OMI: Opening Up the Music Industry

Bringing academia, tech companies, record labels, and many other stakeholders together to tackle problems with creator compensation through groundbreaking technology
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Talk to recording artists, songwriters, and other rights holders whose music is available through streaming services, online retailers, or posted on YouTube, and you’ll find that many are skeptical about how they are being compensated. They receive periodic statements with myriad micro payments for streams that provide little useful information about when or where the music was heard. As well, copyright infringement lawsuits and controversy over consent decrees are frequent topics of conversation among musicians. In an effort to bring greater transparency to the process of compensating content creators, the Berklee Institute for Creative Entrepreneurship (BerkleeICE) launched the ambitious Open Music Initiative (OMI) in June.

Spearheaded by BerkleeICE founder and director Panos Panay ’94, Berklee trustee and technology innovator Dan Harple, and IDEO Cambridge partner and executive design director Michael Hendrix, OMI has brought together 120 member organizations, including Universal Music Group, Sony Music Entertainment, Warner Music Group, BMG, Spotify, YouTube, Pandora, Soundcloud, SiriusXM, Netflix, Downtown Music Publishing, SACEM, artists, academics, publishers, startups, trade groups, and leading policy and technology experts for an unprecedented collaboration. [For a more complete list of OMI members, visit open-music.org/members.]

As OMI states on its website, its mission is to “promote and advance the development of open-source standards and innovation related to music, to help assure compensation for all creators, performers, and rights holders of music.”

“The critical thing is, at present, there is no uniform way for the music industry to identify ownership of music rights and who gets paid for the usage of music irrespective of platform,” Panay says. “All these systems are kept in proprietary databases across the entire value chain of the music industry. That includes record labels, performing rights societies, publishers, streaming services, and film and TV studios. They each have a database with information about who should be compensated every time a piece of music is played. Since none of these databases talk to one another, whenever there is an update—let’s say when a publishing right changes hands or a new piece of music is released—there is no simple way to notify everyone across the entire industry spectrum.”

OMI, a nonprofit initiative led by Berklee, the MIT Media Lab, and other academic institutions, operates from a position of neutrality regarding the initiative’s ultimate business outcome. These factors have enabled Panay and company to bring together industry stakeholders who have historically seen each other as competitors, and start the discussion about sharing information. OMI members, representing creators, entrepreneurs, academic, music business, technology and policy leaders and advocates, have each signed a memorandum of understanding indicating their commitment to the OMI mission.

Which Data Should Be Shared?

Everybody in the industry agrees that knowing the name of the songwriters, players, engineers, and producers on a specific record is essential knowledge. As well, the name of the publisher and what label owns the sound recording are required for transacting business. To eliminate friction, reduce costs, expedite payments, and enable the usage and licensing of music to happen seamlessly, accurate information needs to be shared and automatically updated.

“We believe that we have a good shot of making a difference,” says Panos Panay, the managing director of BerkleeICE and coleader of the Open Music Initiative.
“We believe that we have a good shot of making a difference,” says Panos Panay, the managing director of BerkleeICE and coleader of the Open Music Initiative.
Tiffany Knight, IDEO

It’s simple for Pandora or Spotify to pay the owner of the sound recording, but they are also responsible to pay a song’s publishers. “Publishers will tell you that sometimes they don’t have 100 percent of the rights to license a particular song in their catalog,” Panay says. “An agreement that they signed five years ago may no longer be valid because someone who owned 10 percent of the song just sold their portion to someone else. That transaction happens in a vacuum. Some of this sounds mundane, but it is at the core of what we are dealing with, with respect to payment flows in the industry.”

It’s a paradigm shift for some organizations in the industry that have been around for a century to go from a closed system and to one that is open to everyone.

“People don’t need to know details about a financial deal,” Panay says. “But a digital service provider like Pandora needs to know if a new owner has taken control of some of the works in Pandora’s catalog. Otherwise, they will be sending money to the wrong people. The publishing side of the business is becoming more complex because these days, more songs are owned by multiple creators. People are collaborating remotely and making new works that contain material with copyrights owned by other people.”

Building the Infrastructure

When all are in agreement about which data needs to be shared, building the technology to share the latest information is the next challenge. OMI members are working to create an open-source digital architecture or protocol to share information. According to Panay, this is where the MIT Media Lab, Dan Harple, and member technology companies come into play. They are familiar with how standards for the World Wide Web, banking, or streaming, work in the business and technology worlds. “Dan Harple brings a deep expertise with respect to the creation and proliferation of online standards,” Panay says. “He is one of the pioneers of the streaming and voice over IP protocols. He has technical knowledge about what entities need to come together so that new standards can emerge.”

Millions of people who are unaware of the technical undergirding that makes things work use open protocols every day. “Take the protocol that governs email communication,” Panay suggests. “TCP/IP [Transmission Control Protocol/Internet Protocol] is a basic protocol that governs internet communication. Many applications have been written on top of that so that, for example, I can send an email from the Apple mail client on my iPhone to someone who receives it in their Gmail account on a laptop made by Dell. The applications from Google, Apple, and Outlook compete with one another, but their use of an open protocol for communication ensures that my email arrives to the recipient in a secure, incorruptible way.”

Similarly, OMI members will use the revolutionary Blockchain technology to share data. Blockchain makes it possible to obtain granular-level information about a song as well as the song’s bassline or guitar lick that may have been used in various iterations in user-generated media. “Essentially, Blockchain is a ledger of transactions that is shared across the entire network,” Panay says. “It’s unlike a traditional model where there is a central governing authority that keeps track of all transactions—be it a bank or a clearinghouse.

The Blockchain ledger is shared across all the participating computers in the network. The ledger will not show the dollar amount of a transaction, it just certifies that a transaction took place. Blockchain is a technology protocol with a set of conditions. It records and sends information about transactions of a certain type that are happening across the network.

“To some degree, it can be compared to the Internet, which is a shared network,” Panay says. “This new effort has promise where previous efforts have failed over control issues. The technology for a shared ledger that is open to all participants is a pretty new idea. If there is less money being paid by consumers for music, we should make sure that all the money is being distributed to the rightful owners of the music.”

Currently, more than 50 entrepreneurial companies are working on different aspects of the project. Any member of the community can write applications to drive it forward. Panay makes an analogy to OMI laying the pipelines, in effect, saying to the entrepreneurs, “go and build the apartments, office buildings, hotels, restaurants, and parks that will make this city thrive.”

“We will announce...that we have a major player in the tech field providing the underpinning for this platform, which is huge,” Panay says. “They will provide the technology to enable the industry to begin to prototype ways for this interoperability to happen.” Panay is optimistic that the entrepreneurial premise of OMI will spawn further innovation.

“Why shouldn’t songwriters have a dashboard that could tell them in real time where their music is being heard?” Panay asks rhetorically. “It’s not a crazy idea, but to do that, you have to be able to find out who owns the copyright. Record labels and performing-rights organizations can give access to that information to everybody to increase their ability to collect money by knowing instantaneously when their music is being played somewhere. Entrepreneurs will create apps that use the information in a useful way.”

Panay and company are optimistic that the work of the OMI partners will resound throughout the music industry. “We believe that we have a good shot of making a difference.”

For those wishing to become part of this effort, visit open-music.org/join.

Read about a three-week summer lab hosted by MIT for the OMI visit berklee.edu/berklee-today/fall-2016/berklee-beat/youthful-perspective