SVP, Media & Entertainment at DataArt
“We will eventually see a whole new level of user generated content using licensed music and that can become a much bigger part of the business. Working with fully licensed players in the UGC space will mean that we can create better experiences for music fans and fairly pay rights holders.” — Ole Obermann, Chief Digital Officer and Executive Vice President of Business Development at Warner Music Group.
The convergence of music and social media is profound, which is the reason that user-generated content (UGC) has become such a vital component of the modern music business. Individual contributors are responsible for a rapidly increasing percentage of the content being consumed, from videos and photos to reviews, blogs, and social media posts. Unlike traditional broadcasting and publishing, UGC exists as a peer-to-peer relationship, as social media and other internet platforms create an unprecedented media world where virtually anyone can run their own show.
The Long Road to Monetizing Music in User-Generated Content
The UGC monetization potential for the music business is enormous. However, this revenue stream has only recently been tapped into. The majority of user-generated content requires music, but the average person lacks the knowledge and resources to legally license a song to use. Establishing a system that allows content creators to pay a small fee in exchange for music usage could provide a significant income stream for small-to-medium level artists. However, the current complexities involved in licensing deals make it too cumbersome for many creators to embrace.
Not surprisingly, shortly after YouTube’s launch, massive quantities of content were uploaded using copyrighted materials without cleared licenses. Of course, rights holders were upset by this rapid trend, filing lawsuits against the platform that led to YouTube’s implementation of Content ID. Rights holders, such as artists or labels, upload audio files and the related metadata to the company, who subsequently generates and stores digital fingerprints. New content uploaded to YouTube is automatically compared to this database and is flagged for copyright infringement if it matches content stored in the Content ID database, resulting in the unlicensed content either being blocked or monetized via advertisements, based on settings controlled by the owner of the copyrighted content. With an estimated 1.3 billion users and approximately 450,000 hours of video being uploaded to YouTube per day, the company says it paid more than $1bn globally to the music industry last year. The revenue potential for UGC is obviously expansive, but creators have often accused the internet giant of undervaluing music and paying poor rates (est. under $1 per user annually compared to $20 per user annually from ad-supported services such as Spotify).
YouTube isn’t the only big player in this growing marketplace. Facebook has made its own move into music. For years, the promotional and marketing benefits have been considered to outweigh any copyright infringement issues or the lack of monetization on the world’s largest social media platform. Last year, however, the situation finally changed. Facebook entered into deals with Warner Music Group, Universal Music Group, and Sony/ATV Music to license the labels’ music publishing catalogs for usage in videos and messages that users share on Facebook, Messenger, Instagram, and Oculus. And it doesn’t end at the major labels, with additional licensing agreements being made between Facebook and Merlin, Kobalt Music Publishing, TuneCore, SECAM, ICE Services, and other important players in the music licensing ecosystem. As the legislation is slowly moving to catch up with the realities of the modern music market, there’s no question that the revenue derived from these licenses could become a significant source of income for artists, labels, and all other rights holders.
Social Media Platforms Speak DDEX
DataArt has been working with music companies for almost a decade now and we’ve experienced firsthand the challenges of integrating and properly managing music rights in the user-generated content on social media platforms. The required technical architecture isn’t fully developed yet, with many questions remaining, such as whether labels and platforms are fully prepared to deliver on the recent licensing deals and how best to move forward with either current APIs or an entirely different system, like DDEX, to standardize the digital supply chain.
Digital Data Exchange (DDEX) has gained a significant foothold in the music industry in recent years. Founded as a consortium of leading media companies, music licensing organizations, digital music service providers, and technical intermediaries, DDEX was set up to develop a single set of standard XML messages for the business-to-business communication of information between organizations operating in the digital media supply chain. In comparison to other formats used in the music industry (such as the Common Works Registration (CWR) format), DDEX’s musical works standards support a different set of use-cases, such as the licensing process, communicating a UGC policy, sending audio files that relate to a work (e.g. for audio finger-printing) and others. The DDEX standards are publicly available and a standard implementation license can be acquired for free.
Arguably, DDEX provides the best uniform mechanism to exchange metadata and other information on claims of ownership of musical works to-date, and it is particularly well suited to managing music rights in user-generated content. For that reason, DDEX is currently being adopted by Facebook in its evolving technical infrastructure for communicating with music companies. And YouTube has mostly replaced its original XML feed with DDEX messages, transitioning to a more standardized way to support the efficiency of its Content ID (though the “older” YouTube xml is still in use, it is not recommended for any new integrations).
Challenges of DDEX Integration
DDEX allows rights owners to claim particular A/V resources and communicate certain policies that can be applied to the existing and new content uploaded to the platform. In very general terms, this is how the process of communication between rights holders and social media partners will work:
There are three major policies that can be communicated to the platforms to regulate the usage of music works in user-generated content:
Based on these instructions, the platforms can take down the content that infringes the copyright, apply ad-supported or other monetization principles, or provide the rights holder with statistical data. Since music deals often include a lot of territory specific and other individual provisions, more detailed prescriptions can be communicated to accommodate for more complex policies based on these rules. However, not all of them are equally supported by YouTube and Facebook, and each of the partners’ feeds will require a separate validation.
The important thing to remember when using DDEX’s XML feed is that every new message must convey all relevant information about a resource and corresponding policies, since every new message effectively invalidates the previous instructions. From that perspective, the biggest issue in complying with DDEX standards for music labels and publishers often arises from the complex and often uncoordinated internal systems. Based on our experience, there’s rarely a single database or rights management system that can effectively integrate with external UGC partners. The data that populates the feed usually comes from multiple internal sources in various formats and needs to be carefully adjusted and validated. In such cases, we recommend that music companies should develop a custom interface that serves the purpose of processing both the incoming and outgoing feeds, converting local XML messages to DDEX standards and storing the history of all transactions.
Here are a few other tips from our development teams that help avoid hidden pitfalls of DDEX integration with YouTube and Facebook.
Generally, the success and efficiency of integration largely depends on the quality of metadata within the music company. While YouTube has a more established system that has operated for years, Facebook is still developing its technical infrastructure and some of the core DDEX features may not yet be available or may only operate in a limited capacity.
All in all, many complexities remain. At the same time, technology experts and other industry players are working diligently to determine the answers required to comprehensively move forward with a simple yet effective system for managing music rights in the rapidly growing world of user-generated content.
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