Two years into the global pandemic, digital fan engagement and artist metaverse experiences are at an all-time high. This development has been a huge positive for both artists and fans, leading to new avenues of monetization and deeper community engagement opportunities. However, the increase in live streaming and digital performances has also raised questions and complications in the music industry relating to licensing and how industry players can work together to facilitate these virtual and on-demand shows.
To dig into this complex topic, XLIVE spoke with Elizabeth Moody, Chair of New Media Practice at entertainment law firm Granderson Des Rochers, LLP, who has almost 20 years of experience in the digital music space and works with live streaming and metaverse companies on music licensing and strategy.
Moody notes that the conversation around licensing has evolved during the pandemic as the topic has become more complex. “Before the pandemic, the music licensing was often an afterthought,” she says. “Even at the beginning of the pandemic, songwriters and artists were going on Instagram and other sites to try to make some money, and the record labels and music publishers were letting that go for a little bit as they waited to see how things evolved. A lot of the live streaming services quickly realized that at the very least, they needed to have performance rights licenses, and that's still a key licensing need.”
When it comes to live streams, performing rights licenses are not always easily obtained, Moody explains, because Performing Rights Organizations (PROs) in the US and in many places around the world “take the position that the company that's serving the content — so the live streaming platform — should be responsible for clearing performance rights licenses and the compositions. And they license based on where the viewer is located.”
This means that if a show is taking place in Korea and being streamed to viewers in other countries, the streaming platform might still need to get licenses from every country where viewers will be logging in from.
“It’s interesting right now because there are different views on where and how you're supposed to get these licenses,” notes Moody. “Although it's evolved, it still hasn't really landed on a final strategy. There is a little bit of a complex analysis and licensing structure for live streaming platforms, even just with performance licenses.”
Given these licensing challenges, most live streaming platforms are largely sticking with live performances for the time being. On-demand adds another layer of complexity, because making a copy of a live performance requires clearing other rights. In most countries, for example, moving images mixed with audio implicates a synchronization license, “which means going directly to music publishers and negotiating that usually on a song-by-song basis,” says Moody.
For now, many have been keeping costs down by doing a few rebroadcasts of the initial live shows to reach a wider audience without making the content available on demand indefinitely. However, as the industry continues to adapt to these new technologies and types of performances, Moody expects that both avatar-based metaverse experiences and more traditional live streams will look to expand their on demand and archival footage.
“We live in an on-demand world for other types of content too — everybody expects to be able to watch a Netflix show at their leisure — and I don't think the perception for live streaming is going to be all that different,” says Moody. “The other shift is that a lot of the more traditional live streaming platforms will be tied to in-person live events, so there will be that element of getting there at a specific time, but it's going to be more for people who couldn't make it to the show.”
In addition, partnerships between record labels and gaming platforms will only gain steam moving forward as labels, which were traditionally not involved in the production of in-person performances, look to capitalize on these new opportunities to generate revenue. The big question that is still being worked out as part of these new business models is how the pay structure will work as labels, music publishers, artists, platforms, etc. all need to be fairly compensated.
Blockchain technology and NFTs will play an important role in artists’ ability to make money and control their rights, particularly for rising and independent artists. “I’m excited about what I'm seeing Royal and others doing,” says Moody, “where they're allowing the fans to participate in revenue streams, not just from the blockchain based distribution, but perhaps even from Spotify and Apple. What an awesome direct to fan experience, if your super fans are essentially funding your next album by buying NFTs in your current album.”
We’re still in the very early stages when it comes to the potential that blockchain and NFTs can offer because they still only appeal to very niche communities of fans, but “there's a ton of opportunity for an artist to be able to fund their own career through their fans,” says Moody. “And the fans are excited by that because then they can really participate — they can get some governance in decisions around how music is going to be used and share a piece of the revenues.”