in the best interests of the industry at large.

However, by embracing current technology, forward-thinking labels, publishers, managers, artists, and other music professionals can improve data accessibility and transparency so that all sectors can enjoy the benefits of the digital revolution. When all members of the industry have the ability to make the best decisions possible based on a complete picture of consumption, accounting, payouts, and more, everyone wins.

Outdated technology

The main reason that labels are unable to share data with artists on a regular basis is that the current tools make tracking and reporting digital sales extremely difficult. The data comes from multiple sources and is stored in different formats. Labels must consolidate information from a variety of stores and services, both online and offline, and display it in a uniform formula. This is a major undertaking, which the labels must do at least twice a year, if not quarterly.

When the reports are produced, they appear in Excel format and are hard to understand. Artists, managers and other rights-holders are not necessarily able to decipher the calculation of their share, and all parties may have trouble gaining useful insights for future marketing efforts. However, with the right tools and real-time access, this data could be made actionable for artists and labels in determining where to tour or how to spend marketing dollars. This is why we launched our Data Pro tool - a true business intelligence tool to see the intersection of your trend and revenue data in one place.

Lack of transparency in accounting

Another issue with the current system is that it relies too heavily on information held by record labels and provided to others only in a limited way and too infrequently. The audit trail of digital transactions is often unavailable to those outside the label, which has led to a history of non-auditable and unfair accounting practices. These include cross-collateralization and the practice of classifying streams as “performance,” leading to a lower royalty structure and casting a pall of distrust between labels and their artists. Lack of visibility also causes decreasing unit economics that put more pressure on cash flow and slow accounting periods based on outdated contractual terms.

Ownership of data

While there are many important problems related to revenue from streaming and downloads, it is even more crucial that we fix the current lack of transparency in regards to music data. Labels, publishers, managers, and artists don’t receive access to much of the data that is collected in the process of music sales. If a particular song is downloaded 1,000 times, 1,000 email addresses could have been collected from fans. Audience data is more valuable for future marketing campaigns than ever before, but online distributors, download stores, streaming services and other tech companies servicing the music industry almost always do not provide access to this information.

The Wall Street Journal emphasizes the importance of fan email addresses: “Industry-wide, the average fan email address has a value of about $3.78 in direct purchases from artists over the owner’s lifetime, according to new data from Topspin Media Inc., a six-year-old company that manages online stores for more than 70,000 artists.” A Topspin analysis of five years’ worth of data revealed that fans acquired through widgets or purchases were nine times as likely to make a purchase from the same artist.

Purchase of music is not necessarily the end of the conversion funnel. Handled correctly, it can actually be the beginning of a long-term relationship between the artist and fans. When fan data is kept in the hands of technology companies, the only benefactor of this marketing bounty is the technology company. But if provided to the label, publisher, or artist, they can make use of that information in myriad ways. Instead of staying locked in to one particular service, they can move data to whichever service they choose. They can distribute content by newsletter to fans, adding value that will keep them interested and engaged. A loyal list of followers is also an excellent avenue for selling merchandise and pre-selling tickets, and extra-loyal fans can be treated to exclusive content and offers that make them feel like they are part of the artist’s family. All of these strategies are quite lucrative when implemented correctly, but are actionable only when the artist and their representatives have access to their fan base and a system in place to communicate with them.

Platforms like Facebook and YouTube are using audience data for ad revenue optimization. They are focused on reselling audience data to advertisers but are currently not providing it to users.

Wrongful claims

In addition, lack of transparency has created confusion in the tech marketplace regarding music rights, with some labels and aggregators claiming rights to compositions and collecting revenue from YouTube and other services without the knowledge or permission of the rights holders, who don’t know that revenue is being collected. For example, one artist had his music licensed for a CD book, which was posted on YouTube. YouTube then placed ads on all the videos in its platform that played the song and sent the revenue to the owner of the CD book rather than the original artist. This kind of mix-up is prevalent in the digital world, and without full transparency from technology companies and an easy way to determine who has a stake in the content they host, rights-holders are currently unable to fight it.

Revelator brings transparency to the music industry

Recently, Revelator introduced a new end-to-end sales and marketing intelligence service that aims to bring transparency to the music industry and solve the current problems of distrust and lack of data by enabling the sharing and portability of data to all participants. The Revelator platform creates a level playing field for all the players involved, from artists to managers to labels and more, through:

Real-time metrics/analytics — The Revelator Analytics dashboard automates all reporting of daily and monthly sales and streaming data, providing full transparency. The platform has the added benefit of providing real insights into the sales reports. Each report can be drilled down, so users can see clearly which stores — virtual or physical — brought in the most sales, which ad campaigns were the most successful, and which songs fared the best on which platforms. This is all valuable marketing information, which all parties can make use of. Revelator customers also have access to audience data such as email lists, engagement, and retention.

Financial reporting — Revenue data from multiple sources is consolidated into one unified business dashboard that can be automatically shared with all parties on a daily, weekly, or monthly basis. A click of a button will allow labels, publishers, managers, artists, and more to see their respective shares immediately without the need to wait for a response. Increased visibility boosts trust between all those involved and decreases friction between parties.

Marketing of content — The Revelator platform provides distributors of music with the ability to extract crucial marketing data and utilize it to determine actionable marketing efforts. Data can be used to build a relationship with current listeners and to make informed decisions on the best steps to reach new audiences.

Distribution of music — Revelator offers music distribution to labels, managers, and independent artists to enable them to sell their digital content in top stores and services globally, representing an immediate cost savings of 20–30% of sales revenue. Partnership agreements with various digital music companies broaden the distribution of music on the Internet.

By embracing new technology like the Revelator platform, independent labels, distributors, and others can achieve full transparency throughout the entire process of production, marketing, and sales. This paves the way for collaboration and trust as well as informed decision-making on the part of all those involved in the music industry.

Related Articles

Learn more about Revelator

and scale your music business, today.