Royalty-Free Music and Virtual Concerts: The Future of the Entertainment Industry?

Royalty-Free Music and Virtual Concerts: The Future of the Entertainment Industry?

In a time where we feel socially disconnected from one another, the entertainment industry has incorporated technologically innovative ways to keep artists and consumers connected, arguably more than ever before. This year’s Collision Conference discussed two emerging digital platforms en route to accomplishing this goal: LÜM and Wave.

LÜM is a social media and music streaming platform co-founded by Max Fergus. The app allows artists to connect with users without intermediaries. This music marketplace, as Fergus describes it, is a form of disruptive technology that allows artists to collaborate, not only with each other, but with fans. Unlike other music streaming platforms, such as Apple and Spotify, LÜM is a space where established and “unseasoned” artists can benefit from a creator-focused monetization system. American singer-songwriter and LÜM’s global ambassador, Ne-Yo, attests that newer artists can support themselves while simultaneously taking fans along their journey. Consumers pay subscription fees and participate in “virtual gifting” using the app’s virtual currency, the “note”. This is a form of virtual tipping, equal to half a cent, which, as Fergus points out, is essentially the same royalty payout that exists on other music streaming platforms. Users can gift artists a surplus of “notes” relative to the number of streams per song. Effectively, artists  profit more per stream on LÜM than any other music streaming platform. LÜM’s business model is redefining the music industry by eliminating the need for royalty payouts while maximizing monetization for the artist.

The Music Modernization Act (“MMA”) in the United States is aimed at modernizing copyright-related issues. It makes statutory licensing fair for creators and efficient for digital music providers. However, Fergus has pointed out that the MMA was designed to regulate “royalty-bearing” streaming services and requires streaming platforms to pay fees which disproportionately impact smaller platforms. Operating outside of this traditional, yet allegedly “modernized” landscape, LÜM’s elimination of royalty payouts places the power and profits back in the hands of creators.

Another newcomer making a breakthrough, notably throughout the pandemic, is Wave. Wave is a platform that uses technology to enable artists and audiences to collaborate on the most interactive form of live virtual entertainment which is accessible from anywhere. “Wave allows artists to elevate their music assets and reach more fans than any other existing platform”, says Adam Arrigo, Wave’s Co-Founder. He acknowledges that, before the pandemic, the industry controlled all interactions between the creators and the consumers, including all of the distribution and marketing channels between the two groups. Technological innovation, and Wave in particular, has chiseled away at this control by lowering the barriers to entry and encouraging artists to stay active while maintaining a direct relationship with fans. Artists like the Weeknd, J Balvin, and Justin Bieber have all invested in the platform, in pursuit of new forms of monetization.

Juxtaposed with LÜM’s mission, virtual concerts will arguably result in greater royalty payouts as performance rights organizations, such as SOCAN, may require additional licensing fees. Synchronization licenses, for example, grant permission for a user to sync audio with video. Although most of the music licensing landscape will likely remain unchanged, could the incorporation of video and 3D holograms be an added barrier?

What do these platforms mean for a post-pandemic world? Will mainstream streaming giants be squeezed out by these cutting-edge competitors? Will this digital shift impact licensing and intellectual property rights? The gradual rise in the popularity of streaming services could contribute to a significant decline in traditional music platforms and performances while making an enormous impact on the industry’s regulatory scheme.

Kejsi Trimi is a 2022 JD Candidate at Osgoode Hall Law School and a guest contributor to the IPilogue.