Music Technology Policy

Yes, they really did brand it the “United Masters”, and no, that’s not a subplot out of Game of Thrones and no, it’s not the MIC Coalition price fixing cartel.

You may have heard about the United Masters, the label services company that Google along with the Silicon Valley VC Andreessen-Horowitz is backing.  “United Masters” which is designed to “upend record companies,” or so the story goes.

The launch was covered extensively in TechCrunch and I confess I stopped reading after this:

UnitedMasters is ready to give musicians an alternative to exploitative record label deals. Artists pay UnitedMasters a competitive rate to distribute their music across the internet from Spotify to YouTube to SoundCloud, and they [meaning the United Masters and the artists] split the royalties while the artist retains the rights to the master recordings.

Ah yes.  The artists take all the risk and on top of that payment they split royalties with the “United Masters”.  Sounds like those notoriously fair venture capital deals, right?  They just left out the warrant coverage and 3x liquidation preference.

Tunecore pioneered shifting 100% of the distribution risk from the distributor to the artist by requiring an upfront payment from their distributed artists.  Tunecore did not have the additional brass to take an additional revenue share from the artist’s earnings on top of what the United Masters call a “competitive rate”.

The narrative was something like why should you share your future earnings with your distributor when you can pay Tunecore upfront?  And, in fairness, cap your distribution fees.  That deal works out better for artists who sell enough to drive that upfront payment below 20% or less of their earnings (usually artists who sell enough to make a tidy profit but not enough to justify an advance from a distributor).  However, for artists who don’t sell that much, it drives the distribution fee well over 20% of earnings and, I would imagine, in some cases 100% of earnings.

But even so, the fee-based distribution model didn’t ALSO take a percentage of revenue which is evidently the plan with the UnitedMasters.  Even though we don’t know exactly what the United Masters terms are yet, we can still find the deal structure nauseating.

Good news:  VC Horowitz brought in a tech team to the UnitedMasters party!  Yay!  Because, you know–it’s all about the data, right?

[W]e recruited a phenomenal technology team with members from distinguished companies such as Facebook, Dropbox, and Pandora. I think that the UnitedMasters engineering team is one of the best in the technology industry, but you can judge for yourself.

This from the VC firm that invested in Rap Genius, or as Marc Andreesson, the partner of Mr. Horowitz reportedly called Rap Genius, the “Talmud of the Internet.”  So these are people who have a very positive view of themselves and who have the answers for how to run the music business.

So naturally, such people would reach out to royalty deadbeats Facebook and Dropbox and Pandora, who most songwriters know as their alter ego–“Plaintiff”.  Pandora who screwed the legends of R&B out of performance royalties in their other alter ego–“Defendant”.

Now imagine this phone call–your band reaches out to a talent buyer in a town you’ve never been to before and you tell that buyer that they should give your band a Friday night because—the United Masters have divined from the data that you’d draw.

Right.

There’s a reason why Amazon is getting out of the ticketing business.

As usual, Google misses the point entirely.  Robert Levine observes in Billboard that the main thing that record companies do that the UnitedMasters evidently will not do is actually write a check to invest in artists:

So far, startups haven’t really replaced record labels because none of them really do what labels do. Almost two decades ago, Napster said that it would replace labels by distributing music, but labels aren’t exactly in the distribution business — truck drivers are. (No one gets invited to cool parties by disrupting long-haul trucking.) Several startups help artists market directly to fans, which is becoming an important part of the music business, but labels never really did that — they’ve always sold music to retailers. From a business perspective, labels invest in artists — which very few technology companies have shown any interest in doing. Because it’s a risky business.

And that’s what labels really do for artists — they amortize risk.

And while you think about that, have a listen to the incomparable Marc Ribot and Ceramic Dog performing his ode to the data lords, “Masters of the Internet”.  I don’t think that was quite the meaning of “masters” that the tone deaf “United Masters” and the data lords intended.