April 28, 2015
As long as music continues to be an emotional resource to people's lives, it will always be important for the purveyors of music to offer it to their listeners. Which is where Lyric Find comes in - as the world's leading supplier of lyrics for online platforms and services. The brainchild of Darryl Ballantyne, LyricFind has become an integral resource for streaming services and publishers alike. Here he explains how his company fits into the digital music scheme of things.
What were you doing before you started LyricFind?
I was at the University of Waterloo, studying Math and Business. I also did co-op jobs - the last one I did was four months working at EMI in Los Angeles on the digital side. That led to meeting the right people to get things done and get LyricFind off the ground.
What made you decide to launch LyricFind?
We originally tried launching LyricFind in 2000 as a song lyric site while still in university, but it only ended up lasting a few months before we realized the copyright issues. It was next to impossible to get rights to lyrics from music publishers, who at that time were not ready for that type of thing. So we actually shut it down later in 2001. When I graduated in 2004, I was going to go back to work for EMI, but I got a call from Microsoft. They were launching the MSN Music Store and they wanted to use lyrics for it. That got the wheels in motion for us, and I made a few calls and ended up never going back to EMI. My former boss there, Ted Cohen (who is now on our Board of Directors), made some calls for me to help get publishers on board, one thing led to another and we landed the first couple sublicensing deals.
What were the initial roadblocks and challenges to getting the company up and running?
Getting catalogs to license. Getting a licensing deal with EMI Music Publishing was the first big accomplishment. Up until then, although people had wanted to publish song lyrics for stories, books or magazines, they would have to go to each individual publisher, who then had to get permission from the writers for each song. We wanted to license entire catalogs, not just specific lyrics for a single use.
Publishers also had a lot of difficulty deciding who we should be dealing with on their side - was it a digital rights person, a print rights person, a synch person -- in some cases, more than one at the same time. In the case of one major publisher, we wanted to license their lyrics and they told us, "Okay, here is a form we need you to fax to us" - and it's one form for each song lyric. And they have a catalog of a million songs. So you'd have to fill out millions of pages if you wanted to license everything, plus you needed to know what was actually in their catalogues. And some publishers couldn't even tell us everything they owned. They didn't know the entire catalog. It became an educational process that took some time to overcome.
How much revenue does this generate and who gets the cuts - songwriters? Publishers? Clients? Labels?
What songwriters get is through their deals with the publishers. We deal only with publishers on a wide variety of business models. There are licenses for advertising, where we take a share of the revenue; or we can do a price per display or per subscriber. We also do hardware deals, where it's a flat price per device. The client decides from a lot of different options, but generally we tie the price to the revenue model of the client. It's not cut and dried, because if done wrong, the costs can get insanely out of control. But regardless of the model we license on, the publishers are paid 50% of our revenue, divided up pro rata based on usage.
According to some pundits, it's next to impossible for everyone to get their fair share under the current business models and rates.
It can be, especially since we're in the early going. We know what fair prices should be. Publishers understand their songs' value. Our goal is to deliver a lot more value than the publisher expects. Because we're still building a new market here, people still have, in their heads, what they believe their songs should be worth. It's taken a while, but publishers have grown to understand what that value should be. The goal is to get everyone happy with it.
Will the current royalty battles in Congress -- over the recent consent decree and the ongoing performance royalty debate -- impact you?
The Copyright Office's report released last month did talk about lyrics licensing and asked questions about whether lyrics should be valued as part of compulsory licenses. The office's response was that it's not necessary as there are adequate market solutions and no friction in the market that licenses catalogs. The Copyright Office thought everything was fine. Certainly it would've been an interesting scenario if they thought otherwise. We do licenses with virtually every publisher for lyric rights in the U.S. It'll be very interesting to watch the rest of the proceedings in other areas, with all the back and forth.
Do you have more sympathy for one side over the other?
It varies. On one hand, I sympathize with artists and publishers who are used to getting a higher rate per song and higher margins. On the other hand, the market has generally spoken regarding what consumers are willing to pay for music, so that's the new reality; everyone has to adjust. You can't expect music services to pay out 150 cents on the dollar, and it's not like they aren't trying to bring in as much money as possible.
It sounds like a lose-lose proposition...
To an extent it is. Rights holders still want to have old market rates, while the streaming services need rights holders to consider the economic environment, while the market is changing at same time. But what's the alternative? Nobody has come up with better way to monetize music yet.
Piracy has long been a big issue, yet you were able to get all the illegal lyric sites shut down. How were you able to do that ... and could the labels learn from your success?
We did it by cooperating with the NMPA enforcement program to go after these sites. With lyric sites you can directly contact people running them, or go to their hosting companies, or shut them off from other sources. We can work with them or put pressure on them; there are a lot of different ways to do it. When contacted, almost all the unlicensed lyric sites were very cooperative. Once they realized how easy it was to license work through us, most were happy to do it. They can come to us and get one deal and become completely covered. We also made the terms reasonable enough so they could still do business and still make money, while others seem to try to extract every last penny from them.
Dealing with recording piracy is not as easy for the labels because people are using many different file sharing networks, and there's no central person to go to for the licenses. It's not as easy to shut them down; it's a much more difficult proposition than it would be for a lyrics site, so unfortunately it's hard to draw a lot of parallels.
Do you expect other pirates to pop up? How vigilant can you and the NMPA be?
Yeah, we'll continue to work on them. As soon as a site reaches meaningful size, they'll get a letter from the NMPA saying something along the lines of, "You might not be aware of it, but you need to license the songs whose lyrics you're posting. Here's our contact info to do so."
They're relatively easy to find nowadays ... just check any search engine results. They can't really fly under the radar.
Where's the main growth of LyricFind coming from - major labels, clients or direct-to-consumer?
Definitely music services. Song lyrics are a core piece of the streaming services, and we license everything from Amazon to Deezer to Pandora and Microsoft ... all the services want to include lyrics as a part of their service. That's definitely a big area for us - and I also expect more deals in the future that make the lyrics accessible on more hardware devices.
There currently are a plethora of music streaming services. Do you believe there inevitably will be a "thinning of herd" - and how would that impact your business?
Certainly there will be some of that, but consolidation isn't necessarily bad for us if we deal with the remaining companies. If one guy buys another, we'll just have a larger deal with the combined company. We scale appropriately for our licensing with the streaming services based on the number of users, so it doesn't really affect our economics and in some ways, it's more efficient having one less client to manage.
Where do you see LyricFind's future growth coming from? Can you look far ahead, or is the pace of change too fast to have long-range goals?
You can look ahead about five years, but beyond that, it's just mass speculation. In five years, we will have much better global catalogs, with coverage of all licensed repertoires, including synch data for all of our lyrics. There are a lot of musical cultures and societies around the world, and there's a lot of demand for them out there.
On top of offering complete catalogs of everything on record, we're also looking at additional add-on products related to lyrics that could be useful to clients and improve the music experience. These additional services could provide the industry, rather than just the consumers, lyrics that can be used internally. We won't reveal these products at this time, but they are in the pipeline. They're lyric-related and could prove quite valuable to the consumers, music services and publishers.