June 24, 2014
· Portrait of a new world music industry entrepreneur: In an era where the value of music is hotly contested between artists, content providers and media interests, Paul Anthony optimized the new world paradigm of digital hi-tech and social media to create Rumblefish, which offers the largest pre-cleared music catalog to a growing world of smartphone videographers and artists.
What were you doing before you decided to start Rumblefish?
I grew up making music. When I was 14, I did my first album as a drummer. I went to the Univ. of Oregon, where I was a double major in Music and leaned how to write for film and TV. Along the way, I produced a lot of music, some for very popular artists, but more for unknowns. I enjoyed all of it, and that inspired me to create Rumblefish.
I initially wanted to find a way for my music to pay for school. The University was really expensive. I figured that since I had a full student orchestra that could play everything I wrote, I might as well make some money. So I started recording the student orchestra playing my music for use in indie films and TV ads to anybody who needed original music. My homework was the compositions; selling them, mainly to a bunch of different productions, worked out quite well. The one thing that I'm most proud of - and I'll never forget it - is that there's nothing like conducting a 70-piece orchestra for the first time and seeing it up against the film.
So when did you launch Rumblefish full-time?
As fate would have it, I was booted from music school for selling my homework. I was just two classes away from a double major in Music. Fortunately, the Dean of the university's Business school, Phil Romero, took a liking to me and invested in my start-up company He helped get my business plan together and make what felt like an act of desperation a real opportunity.
Was there a particular deal you did that got Rumblefish off the ground?
We cut one of our first deals with YouTube for their audio swap product, and then we diversified from licensing small boutique catalogs of 30,000 songs to film, TV and video games. We've grown very large; now we have over five million copyrights. Part of why we grew was that we made a big bet on the future. Many years ago, with the advent of social media, we thought, "Wouldn't it be awesome to instead of having 500 well-funded production companies for customers, we could have a billions of customers? Anyone with a smartphone can be a filmmaker now; why not provide the soundtracks for them, where everyone can get access to your catalog?"
The YouTube deal was a definite validation for us; it moved us in the right direction. We used to license 1,000 songs a year to TV, film and advertisers. Now we do over 50,000 songs a day, using social media to get our songs used in everything from video slide shows to animated gifs. Social media has given us a huge opportunity to grow.
What are the main challenges in Rumblefish's continued growth?
We have two very clear objectives; both of them serve our ethos, which is to help the artists make more art. As long as we respect the lifeblood of where songs come from - and that's artists making art - we will achieve our objectives. Objective #1 is to sign up more music; we have 2.5 million songs out of 25 million songs - and we'd like to offer all of them. The goal is to increase the size of the catalog that's available to the community, so they can use more music.
Objective #2 is to find every place where creators are making videos and offer our licensed music to them. Obviously, YouTube has been a big client of ours, as has Vimeo, which enables people to create videos. There's also Animoto and we just announced a deal with Shutterstock. We provide the infrastructure that offers an easy way for these companies to license music. It's much easier to use us than to try to individually get every song you want by finding out who owns the publishing and the master and dealing with multiple licensing societies. We've spent years organizing that information, figuring out the metadata and curating thousands of playlists that make sure all those rights are available to any song we have and that the music is easy to browse through to find what you need.
Our latest deal is with Shutterstock, which is already a massive business; they did $235 million in business last year in their image and video footage businesses - and now they can rely on Rumblefish to provide a readily available music catalog for their Shutterstock Music product ... ditto for Animoto and YouTube
Exactly how does the money flow from these companies' customers to you ... to the artists?
There are a variety of ways. The first way is subsidized through a company such as Animoto, which provides a video creation service that's very popular. Their customers make a large number of videos - and they want music for their videos. All those customers can get them through Rumblefish inside of the Animoto product. Animoto has over 6 million users who pay a subscription fee for the service, which includes music rights. Our service is subsidized through a percentage of those subscription fees. They're not paying one fee for every song they use.
Another way is a direct license. Other companies we work with that will charge a license fee, such as Shutterstock. They just buy direct license-based rights and download the songs that are licensed.
The third way is advertising revenue, which is what YouTube and other video networks do for music creators. We help artists and labels take advantage of that, too.
And how much of that revenue goes to artist compensation?
What we pay artists from the license fees we collect depends on the demand for the song. We negotiate a rate with our content provider that is a percentage of total revenue we receive, with a majority of the revenue going to the artist.
Artists have complained that streaming services such as Pandora or Spotify don't compensate them nearly enough. Have their problems impacted you in any way?
We don't deal with music streaming or download services like Spotify or iTunes. They are handled by music distributors. Our specific focus is the micro-license of music in video in social video. We're doing a significant amount of micro-licenses, so that's where we spend our time. It's a huge market.
In 2006, Rumblefish started its own Music Licensing Store. How has that fit into the mix?
One thing we've learned with it is that there's no one definitive music licensing marketplace. We believe Shutterstock has incredible reach, as does Animoto and many others. Those marketplaces all have great reach, but there isn't any one marketplace that reaches everyone. Our own music licensing marketplaces help us reach those who don't use other marketplaces, such as action sports creators and wedding videographers. Our artists, the music creators, are best served when we can get their work in as many marketplaces as possible - including our own.
We also think there are more niche markets to find and get into. We just tied into one of the most successful ones, Shutterstock, which has done an incredible job to grow a vibrant community who use their images and video footage. Obviously when people use Shutterstock to create video work, they naturally would like to incorporate music into it, which is where Rumblefish comes in. We provide the largest pre-cleared music catalog in the world for their customers. And we're always looking for more successful online communities involved in video creation.
Are you concerned that there could be too many of these marketplaces, that some will inevitably go under?
Not everyone can be successful - even in a growing community like music licensing. I can't speak to why some marketplaces go under; only they would know. Music licensing is not like a "If you build it, they will come" type of thing. Successful marketplaces are those that need licensing for an existing vibrant community, and licensing should not be used to build a new community.
So what do you foresee in Rumblefish and its future growth?
In the near future, I see us doing more micro-licensing, optimizing YouTube monetization and rolling out our license verification offering. We have a new website we're going to launch soon. We're also going to launch license verification technology; that's coming later this summer.
Where we're going to grow is in finding more marketplaces for our catalog, and finding more communities to sell it to. We'd love to go from 50,000 songs licensed per day to over 250,000 a day, while we expand our catalog from 5 million copyrights to 10 million -- and make that music easily available to anyone who needs a song for their online video. We'll let the individual companies grow and manage their communities and keep them vibrant; we'll provide the music.