General Context

What is music intellectual property?

In the music industry, intellectual property represents the core asset that drives the sector. It comprises many legally recognised rights, facilitating the regulation of the global music distribution market. These rights entitle creators, including authors, musicians, and producers, collectively known as "Right Owners," to obtain economic benefits from their creative outputs. At the core of these assets’ monetisation lies the licensing process, where specific rights for use and financial exploitation are transferred to third parties tasked with organising content distribution to the masses.

Legally, the beginning of a music asset's IP rights coincides with its creation. This instigates the aggregation of a suite of rights to the author, notably rights applicable to intellectual property exploitation. A certain number of these rights are transferable, allowing the author to monetise their creations by licensing them for use by others, while a subset remains untransferable.

IP is the foundation of the music industry, supported by copyright law—an area known for being extremely intricate. The copyright framework follows the same consistency globally, peculiarities and exceptions permitting, posing challenges to conceptualising a universally applicable technological solution. This legal foundation not only sustains the industry but also shapes the traditional methodologies of copyright management, such as licensing, which, despite ensuring stability, constrain new business models and avenues for music creation, consumption, and funding.

Mechanics and Counterparties in the Music Industry

The mechanics and counterparties in the music industry form a complex network of interactions essential for the creation, promotion, distribution, and consumption/monetisation of music. At the core of this ecosystem are the creators—artists, songwriters, and producers—who produce the IP that becomes music. This IP is managed, promoted, distributed, and then monetised through a network of counterparties, including record labels, music publishers, distribution platforms, and performing rights organisations.

Record labels provide financial support, marketing, and distribution resources. Music publishers manage copyrights and handle the licensing of compositions for various media. Distribution platforms, such as digital streaming services and physical retailers, make the music accessible to the public. Performing rights organisations collect royalties from music usage on behalf of creators. Live event promoters, venue operators, and merchandise companies are critical in the performance revenue stream. Each counterparty in this complex network operates within a framework of legal and contractual agreements, ensuring that music reaches audiences worldwide, while rights holders are fairly compensated for their creations.

The traditional music industry relies on manual processes and intermediaries to manage it. After creating music, an initial registration establishes the various associated rights. Legal checks ensure the work's originality and compliance with existing laws. Distribution channels and licensing agreements enable public consumption, dictating how and where the music can be used and how royalties are calculated and paid. However, this system is often slow, opaque, and costly, prompting the need for more efficient technologies to address these challenges.

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