Why Better Royalty Infrastructure Shouldn't Mean Another Expensive Subscription
One of the questions I've been thinking about while building Royalty Partners is a fairly obvious one:
Will customers pay for this?
It's an important question because the music industry already spends a tremendous amount of money on administration.
Labels and publishers pay distributors. They pay for royalty calculation systems. They pay accountants and administrators. They pay banking and transaction fees. They pay for foreign exchange. And, very often, they still employ people to move information manually between all of those systems.
So if Royalty Partners is simply another piece of software layered on top of that stack, I'm not sure we've solved enough of the problem.
I don't want the answer to better financial infrastructure for independent music companies to be another big software bill.
Luckily, there are other ways to build financial software.
Some of the companies I've found most interesting as I've been building Royalty Partners are financial technology companies whose software is only one part of their economic model. There are several good examples of platforms whose core software can be used for free, while the company earns revenue through financial activity and optional paid products and services.
I'm interested in what that model could mean for the music industry because it challenges the assumption that the only way to build valuable financial software is to charge customers increasingly large fees for access to it.
Music already has financial activity.
A music rights business isn't just maintaining data. Money is constantly moving through it.
- Revenue comes in from distributors, DSPs, licensees and other sources.
- Expenses are incurred.
- Royalties become payable.
- Artists, producers, songwriters and other participants are paid.
- Money moves internationally. Currencies are converted.
All of those activities already have financial infrastructure and costs associated with them.
If Royalty Partners can make those activities easier, more transparent and less expensive, there is an opportunity to build a business around the financial activity itself rather than charging clients heavily simply for access to the software that organizes it.
That distinction matters to me.
The software should create leverage
My goal is for Royalty Partners to become more useful as more of the financial workflow passes through it.
The platform should help a label understand what it has earned, what it has collected, what it owes, what has been paid and what remains outstanding.
And increasingly, it should help the label actually perform those financial operations.
If we can do that, the economics of the platform start to look different from traditional royalty software.
There may still be paid products and services. Some companies will need more sophisticated workflows, integrations, support or administration than others.
But I don't think every useful feature needs to become another add-on fee.
In fact, I'd like to move in the opposite direction.
I want independent labels and publishers to have access to financial infrastructure that historically has been difficult, expensive or simply unavailable to them.
If we build the economics correctly, Royalty Partners should make running a music rights business less expensive, not become another significant cost of doing it.
That's an important part of what I'm trying to build.