The latest edition of Music Week takes a deep dive into the fast-paced royalties sector.
In a special report, a number of the market's leading players delve into the biggest opportunities and challenges for the scene while debating where it is heading next.
According to the IFPI, revenues from performance rights increased by 9.5% last year to $2.7 billion, representing 9.5% of the global market and illustrating the sector's growing importance to talent in the modern age.
The royalties space has been an early adopter of artificial intelligence - with generally positive results, according to those operating within it.
"Music has been a great adopter of new technology, and we are excited about the potential that AI opens up," PPL chief membership & people officer Kate Reilly told Music Week. "At PPL we’re seeing some benefits from AI such as improving our internal systems and processes, and we’ve several projects on our roadmap that will lean into AI tools to increase efficiency, improve data accuracy and in turn, payments to members."
International advisory and accounting firm Prager Metis (PM) is working with a third-party company that uses AI to identify anomalies in the reporting of royalties to artists and songwriters, reports PM partner Austin Jacobs.
"With the increasing size of royalty statements, which contain huge numbers of low-value transactions, AI is going to play a significant role in the royalty audits of the future," he added.
In the coming years, AI is expected to play an even more significant role in the music business and the lives of music creatives
Alex Heiche
Tracey Myall, royalty director at Gelfand, Rennert & Feldman, revealed the UK team has been utilising AI "for some time now", working internally with its US colleagues to add to its repertoire of AI tools.
"We frequently exchange ideas and solutions with our data scientists and analysts to create new tools," she said. "Looking at what we have created so far, it’s very impressive and we can see the scope expanding further."
Alex Heiche, founder/CEO of music finance company Sound Royalties, said AI was "increasingly prevalent" in his company's work.
"We use AI to enhance data analysis and improve forecasting accuracy," he explained. "AI helps us process large datasets efficiently, ensuring more precise and timely overflow royalty payments to creatives. This use of enhanced technology is in tandem with our personalised, high-touch customer service.
"In the coming years, AI is expected to play an even more significant role in the music business and the lives of music creatives. It will further streamline royalty calculation and distribution, offering real-time monitoring and increased transparency. AI will also enable personalised music experiences and more effective engagement with superfans."
He continued: "Additionally, AI will help continue to develop new revenue streams, such as AI-generated content and dynamic pricing models. However, we must continue to address challenges related to data privacy and the ethical use of AI, like supporting important legislation such as the recently enacted ‘Nurture Originals, Foster Art, And Keep Entertainment Safe (No Fakes) Act’.
"We are committed to using AI responsibly, ensuring that its integration benefits all stakeholders while maintaining transparency and fairness in the royalties market."
We need global safeguards, providing clear and enforceable rules for transparency, auditability and compliance with copyright laws
Andrea Czapary Martin
Tom Allen, president of Downtown Royalties and Financial Services, said there were many opportunities within the sector to augment data and make predictions using machine learning.
"By using these models to do things like predict revenues into the future, it can become a useful tool for planning cashflows on specific projects," he said. "Trust and Safety has been a big part of Downtown’s work across our data science department, analysing trends datasets to find fraudulent activity and remove it from our distribution service.
"Within our products, we’re also seeing the opportunities with AI to improve how a user interacts with us. For example, running experiments on how we can use large language models against data to make data queryable in plain English language or identifying anomalies in the data for better income tracking. We see AI as being super-useful for scaling our processes and enhancing our users’ efficiency."
PRS For Music CEO Andrea Czapary Martin said a framework for the “safe development and deployment” of AI was an “urgent necessity”.
"Generative AI services are unmistakably commercial, typically operating on subscription models, some costing up to £50/60 a month," she said. "They are built using the songs and compositions of human creators, rarely with the permission or remuneration of those rights-holders - a fact that neither Suno or Udio sought to challenge in their response to the lawsuit brought against them by the RIAA.
"It is perhaps unsurprising, then, that many songwriters and composers don’t see AI as a positive."
She continued: "We need global safeguards, providing clear and enforceable rules for transparency, auditability and compliance with copyright laws," she said. "The current market ambiguity serves neither creators’ nor AI services’ needs.
"As an industry, we must play our part. Our member survey found that around three in five PRS members need more support to understand how AI could impact their careers. Individually and collectively, we must build a common knowledge base on AI, defining both the unique opportunities and challenges it will bring."
Nevertheless, Martin acknowledged that the technology “brings opportunities as well as threats”.
"Our systems use machine learning to streamline and optimise our processes to deliver greater cost-efficiencies and enhance services we provide to members," she said. "Last year, we successfully matched over 90% of musical works reported to us. By broadening our toolset and using robotic process automation we can further accelerated accurate royalty payments to music creators."
At MRC, our greatest resource is our people, and we know our clients truly value that human connection
Brendan Jack
Over at The Music Royalty Co (MRC) however, royalties director Brendan Jack said he was keen for the business to retain its personal touch.
"It probably comes as a surprise, but [AI] is not something that currently factors into our work," he disclosed. "I think it will become an invaluable tool for automating many tasks involved in processing and accounting for music royalties. However, I believe it will be a long time, if ever, before the human element is no longer needed.
"As a business owner, you need to discuss your accounts, or get advice on statements. You need someone who not only gets the complexities of your finances but also provides clear, straightforward answers. At MRC, our greatest resource is our people, and we know our clients truly value that human connection."
Elsewhere in the sector, Colin Young, Ben Marlow and Gary Groutage set up Y Royalties last year. The firm, which started as the royalties division at accounts firm CC Young & Co, specialises in royalty audits, rights management, catalogue valuation and transaction due diligence.
“Our goal is to challenge the industry and apply our innate curiosity to ensure that creatives and rights-holders are fairly compensated for their work, which requires deep data knowledge and technology that can keep up with the pace of growth,” said head of valuations and royalty due diligence Alex Bowler.
Subscribers can read the full Music Week 2024 special report on royalties here.
