Former Hawthorne Heights drummer Eron Bucciarelli started his company Soundstr about two years ago to identify the music that’s played in real-world businesses and help songwriters get compensated for it. With its Pulse device, Soundstr provides transparent music-use data to businesses that license music. They can use that data to negotiate licenses based on actual usage instead of a general blanket license that may send more money to certain performance rights organizations (PROs) than they need to pay.
Soundstr officially launched late last year with the goals of bringing more businesses into the system, helping them pay for only what they use and directing license money into the correct songwriter’s pockets.
Why leave a successful band to start a music technology company?
We were performing all over the world, and every night the concert promoter would deduct a small percentage of every ticket sold. This money was supposed to go back to the PROs. Well, two problems were happening: The promoter was deducting performing rights fees for every PRO. We were only registered to one rights organization, so essentially extra money was coming out of all of our ticket sales, and it was going to songwriters whose music was not being performed that evening.
Hawthorne Heights only performed original music, written by us, so this money deducted from our ticket sales was supposed to come back to us from our PRO. One night I looked at all my royalty statements and saw that the money wasn’t coming back to me. I did a little research, talked to other bands and found that they had a similar problem. At that point I realized there was a greater issue than just a simple accounting error.
Why do you feel that PROs don’t always distribute money to songwriters fairly?
PROs collect money from businesses and don’t have data on how to distribute it, so they use radio as a proxy. They assume whatever’s played on the radio is the same as what’s played in a business, and they take money that gets collected from different bars, clubs, and concert venues, and pay it out to whomever’s on the radio.
We looked at music played in a handful of establishments in Cincinnati and compared that data to Nielsen BDS, the industry standard for radio charts—basically the same metric a PRO would use—and found that out of about 3,000 songs we identified over a two-week period, only 19% were played on the radio. Therefore, 81% of the songs heard in a business weren’t getting compensated. That money was going to other people.
Many US entertainment establishments that broadcast music do not pay license fees. How do you get them to comply?
Soundstr's Pulse system
To some degree, the PROs try to track down these businesses and persuade them to pay. ASCAP announced that it is suing 10 businesses for not paying licenses. That doesn’t seem like a very good business model. You’re spending tens of thousands of dollars in litigation to license a business that’s going to probably pay you a couple thousand dollars a year. I contend that if we provide technology that lets businesses pay a fair license based on their real music usage, then it will in turn save them some money, and they’d be more apt to obtain a license. This in turn puts more money back into the system for songwriters, and if that money goes to the correct people, then everyone should be happy.
And that’s where your Pulse system comes in. What does it cost?
We charge a monthly subscription fee based upon the capacity of your establishment to access your music performance data. The bigger the establishment, the higher the license fee that it pays to the PROs, and that goes in line with the potential savings it may reap from our data.
Some of these venues don’t pay their music license fees because they’re not well-informed on the subject. The PROs will even tell you, the number-one request from unlicensed businesses is to prove that the money will go to the correct people who earned it, and [the PROs] can’t— without our technology, that is.
How much more needs to be done for the PROs to support your platform?
We have the new U.S. PRO called Global Music Rights; they’re supporters and will accept our data. We’re doing a pilot with SOCAN in Canada, and they’re very excited about this, as are other PROs around the world. The U.S. PROs are slower to react; there’s a lot of bureaucracy. But we’re doing our part to get more people into the system and more money back into the pockets of creators and the people who support those creators.