TOKENIZING MUSIC RIGHTS: PART 1 - AN INTRO TO THE TYPES OF RIGHTS YOU SHOULD KNOW

It’s the year 2009, a year after the housing market crash. This rapper named Drake is starting to make waves and is becoming a very hot musical commodity - and you are looking for new investment opportunities. Imagine that you, a retail investor, made a small investment for a piece of Drake’s music rights, and imagine where you would be today financially…

At STOKR, we love pushing the envelope and creating innovative utilisations for security tokens. A new project is in the pipeline, and the idea could revolutionise the framework of how music rights and how outside ownership of them work. Before we get into that, let’s briefly discuss how music rights have worked over the decades.

RIGHT INTO THE THICK OF IT

The term “music rights” has a very broad meaning. It basically encapsulates the intellectual property and revenue streams the artist generages from popular works of their art - and more importantly, who they go to. When someone or some company says they own the music rights to a Shakira song, it doesn’t necessarily mean they own the song and everything attached to it. It more depends on the deal set for them to claim ownership of certain rights, this is where it gets complicated.

There are several types of music ownership, but we will focus on the most elusive and sought after rights in the industry that you’ve most likely heard of before.

Publishing Rights & Copyrights

When someone mentions “publishing rights”, it is an umbrella term that grants ownership of certain types of royalties whenever an artist’s work is used, performed or otherwise played in a fashion outside of the artist’s own use. But there are three main types of income that constitute a publishing right.

• Sync Rights - The rights to include the works in audio-visual production like movies, DVDs, TV shows, advertisements and the likes. Anytime a song is used on-screen, income is generated and paid to the necessary parties.
• Mechanical Rights - Anytime a song is sampled or used in another audio work, permission is required to use it and income is generated from fees incurred of the use.
• Concert Rights - The rights and permission to use the musical works in public performances.

Typically, publishing rights used to belong entirely to the publisher - the entity responsible for managing musical works. Under the length of the contract, a songwriter would have no rights to publishing, and the publisher would own their share in all future compositions created - forever. In exchange, the publisher takes care of actively promoting the artist, their work and general access to the music industry that most could not get without a publishing deal.

Things are different now, with artists being able to take more control of how they distribute their work, thanks to social media, streaming services and music uploading platforms. Publishing is no longer a difficult thing to accomplish. Self promoting is much easier than it was 20 years ago. But as you can see, publishing rights can be extremely lucrative and are generally worth hundreds of millions of dollars for big artists. Publishing deals are nowadays more shared ownership between the publisher and the artists themselves, as artists now hold more of the cards in this game.

Copyrights are similar in fashion, but they are more specifically designed to protect the artist’s work once it is created. According to U.S. law, the minute music is created and made a fixture in any medium, (uploaded digitally, physically written, etc.) it is protected under copyright, where the artist is proven the real creator of the work. However, this copyright has to be recognised and certified by the U.S. Copyright Office to take legal action if it is believed the work has been infringed upon. Otherwise, permission (and generally payment) is required to use this work in conjunction with other musical or visual pieces.

We have some great information coming in this series. There is also a new project that we are excited to introduce in light of this new subject. Stay tuned!

Diamaan Gueye