Welcome To Music’s Live-Streaming Moment [David Pakman]

Venture capitalist and Venrock partner David Pakman explores how live-streaming has developed into the robust success that it is today and how music rightsholders have an opportunity to be leaders rather than spoilers.

Pakman’s involvement in music tech dates back to 1995 as the co-creator of Apple’s original Music Group. In 1999 he co-founded Myplay which introduced the first digital locker “digital music locker” and then became CEO of eMusic which became the world’s leading digital retailer of independent music.

By David Pakman from his blog Pakman.com

Since 1995, many of us have dreamed of a world of live-streamed music events.

It might finally be happening.

In 1995, as co-founder of Apple’s nascent music group, I partnered with two innovative club-owners, Andrew Rasiej (Irving Plaza) and Michael Dorf (The Knitting Factory) who had resurrected the struggling New Music Seminar to create the week-long New York Music Festival. We worked together to create a hybrid offline/online event called the Macintosh New York Music Festival, installing cameras in clubs and live-streaming musical performances. In many ways, this was the birth of live-streaming music.

We have come a long way since dial-up modems, DSL lines, and Real Audio. The infrastructure has existed now for decades to offer high-fidelity online music performances streamed around the world. But demand to watch streamed live concerts has been spotty. Many attempts have been made to build platforms for this purpose, but all are long gone. Yes, there have been big live-streamed music festivals, and plenty of examples of well-attended online music performances. But watching live-streamed concerts just isn’t really a thing.

Until now.

In fairness, two things have been happening in live-streaming that foreshadowed where we are now. First, live mobile video took off when it became conversational. YouNow, Periscope and their followers like YouTube Live and Facebook Live succeeded by making the form more about the hosts interacting with their viewers through online chat, donations, and guest appearances rather than simply taking something that looks like television and putting it on the internet.

And second, as with all things internet, the long-tail — not mainstream superstars — was responsible for the growth and innovation. YouTube broadcasters pioneered short-form recorded videos and Twitch streamers pioneered the live-stream built around gaming. This form has created an entire genre of streamers, supported by viewer donations, merch sales, and sponsorships. Again, in keeping with the internet’s culture, the base software used here for stream preparation and management is the open-source OBS. Like blogging before it, it is supported by millions of design templates, plug-ins, and API integrations with the distribution platforms.

“We need the spontaneity and interaction the soul-less music playback platforms lack.”

But finally, in this moment of global isolation, with streaming media consumption exploding, we crave the electricity of live music. We need the spontaneity and interaction the soul-less music playback platforms lack. There is only one problem, and it is the same problem that has plagued online music for twenty-five years…rights-holders are holding it back.

The most exciting thing in music the last fifteen years has been the rise of DJ culture. Online, DJs try to stream live sets and interact with their audience like the gamers do. But, they are blocked at every turn by the music rights-holders. Why?

Non-recorded live music streams are simply public performances. They implicate the rights of both the music publishers and the sound recording rights holders (record labels). Like bands and DJs who play in clubs, performing rights societies (or PROs — in the U.S., ASCAP and BMI, etc.) collect fees from club-owners in exchange for blanket licenses to perform music in their venue. But online, record companies collect performance fees for music too. Still, all platforms have blanket licenses, in effect, from the PROs and through filings with SoundExchange. So, why can’t the world’s millions of DJs hop on YouTube or Facebook and stream live sets?

As a DJ or a band, you can stream live audio without video (under the blanket performance licenses and payments to SoundExchange mentioned above). But once you attach a visual element to those streams, like a DJ spinning tracks live or an artist strumming a guitar in a bedroom, the music rights-holders claim a “synchronization” right exists. And, by the letter of the law, they are probably right.

Successful live-streaming seems to require these visual, indeed personal interactions by the broadcaster.

“it may just be a matter of time, however, until music publishers and record labels demand additional payments for sync licenses.”

But the blanket performing rights agreements issued to online platforms and SoundExchange payments don’t include a synchronization right, so YouTube and Facebook shut you down. Their software detects the use of copyrighted music in your streams and, even if you choose settings that prevent a recording from being made, your stream is cut off and/or nasty copyright claim notices are sent to you. Repeated violators are kicked off the platform. Twitch and Mixer, perhaps unsurprisingly given their gaming focus, are more friendly to live music DJs. Even though this activity is not prevented on those platforms, it may just be a matter of time, however, until music publishers and record labels demand additional payments for sync licenses. To enable live audio/visual music live-streaming on a mass scale, these platforms must strike individual agreements with each music publisher and record label—an onerous and laborious process. So, most haven’t.

The comparison with gaming companies couldn’t be more stark. Virtually every video game publisher in the world allows you to play their games online, stream them to your followers, add your own video overlay on top, have live chat, and even accept donations. The progressive video game industry has been rewarded for their support of platforms like Twitch and Mixer; global video game revenues are up 10% — 15% year over year for the past decade. Music grows, but much more slowly. And music publishing growth lags that of the larger recorded and live music industries.

If I were the large music publishers, I would immediately offer the PROs the opportunity to sign blanket licenses enabling widespread live streaming inclusive of the sync right, provided the PROs sign those deals within the next 60 days. And I would grant SoundExchange additional authority to include a sync right in exchange for the payments they already collect. The only way to enable this widespread exciting use of live music is through blanket licensing.

“music rights holders should view themselves more like builders and makers”

In this moment of opportunity, music rights holders should view themselves more like builders and makers—capitalize on shifts in consumer demand and do everything you can to encourage use, attention, and enjoyment of your works. The long-tail is always where you find the most innovative. Bedroom DJs and singers, and even Chris Martin and countless other mainstream artists are trying to use live-streaming as a way to connect with people and break the social challenges of pandemic isolation. Let it happen, and you will be rewarded.

David Pakman is a VC at Venrock, investor in Nest, Dollar Shave Club, Misty Robotics, Amino, CryptoKitties. Former CEO of eMusic, co-founded MyPlay and Apple’s Music Group.