Thursday, June 9, 2016

The Music Industry's Big Data Problem

Written by Bobby Owsinski — One of the hopes that digital music brought was for a faster and more accurate way for everyone in the food chain to get paid. That sounds good on paper, but unfortunately hasn’t quite panned out the way anyone in the industry expected. While it’s true that it’s easy to count online sales and downloads in the digital realm as well as streams and views, digital accounting lags far behind the expectations of artist, label or publisher alike. But now, music’s big data problem is beginning to be changed thanks to the efforts of companies like Kobalt Music and DistroKid, a trend that hopefully will be adopted by the rest of the industry at some point.

One of the major problems in the current world of music big data has been that although the streaming services could provide accurate info to labels and publishers, it came in a format that was incompatible with their accounting systems. That meant that all those reams of data (more than ever, thanks to the services ability to granularly collect everything) was delivered in stacks of hard copy, which then had to be manually input into the label or publisher’s system. And of course, the problem was that the person doing the inputting was often an intern or a low-on-the-totem pole employee who was not equipped to deal with some of the more complex decisions that would come up in the course of inputing, which lead to inaccurate statements for artists and songwriters. And let’s not forget the inevitable human error that goes along with manual data entry that didn’t help matters.

This is a problem that continues to plague the majority of the industry every quarter, and in some cases, every month. In fact, many publishers secretly complain that the cost of the manual labor involved exceeds their revenue in many cases. Still, it’s their fiduciary duty to carry on despite these difficulties.

Now to be fair, accounting software systems are expensive, usually custom designed, and take a very long time to both implement and overcome their inevitable growing pains. While changing to something that’s more digitally compatible is in everyone’s best interest, it’s still a painful process, both financially and morale-wise. It’s not a remodel, it’s almost a full tear-down and rebuild.

However there is a light at the end of the tunnel. A few years ago Kobalt Music, lead by Swedish entrepreneur Willard Ahdritz, launched the Kobalt Portal, the first online dashboard that Kobalt artists and songwriters could use to discover their earnings in a timely fashion. In fact, the portal has now been turbocharged so it can even report in real-time, an innovation that has attracted over 8,000 artists and songwriters to the service, including such heavyweights as Paul McCartney, Prince, Gwen Stefani, Bob Dylan, Tiesto and Kelly Clarkson, among many others.

Kobalt, started by Ahdritz in 2000, is a relative latecomer to the publishing game, but that turned into an advantage. Thanks to his experience with enterprise data systems when he worked as a consultant to large transportation brands, Ahdritz saw the writing on the wall that data interface was the future, and not being saddled with the baggage of old technology, was able to implement a system that was way beyond the capabilities of even the industry’s publishing giants.

While Kobalt is for artists and songwriters blessed with some success, DistroKid has concentrated on artists and bands still searching for their big break. Launched by entrepreneur Philip Kaplan in 2013, the service was designed as a quick and inexpensive way for artists and bands to submit their music to digital distributors like Apple Music, Spotify, iTunes, Tidal and many more. One of the things that sets the company apart from other digital aggregators is a new feature that allows any earned royalties to be distributed to each of the collaborators involved instead of sending out a single payment to the band leader, who then has to divide the payment amongst band members, for instance. Since creation sometimes isn’t an effort with an equal division of labor, the service even allows for payments to be made depending upon percentages supplied to the service. That means that everyone gets a statement that shows what was earned and how much was paid out, so it’s clean and simple to all involved.

How soon other aggregators, labels and publishers offer similar features to Kobalt and DistroKid remains up to conjecture, but these companies are certainly leading the way down a path that the rest of the industry will be soon forced to follow. It’s a process that everyone would like to employ tomorrow, but as with so much else in life, it’s also much easier said than done.

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