Collecting Royalties Without the Middleman, a Concept for @DGMLive and David Singleton

This post is really in response to a Facebook post by David Singleton, the joy of Facebook algorithms means that I didn’t see the actual post until this morning. It’s worth a read especially if you an artist and you want to get paid fairly, there’s a link at the bottom of the page.

What I present here is a proof of concept and probably a shaky blueprint at best but hopefully it outlines some concepts that someone within the industry can run with.

I’ll take the angle of a musician but it could apply to anyone who creates something.

Everything in life is a transaction

A radio play of a song is a transaction, a YouTube video play is a transaction (this throws up a few more questions which I’ll get on to later), a concert ticket sale is a transaction…. you get the picture.

There are actors in every part of the process, some of them wield more power than others. With that imbalance of power the distribution effect can be manipulated, skewed and downright ignored. Over the years with the joys of the internet artists have tried, and rightly so, to regain control over their income and artistic rights. Being able to sell direct has been the goal, with offshoots of subscriptions, exclusive club releases and so on. And they’ve worked, on the whole, fairly well.

However, along with the rise of those types of services you still have the larger monopolies such as iTunes, Spotify and Amazon who control their own ecosystems. And with the same message as the National Lottery, and perhaps the same probability of a positive win, you have to be in it to win it. Once a large volume of consumers piles on to the platform the artist is under a certain amount of pressure to join on the fear of missing out on revenue.

One of the joys, especially for me who loves customer loyalty data, transactional data and the real time nature of these things, for me everything is a transactional data point. This includes every musician in the band, past and present, every track recorded, every concert ticket sold.  The question is how to combine all those data sources so everyone gets paid.

Scribbled before heading out of the door….

Yup it’s one of those drawings again…

Have notebook, a pen and a cup of tea. I will scribble.

I see radio stations, streaming services, direct sales and ticket sales as “consumers of the artist”, now they might not directly consume the product but merely act as a wholesaler to the listener/audient. However there is a transaction and that transaction will be recorded. Breaking it down a stage further everything is an entity and it relates with another entity.

The Band/Artist

Should I call this the brand? Perhaps I should, as an entity it’s what the end consumer/fan/audient connects with. It gets tribal, I’m a huge fan of King Crimson, St. Vincent and Level 42…. I connect with them all. I also connect with the members of each of that entity so it needs breaking down a little further.

Having the band/artist as an entity is important. Lineups of that entity can change over time, anyone who knows King Crimson well is aware of this fact, changing lineups may also mean changing publishing rights of the music and this gets important when it comes to compensating people over the long term.

The Asset

Assets of the brand, the type of entity opens up here and gets interesting. A concert is a live asset with multiple members, an album is an asset made up of assets (songs). Each asset has members that performed and wrote the pieces in question. What was once an administrative nightmare could actually be easy to manage in these digital data driven times.

The Individual Member

Who “works” for the band? Like I said above lineups change over time. Here though a member is a member. Interestingly this could be said for a solo artist. Is Annie Clark the member of the brand “St Vincent”? I think so. It also means that frees the individual up to work on other projects outside of the main brand. Collaborations therefore become measurable.

In this instance it doesn’t have to just be a musician, it could be a manager or a producer connected with the brand or artist. If you can negotiate a transactional amount then you can allocate reward over time.

A good case in point would be Nile Rogers who worked on (the asset) Like A Virgin by (the brand) Madonna. Nile waved his advance for producing the album and renegotiated his royalty on sales. My only surprise was the Nassim Taleb didn’t include a paragraph in his book “Skin In The Game“, it was the perfect example.

The Consumer

Once again, as with the asset, a consumer can take on multiple personas. It may be an organisation such as Apple, Spotify or Amazon. It might be Google/YouTube or just an average person who likes to purchase the wares.

A consumer at this point may not be the end user of the asset. This may be a wholesale transaction with a different volume of money associated to it. Multiple consumers can have different sale amounts attached to them.

An Asset Transaction

Now we get to the interesting part. The performance of a song is an asset transaction, whether it be live, recorded, streamed or just straight purchased (I still prefer a purchased CD for value for money played over the long term).

With the member attached to an asset then breaking down becomes much easier, it’s just a process at that point. Especially with a band like King Crimson when songwriting credits are spread over many people over a long period of time and many songs over many periods can be played live.

The live performing band can play Discipline knowing that it will be recorded in a ledger of some form (more on that in a moment). This record once processed knows that the writers: Adrian Belew, Bill Bruford, Robert Fripp and Tony Levin will be due some form of performance payment based on the agreed consumer value. The same goes for someone streaming the same song from Spotify for instance, the record of that transaction is saved and the members compensated accordingly, it’s just another consumer with another value attached to it.

This does mean though that every live performance set list needs to be recorded too. And yes I appreciate that whimsical flights of fancy happen when an audience member yells “House of the Rising Sun” and you launch into it. With a finalised set list pre or post performance you have a list of transactions and everything connects with each other.

Calculating Asset Wealth Distribution

Or, “How do I get my money!?”

As we know the transaction amount to a consumer for a specific asset calculations to what is owed to whom becomes just a case of mapping each transaction and ending up with an amount owed to a member.

We end up with a kind of conceptual graph of the relationship between the writers, the artist, the performed asset and the consumer.

(concert) [:performed] <- (asset) -> [:by] (brand) -> [:written_by] (members)

From there it’s purely data mining, finding out who is owed what. With everything recorded in some form of ledger, well you have something to reference. It just becomes a job of performing that function.

How and what frequency the royalties are calculated is another matter. Doing it in real time while possible is not feasible from a payment point of view. Payment transactions come with their own cost. Depending on transaction volumes a monthly, quarterly or annual run are perfectly reasonable. The calculations themselves are pretty much unique to the brand in question. What works for KC may not work for Level 42, which also may not work for St Vincent. Like I said, consumers have different agreements with the brands.

And you might have noticed at no point have I mentioned a middleman collecting the royalties. It should be done direct, peer to peer, no middleman. The reason, I’m wildly assuming, for them existing in the first place was that performance, recorded or otherwise, was just about impossible to monitor. Radio play may have been different but live performance was hard to monitor. So it was easier for every consumer (shop, public space) to pay a fee and hope it would get distributed fairly.

We need to talk about Youtube

Copyrighted material is difficult to police. YouTube adds to the computational woe in the fact that many who publish an artists work have nothing to do with the artist at all.

And it’s all very well that sharing the love of the band or that song but at the end of the day no one is really getting paid for it. Now there are certain things you might see like some copyright information and a link to purchase the track or album in question. It’s far from peer to peer transactions and it’s also far from perfect.

With the ledger we know that a video is being viewed. If it’s one of your songs is played (the asset) then it’s just another asset transaction, and because we know the connecting members of that asset, well it means they are due something from that consumer. At this point a consumer is every YouTube account that it is publishing your asset. Now that’s opened up tens, hundreds, even thousands of revenue streams.

As far as we’re concerned it’s just another data source.

Challenges, hmmm there’s a few.

Right now there many middlemen and it’s really bad business for them to be cut out of the loop. I know this from previous startups in aircraft leasing, I’m good at annoying brokers in the chain. What I’ve described above while not impossible to do, it’s just data at the end of the day, is an implementation challenge for one simple reason.

Not every player I’ve described will be on board.

At the moment the large ecosystems are telling the artist what they will pay them. Spotify streaming sales are fractions of a pence and even with a long long long tail could take years to make any decent money. Power laws come in to play here, 20% of the catalogue will (probably) make 80% of the revenue.

To get a large organisation to emit data per play is not impossible. It means that brands have to be savvy enough to pull the data in and process it. Investment in some form of venture to handle all this must happen first.

To decentralise the whole royalty payment system out of a few power brokers, well that’s interesting and risky. At this point you become the main broker of performance data (does that not already exist?). The power merely shifts from one place to another.

Decentralisation is hard (and no one dare mention the word Blockchain to me). Implementation to each partner is hard, time consuming and usually too technical for the lay person to understand.

Live performances I’ve already touched on, a system to record concert performances with a list of assets so it can be processed with a result of who exactly gets paid what. Once again all doable, but who are the partners that do all this, is it the band before performance? Is it the venue? Is there a gig register? Cover bands at this point should be worried if you’re filing set lists you’ll be paying everyone.


There is a lot covered here, some ideas are worth fleshing out and some ideas would take so long to implement. There are trade offs and some parts of the data model are easier to execute than others.

Back to my main point though, once the concepts are broken down and everything becomes a transaction then it’s easy to figure who is supposed to get what. And to reduce disputes, as David’s post was getting at, then you need a transaction for everything to do with an asset. After that it’s just accounting.

Getting all the players on board is an entirely different conversation.

Now where do I send my money when I belt out Sartori In Tangier on my Chapman Stick when I’m at home? It’s a live performance after all. 🙂

For those that got this far…. here’s David’s post.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: