Brent McCrossen is a New Orleans native and the CEO of Audiosocket. They’re best known for music licensing, but I wanted to learn more about their new watermarking technology, LicenseID. It’s poised to make music copyright transparent for the first time and get musicians fairly compensated in the process. Plus, we’re both drummers. I was curious to see how one goes from butt of musician jokes to poster child for New Orleans’ explosive post-Katrina entrepreneurship culture.
Music industry stories often resemble David and Goliath, where Goliath always seems to win. Most musicians barely make a living, and the execs make a fortune off the art. I was struck by the total absence of good versus evil in Audiosocket’s story. By designing a product that benefits both sides, LicenseID should have David and Goliath toasting one another at the same table. We talked about how Audiosocket and LicenseID organically came to be, why the music industry needs to think like a tech company, and how the rest of the world needs more roast beef po’ boys.
Alec Quig: When I asked what you’ve been chewing on lately, you sent me an article about Congress and copyright legislation reform. Can you sound off on that a bit?
Brent McCrossen: The nuts and bolts of it are pretty exhaustive. Basically, copyright law really hasn’t changed much since it was originally drafted, long before the internet or digital distribution existed.
AQ: In the 1920’s?
BM: Most of the rights that exist are related to mechanical printing, pressing records. Vinyl sales might be on the rise, but the majority of music use and intellectual property in general is now digital. On the music side of copyright—where Audiosocket operates—a lot of the laws are not really applicable to how music is consumed today. Nor are they really beneficial to artists and songwriters.
BM: Exactly. There’s been enough effort by rights holders–songwriters, you know, real humans—and record labels to get Congress and the copyright board to revisit the laws. They need to consider the implications of the internet and how it’s so profoundly impacted the earning power of musical creatives, and see if they can redraft some of them. Which is a good move! The twist is that the music industry itself will also have to accommodate some advancement. I’ve always conceded that the music business doesn’t think like a tech company. If it did, Napster would’ve been bought before it ever had such a negative impact on the industry’s earning power. But you can’t really pay for what you can’t report. And you can’t report what you don’t know.
AQ: Which is where Audiosocket enters at stage right.
BM: I certainly think we’re going to contribute in a major way. Other players are involved here as well. What’s been asserted by luminaries like Jim Griffin, the expert witness to Congress in these regards, is that there needs to be an exhaustive, centralized database that lists all the rights and rights-holders.
AQ: And do you have competition in building this exhaustive, centralized database? I wasn’t able to determine whether you have competition, or whether you’re basically thwacking through unexplored brush with machetes. If you do have competition, are you all thwacking towards the same goal?
BM: There’s two different things: Audiosocket at its core is a tech company. In the first five years, all we did was license music. We got all this content, and cleared rights in advance. One could search for, discover, and license one of our songs for use in a film with the click of a button.
AQ: Indie music for indie filmmakers.
BM: Yep. We also worked with broadcast networks and agencies too. But working in that line of business, we realized our copyrights were being violated, whether accidentally or willfully.
AQ: I read about that. And surprising amount of people paid up right away when you notified them of their violations?
BM: Exactly. 25% of our uses had been in violation, but over 70% paid their licensing fees within 60 days.
AQ: Were you surprised by that? I certainly was.
BM: I was surprised by both numbers, yes. I was amazed that our copyrights were being violated at such an alarming rate, and I was also surprised at how willing people were to true up and pay the fees that they should’ve paid in the first place. But our approach is not heavily litigious. When we find a violation, we assume that you made an honest mistake. Our approach basically is: here’s what you did, here’s what you should’ve done. You paid us $2 and you should’ve paid us $5000. Give us $4,998, and we’re good! A lot of other people would just have their lawyers call you—shoot first, ask questions later. We’re not that way. And I think because of that, whether intentionally or otherwise, we just get these violations out of the way. We started the company out just doing licensing, found violations, and decided to invent a technology that would track the use of our copyright to help us better identify how our music was used in a more automated way.
AQ: I saw the snazzy infographics of how that works on your website, but it’s still pretty mysterious to me. I felt the same way when I tried to understand Shazam.
BM: Those patent drawings are very pretty sometimes [laughs]! It’s called License ID. It’s our new product, and it’s becoming a new business. It’s a separate thing altogether. We have a lot of competition in being Audiosocket, licensing music. But as far as License ID is concerned, there is no competing technology. There are technologies that do watermarking, but the way that we’ve deployed technologies to encode inaudible data each and every time a song is licensed or downloaded…that in itself is unique. That’s patent-pending right now. We’ve talked to all the major players in the industry, and they all said the same thing: “Wow. We’ve thought something like this should exist forever, and we’ve never seen it. This is fantastic.”
AQ: I can roughly visualize the growth of your company on a timeline with the logos of various companies and organizations you’ve successively partnered up with. AP and Vimeo are two examples. Who’s next?
BM: I have to speak in broad terms here. A lot of our business development focus is on the LicenseID product. As far as really monumental shifts for the company, what’s next is the leading music companies in the world using this technology. I expect to have announcements on that soon.
AQ: You announced a partnership that will stands to add LicenseID to over a hundred music catalogs, adding tags to over 600,000 tracks. This reminds me of deep sea fishing: huge ships trawling with gigantic nets. Can you give me an idea of how much has been done versus how much is left to be done?
BM: There’s more in front of us than anything else. We’re working on a deal that, assuming we get it done on time, will put three million copyrights in the system of LicenseID. That’s a pretty large slice–a partnership with any one of the majors represents a lot of the pie. There’s a lot of music out there, and a lot of music companies. But there’s so much consolidation that if you get one or two of the big players, it’s a big slice.
AQ: Which sounds like it’d make the process simpler in some ways, but harder in others?
BM: Things move slow with companies that big. They don’t make decisions like this in a rushed way. At all. We’ve been having discussions for almost a year. Our people in L.A. are just trying to push this across the finish line so the lawyers can get to work. But yes: there’s more to get than we currently have, but I also think that when we make some of our announcements later this year, it’ll demonstrate that we have critical mass in the industry.
AQ: While you’re negotiating with these massive conglomerates, are the people who are coming to you and contributing to your database still indie musicians? How much of the music you’re dealing with is you going to them versus them coming to you?
BM: The majority of the music in our catalog is all independent—either indie labels or artists. As it relates to submissions, I would say that we receive about 30 unsolicited auditions a day.
AQ: Wow! I thought it would be a lot more! That’s a lot, but I thought it would be into the hundreds.
BM: [Laughs] It’s still a lot, but we reject about 95% of it. We’re very curatorial. 80% of what we add to the system is us going to an artist and actively working to sign and recruit them. The other 20% have come to us.
AQ: So where are you finding the bands in the first contingent? Dig a little on your website and it keeps coming back to “quality, quality, quality.” But there must be a kind of sweet spot for a band that’s going to be good for Audiosocket, and vice versa.
BM: The way that it really works is, well…her name is Sarah. I give her all the credit. She runs our artist relations department. Among of the many things that she does–and she does a lot of stuff—the main task is artist relations, going out and finding artists. There are things that inform her approach, and there’s her approach itself. She’s customer-driven. We can look through our database and see what’s being licensed, what’s being used.
AQ: And what people are looking for.
BM: We watch all the data. What’s the most popular style? Genre? Vocal type? What are clients asking for? In a very human way, they might just want something that sounds like Beyoncé. We’re always mining that data to inform what Sarah goes after. Being an A&R person, her job is to have her finger on the pulse of all types of musical styles, reading trade magazines and blogs, following musicians she respects—emerging and independent artists—and trying to find those nuggets before they become unreachable. It’s a very intense job for her. It’s a large world of music to filter through. And it’s competitive—artists on the rise can get up in a stratosphere where you can’t get to them. Suddenly, they’re too big for you. Her job is to get there early and know what’s going to be hot tomorrow. She has to have her eyes in a lot of places to mine that talent.
AQ: How many hours a week do you work?
BM: My wife would probably tell you twenty-four hours a day, but I would say at least sixty.
AQ: And the fuel for that is still fighting the good fight, helping musicians actually make a living?
BM: If you don’t have a passion for what you do, working sixty hours a week is going to be tough. I couldn’t do it. For me the driving factor is believing in what we do. And it’s also the love of entrepreneurship. The sixty hours I spend a week are all on Audiosocket, but it’s not all directly music-related.
AQ: Right. You have to read these 250-page white papers when Congress releases them.
BM: Precisely. Those things mirror my effort to help the company excel in every way possible. Often that requires looking for ways to evolve and improve as an executive. Some of those 60 hours a week aren’t directly related to Audiosocket’s immediate revenue. I find that the more I work to improve my knowledge and experience as a CEO to better the company, the long term impacts on the business are tremendous.
AQ: How old are you now?
AQ: How long since the company was founded?
BM: We technically started in 2008, and formalized it in 2009.
AQ: Ten years ago, would the way you’re speaking about being an executive now have surprised you to hear?
BM: Absolutely. I thought about that yesterday. I was walking down the street by myself and just thinking, there’s no way you could have envisioned being here in this moment. I’ve always had an entrepreneurial spirit. I’ve been in the music business for over fourteen years. I’ve played music all my life.
AQ: And are you still playing music on top of working sixty hours a week?
BM: No. But I’m working to improve on that. I have a three year old son who I need to get with behind the drumset, at least on the weekends. If he has any interest in it, I certainly want him to grow up being exposed to it.
AQ: Fortunately, it’s hard not to in New Orleans.
BM: Right. And if someone said I’d be doing this in ten years, I would’ve never believed them. I just had an idea, and I started, and was willing to learn. And it was out of Interface that Audiosocket was born. The artists I managed were having a hell of a time making it work. Gas prices were through the roof.
AQ: And this must’ve been when the MP3 was first ascendant and music sales were notoriously at their worst?
BM: Exactly. We got some big placements for some of our artists, and that’s when the lightbulb went off. Man, if I only had more music, in every genre, and a way to distribute it, then I could really have an impact on artists’ ability to make a living. It just seemed like a natural evolution of something I was interested in. I loved technology, even though I wasn’t a technologist by any stretch of the imagination. It just felt like the right idea at the right time. Rick Hennessey was my mentor.
AQ: Why does that name sound familiar?
BM: He’s a Seattle guy who sold the first ever ringtone company in the US. He kind of invented ringtones. He went on from that to invent caller ID for cellphones, then went on to sell that. He’s smarter than shit. He was friends with my business partner, liked the idea, and agreed to help us get funding and get the company off the ground. I give him a good majority of the credit for everything I’ve ever accomplished as a CEO. He provided so much structure and guidance for me. He and a small handful of other people were really instrumental in informing my approach to becoming the executive I still want to become.
AQ: And you’re paying that forward through the Idea Village and elsewhere in town?
BM: Wherever I can, man. I say this to all the companies I work with: primarily because of Rick, I feel obligated to give back. I would not be where I am today without him. He really was like: you’re just a wild stallion, and we’re gonna make you race-ready. He gave me the patience and time, without any blocks. Like, here’s my mind, reach in. No restrictions. I have the opportunity to do that for other early-stage entrepreneurs and it’s one of the most rewarding and fulfilling things I’ve ever done. I’ve watched the growth of Krewe du Optic and Stirling, seen the impact of mentoring, and it’s been as rewarding as building Audiosocket.
AQ: It’s striking to see the effects of entrepreneurial culture around town. You feel it very palpably, especially, I’d say, in the past two years. It seems like y’all rose phoenix-like after Katrina yourselves, at least to some extent?
BM: It was 2009 when we opened our satellite office up here in this building. Our first New Orleans hire worked in a small closet in the back of this floor. Watching New Orleans try to recover certainly played a part in my mission to get the company down here.
AQ: What are your thoughts on services like Spotify? I can’t imagine you being a huge fan.
BM: I use Rdio. I think their user interface and experience is light years ahead of Spotify’s, even if Spotify’s catalog is deeper. The rates they pay…it’s hard to bitch about, no matter how much you may wish to complain. Those deals were struck directly by the labels, and they own a good chunk of Spotify. They’re paying out 70% of their top line revenue back to the labels. One could argue for Spotify’s rates being higher, but I think a better place to put the argument is in reporting. The reporting is going back to the labels. Rights are not being enumerated to the artists. Again, there’s not enough transparency. And I think another argument can be made regarding the ad-free model: songwriters should be paid a higher percentage. Right now, there’s a difference between an artist and a songwriter. An artist is Beyoncé, and a songwriter is the person who wrote her songs.
AQ: Or in her case, the team of anywhere between 16-25 people who wrote her songs.
BM: Right. And in this situation, the songwriters get a fraction of a fraction of what the artists get.
AQ: I have a friends in bands who love to post their Spotify paychecks to social media. They’ll be like, 17.29455 cents.
BM: [Laughs] It’s absolutely pathetic. And I hear even more complaints about Pandora. You may have noticed in the copyright reform documents we discussed that terrestrial media gets away with the greatest amount of theft. It’s not really theft, because it’s technically legal, but they still pay artists nothing. Nothing! Yet they’re making billions of dollars a year on that music! Those are where the shifts really need to happen for greater equity for songwriters and artists both. It’s hard to bitch about the streaming model. It’s tremendous. It’s what people want.
AQ: I had 300 gigabytes of MP3s. When my hard drive crashed, Spotify stepped in and not only saved my ass, but greatly expanded the net I’m using to trawl.
BM: Personally, I wish consumers were more willing to pay more. I think I pay $17 a month for my wife and I to have a Rdio account. I would pay $40/month easily, and not just because I’m in the music business, or because I’m a music guy. Before all this shit existed, when I was in college and had no money at all, I was going to the store and dropping $16 on a CD…
AQ: …and it may or may not be worth it when you get home.
BM: Exactly. I’m still saving a ton on music. And there’s more of it, and more flexibility in how it’s delivered. I can’t bitch about Spotify’s rates, because they’re what the labels agreed to, and they own the majority of that company. I’d just champion an awareness of the value of music in general. When songwriters get paid a fraction of what the artist does, those songwriters aren’t going to be living in Nashville or LA writing music. The Beyoncé of 2040 is going to need writers to support her voice. We as consumers, when we decide to steal music—I don’t think people should be sued over it, but when we decide it’s not worth our money…that’s the day the music dies. It takes a lot of time and money to record, despite the costs of that going down. Perfecting your instrument doesn’t just happen. If you can’t make a living, the quality of music suffers.
AQ: This is something I love to think about: when did the idea of music as a commodity begin? When did musicians begin to expect, to any extent, to be paid for being musicians? You probably know better than I do. When it was printed and then reproduced? It’s amazing to consider that music became a commodity long after, say, paintings or literature.
BM: This makes me think of player pianos and Victrolas.
AQ: My mind jumps to O Brother, Where Art Thou?. The three protagonists’ song blows up, and instantly there’s that sleazy guy trying to make a buck off of it. Both sides quickly become archetypes.
BM: Listen: the music business is huge. Don’t let anybody tell you that the industry is dying, whether because of piracy or anything else. The pie is getting infinitely bigger. The problem is that the money is getting consolidated, and not in the hands of the right people. LicenseID will change that. It forces transparency. Before LicenseID, people could be using your music in a commercial video and you’d never know. You couldn’t even ask to be paid for it. And we’re changing that. Rights-holders can track and ensure that they’re compensated for their work.
While we’re initially applying the technology to look for violations—say, people who sync music to a commercial without a license—that’s just the first application. The way it’s built is to provide greater tracking and reporting for every single broadcast use. We can encode LicenseID metadata into a song file at the plate when it’s pressed, and every time it’s on any internet stream, satellite radio, or even in stores. As long as our devices are there to listen, we can track and decode it. It could be in Iraq.
AQ: And it provides better analytics that artists can exploit. The mind boggles!
BM: Right. And they can take that data and make it actionable, baby! And for them, suddenly it’s like, maybe we should take our tour to Baghdad? Forcing transparency and accurate reporting allows rights holders—in other words, musicians—make a better living. There’s nothing more fun than waking up in the morning to that.
AQ: What are your big goals for 2015? And 2020?
BM: Though I’m interested in 2020 especially, the big goal for this year is to establish LicenseID as an industry-standard in copyright protection and verification. That’s a very big goal, and its not an easy one.
AQ: But it seems like you’re rolling.
BM: As far as it comes to copyright complaints, we’re well on our way, absolutely. When I look at 2020 and all the different applications of that technology specifically, I think we’ve positioned ourselves to help all creatives of all digital works better track, monetize, and report their creations. Success there makes us worth a lot of money. If we’re successful there, we’re bought out before 2020.
AQ: What happens to you if that happens?
BM: Well, they typically want executives to go with.
AQ: What about cashing in and starting a band up?
BM: Maybe! But I doubt that I would do only that. I have two or three other business ideas in my head. For one, I firmly believe that the world would benefit from an embrace of the Chipotle model, but for po’ boys. I would like to do that. I think the world needs better roast beef poboys. From Spokane to…
AQ: Indiana. Where’s your favorite roast beef po’ boy here?
BM: My house. I think I make the best in New Orleans. And my second favorite would be R&O’s. That is definitely the best roast beef po’ boy in New Orleans. People like Parkway, but I’m not a fan, especially of the roast beef. If I go to Parkway I’ll get something else. If I’m going to get one outside of my kitchen, the only one that satisfies is R&O’s. And there’s one place in Metairie under the Causeway Bridge called Bear’s, which is really good, too.
AQ: Ten years ago, were you having five different business ideas? Or were you just being a music dude?
BM: I was just being a music dude.
AQ: I mean, there’s some stuff you can read about regarding your origin story, but it’s not completely clear. I’m very interested in how one turns from a “music dude” to a CEO. How does that happen? How much of it is luck and fate?
BM: It’s 50/50. This whole thing was born out of one reality: I just had a passion, and something that I wanted to do, and I didn’t need anyone’s permission or approval, and I was absolutely willing to continue to go forward, even—no, especially—when people told me no. That’s it.
AQ: One of the most surprising things I noticed about your story is that it’s never been good guys versus bad guys. It always seems like a David and Goliath thing, where the artists are always pitted against this writhing beast hydra with twelve heads that represents the music industry. When I read about Audiosocket, there really seems to be nothing adversarial going on, whatsoever. Your model seems both artist and business friendly, and very cooperative.
BM: It’s not been adversarial at all. It’s been collaborative, if anything. The interesting thing is that if we force transparency into this system, there are people who do not want that, because they’ll have to pay out. But many of those same people are going to Congress and saying, “We need transparency! Google needs to tell us where our stuff is being used! We need to shut pirate sites down!” The industry can’t force the issue of transparency and compliance and say they don’t want it at the same time. Even if they’re slightly concerned about the implications of LicenseID for their business, they can’t go against it. If they do, they instantly lose their own arguments and can no longer fulfill their own agenda: protecting their intellectual property and earning power.
AQ: Which is very cool!
BM: LicenseID isn’t about focusing on the negative. It’s just: stuff is getting used at an incredible volume, at incredible rates. Lots of money is changing hands. We’re going to make sure it’s distributed to the right people. That’s it!
It’s not like: sue grandma. This isn’t the RIAA going after college students. As we scale out LicenseID across the industry, eventually, no doubt, you’re gonna hear people bitch about companies coming down on them for violations: YouTube filmmakers, small digital agencies, bigger brands are going to say they’re getting wrongfully bullied by rights holders who are demanding payment, that they didn’t realize they were violating copyright, that they didn’t mean to, and to please forgive them. It’s gonna force remuneration. But it won’t be the music industry that’s pissed. It’ll be the industries that use music without paying for it. And I’m cool with that. I don’t care if people get upset with us for that. I just think we’re making everyone more honest.
Brent McCrossen is the co-founder and CEO of Audiosocket. Learn more at www.audiosocket.com.
More on Alec Quig at his website: www.alecquig.com.