I assumed as much.
Thanks for having me.
My name is Jeff Price. I ran a record label called spinART Records for about 17 years, releasing bands like the Pixies, Echo and the Bunnymen, Ron Sexsmith, and even a Gordon Lightfoot record.
In 2005 I launched a company called TuneCore that quickly became the largest music distribution company in the world. I changed the global music industry business model. What I did was allow any artist anywhere in the world who recorded music to have access to distribute music and put it onto the shelf of digital music services where people would go to buy the music. Upon the sale of the music, I also changed how they were paid. I gave them 100% of the money. There was no record label between the artist and the retail shop. They were the record label. Anything that we were paid flowed through to them.
In addition, I allowed them to keep ownership of their own copyrights. The traditional music industry had to first editorially decide they were going to let you in, and then upon being let in, you would assign ownership of your copyrights to them, and then they would pay you about 12% of the money.
We democratized the music industry and let everybody in to put their music onto the digital shelves. When the music sold, they would get all of the money and they would keep ownership of their copyrights.
The company grew very rapidly. Within about a three-year period, the clients of TuneCore sold over $800 million in gross music sales of their music—the “everybody else”. All of this money flowed through and went back to them. TuneCore was paid a simple upfront flat fee for its service, so we commoditized distribution while democratizing it.
A number of years into running the company, a very strange thing happened. We were distributing, every single month, between 100,000 to 150,000 new recordings. To provide some perspective on that, the Warner Music Group, in its heyday, was distributing about 3,600 new recordings a year. We were distributing 100,000 to 150,000 new copyrights every single month. We were distributing 50 years in the music industry in a month. These days it's over 250,000 new recordings a month coming from these do-it-yourselfers, these people who own their own copyrights and get all of their money coming back to them.
Four years into running the company, I began to think about the second separate royalty these people got, because it turns out they were two things. Here's an example: Sony records hired Whitney Houston to sing the song I Will Always Love You, which I will sing at the end of this—no, I won't—but Dolly Parton wrote the lyric and the melody. Those are the two separate and distinct copyrights. Every time that recording streamed or was downloaded, there were two separate licences and two separate distinct payments that had to be made, one to Sony for the recording and one to Dolly for the lyric and the melody. It turns out that the clients of TuneCore—the do-it-yourselfers—were both Sony records and Dolly Parton at the same time. Every time there's a download or a stream, there are two licences and two payments. TuneCore was only collecting the payment for the recordings, not for the lyric and melody, and it began to embark on a curious adventure. Where is the second royalty?
I discovered over $100 million had been generated in the second royalty that they had never been paid because of inefficiencies in the system. There were no pipelines, no way to do this, and we began to recover that money.
Along the way, as we got to the end of my TuneCore tenure, I launched a second company in 2012. I left TuneCore and launched a company called Audiam. The $100 million that hadn't been paid to the Dolly Partons of the world, the songwriters, never left my mind.
When Audiam was born—my new company—I thought we really needed to go to work for the Dolly Partons of the world, or the people who work for the Dolly Partons of the world, and ensure their music is licensed and being paid for by the streaming and other digital music services. That's what Audiam now does—it licenses and collects money for Bob Dylan, Metallica, Red Hot Chili Peppers, the people who wrote the songs, who sometimes are the same people who did the recording.
We discovered, in the United States and in Canada, massive infringement. The digital music services were using these compositions, these lyrics and melodies, without licences, and they were doing it without any payments either. We embarked on a way to help remove that friction in licence and work with many of the people I'm sitting here with.
But the thing that has really stuck with me that I want to drive home to you as a committee is that the majority of copyrights that are being produced, created, distributed today in music come from the “everybody else”. They come from outside of that traditional industry. Their market share is growing as far as revenue and market share are concerned, while the major music record labels' market share is declining. It's these people who are being impacted by what's happening today, because they're getting the larger market share. As you go forward in time, the volume of copyrights that is being created will continue to be propagated from the diaspora, the “everybody else”.
The really important point is that traditionally you would have a multinational corporation like Sony, one entity with three million copyrights; now you have three million individuals, each with one copyright. The way these people are impacted is contingent upon rulings, regulations, rates and so forth—copyright, and what should and shouldn't be licensed—but remember now it's about the individual as opposed to a multinational corporation, in many respects.
Two kids in their bedroom came to TuneCore, as one example of thousands. They wrote a song about sexting and sold over one million copies of this song around the world with no idea that they had earned these royalties. Their money ultimately was taken and given to the large music publishing companies—Universal, Warner and Sony—based on their market share, because they didn't even have the information to know that they earned it.
That's a quick summation of me and my company, and I suspect that's why I'm here today.