Royalties. Royalties. Royalties.

About three weeks ago, Kendrick Lamar released his highly anticipated third album – perhaps one of the most highly anticipated hip-hop projects of 2017. DAMN. explored themes of religion, love, Black pride, police brutality, and perseverance in the face of institutional racism. Heavy. But very well received.

DAMN. sold 603,000 equivalent album units in its first week, the second highest debut for an album since Drake’s Views sold over a million in the first week in 2016. It also claimed nine of the top ten songs for the week of May 6th on Billboard’s On-Demand Streaming Songs chart, which tracks streams on platforms like Spotify, Apple Music, TIDAL, and more. Kendrick one-upped previous record holders, Drake and J. Cole who each concurrently held the top eight spots with songs from More Life and 4 Your Eyez Only, respectively.

Such a stellar body of work only exists via a meeting of the greatest minds. A look at the album credits reveals beats from heavy-hitter producers like Mike Will Made It and 9th Wonder, guest features from world-renowned artists like U2 and Rihanna, and an average of three writers per song.

With all those collaborators, digital distributors, and samples, it’s easy to see why lawsuits about unpaid royalties have riddled headlines over the past few years. Just last month, Spotify reached a $30m settlement on a $150m class action lawsuit filed against the company in 2015 over unpaid royalties. Having learned its lesson, Spotify announced its acquisition of Mediachain just last week. Founded in 2016, Mediachain is building a more efficient way to link music files on the internet (in this case, on Spotify) to its owners and creators so that they can easily and accurately receive payment for the money generated from streams on the music platform.

In the wake of these cases, plenty of other startups have popped up as solutions to the issue. I’ve been following three that I believe are particularly poised to define the space and lead the charge:

  1. Founded in 2015, Stem is an online platform that distributes music to streaming services and organizes the royalties associated with each play for the contributing artists. The company is off to a great start, already partnering with the largest streaming platforms: Apple, Spotify, SoundCloud, and YouTube. They are currently working on expanding that catalogue of partners to include Pandora, Google Play, Tidal, and more. Last year, Frank Ocean put the service on the map when he distributed his surprise album, Blonde, through the service. What makes Stem special is that it bundles distribution with royalty accounting, which is typically hard to come by for independent artists not supported by the robust infrastructure of a record label. Collaborators must agree on a royalty split, upload their own metadata (unique attributes embedded in digital music files used to identify the content, its owners, creators and contributors), and choose the streaming services where they’d like to distribute their content. From there, Stem receives the streaming and revenue data from each service and using its proprietary algorithm, uniquely packages this data and displays it in a comprehensive dashboard for all contributors. The service distributes music for free, but takes a 5% share of the royalties. With the rise of social media and independent artists like Chance The Rapper making history for his Grammy nomination and win in the Best Rap Album category for his streaming-only album, Coloring Book, the indie route seems more conquerable than ever.

  1. Also founded in 2015, Jaak connects media to content metadata in order to improve the licensing and royalty payment process for creators, collaborators, and distributors. Discrepancies inevitably arise when various sources including artists, publishers, record-labels, and streaming services keep their own records of music ownership and royalty payments. Even seemingly inconsequential differences in the written identity of an artist can lead to incorrect records and payments. For example, Jay Z, Jay-Z, Hova, and Jigga might be the same person in real life, but individual records might exist for each variation of his name. Jaak leverages blockchain technology to maintain a metadata network that allows various parties to easily and quickly communicate between each other, and at the very least, keep records using the same metadata. This ensures creators are more reliably compensated for the use of their content, and that the people and organizations using the content can more easily and reliably find and license it without fear of monetary retribution at some later point in time. This is the first step to dramatically improve the process of content licensing in today’s digital media space.

  1. Founded in 2016, DotBlockchain Music also seeks to leverage blockchain technology, but to develop an entirely new music format (to replace the MP3 and others) that along with the actual music will hold immutable metadata like ownership history, terms of use and licensing restrictions all within the same file. Since metadata is rarely standardized and easily corrupted or deleted, as described above, DotBlockchain hopes that popularizing this new file format will allow the industry to circumvent the issue altogether. Additionally, as ownership changes and payments are made, a transparent record of these transactions would remain with the file for all to see. DotBlockchain recently announced partnerships with four industry groups, a performance rights organization, a publishing royalty administrator, an indie music distributor, and a digital rights service. These partnerships give DotBlockchain approximately 65 million songs that it can use to begin building out its solution in the marketplace.

The fourth industrial revolution is upon us and I’m super excited to see how these companies go on to permanently shape the music industry and much more.

Anastacia Gordon is a tech investor, writer, and (former) operator born in Jamaica, but raised in NYC. She’s currently an MBA student at Columbia Business School and spends her time consumed by all things music x media x culture x tech. While in school, she has invested alongside incredible people at Kapor Capital, Cross Culture Ventures, Lerer Hippeau, and Comcast Ventures. Prior to that, she was a founding team member at Jopwell (YC S’15). 

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